Car sales contracts and warranties

Before you pay for a car, be sure you:

• understand the details and terms and conditions listed in your vehicle sales offer
• weigh up whether an extended warranty is worth it
• consider creating your own DIY contract if you buy from a private seller.

For detailed information on what to do before you sign a finance or loan contract, see Getting a car loan.

Sales agreements with a dealer

Check the details

Before you sign anything, carefully check:

• the total price is the same price you agreed to
• the buyer and seller details are accurate
• the vehicle details, eg odometer, vehicle identification number (VIN), chassis number and warrant of fitness expiration, match the details on the Consumer Information Notice (CIN) in the window of the car
• any add-ons or accessories, eg tow bars or extended warranties, are what you want
• the down payment and finance details are accurate, if applicable
• any trade-in information and values are correct, if applicable.

Read more about Contracts and sales agreements.

Don’t pay a deposit

Be sure to read the sales agreement or offer carefully. If something doesn’t add up or make sense, ask the dealer to explain it to you. If you have doubts, don’t sign anything. Request a copy of the offer to take away and get independent advice on.

Ask the dealer to keep the car for you until you return, but do not put a cash deposit down. Cash deposits are often non-refundable if you decide not to buy the car later. If the seller insists on a deposit, it may be a sign to buy elsewhere.

Be wary of making cash deposits. Dealers don’t have to refund you if you decide not to buy the car.

Understand on road costs

Check the contract for on road costs. Ask the dealer if the total price includes or excludes on road costs. If it does, ask the dealer for a breakdown of what on road costs are included in your sale price.

On road costs cover everything you need to legally get your car on the road, including a current:

• warrant of fitness (WoF)
• registration
• licence (rego)
• road user charges if you buy a diesel vehicle.

The dealer should tell you if on road costs are not included in the sale price. It should not come as a surprise to you after purchase.

Getting extended warranties or breakdown insurance

Buying an extended warranty or break down insurance is usually not worth it.

This is because you are covered by the Consumer Guarantees Act (CGA) when you buy a car from a dealer. This means the vehicle has to be of acceptable quality and last a reasonable amount of time.

Although some dealers may state otherwise, there is no set time you have to return a faulty car. If there is a problem with the vehicle you didn’t cause, you have a right to seek a remedy from the dealer under the CGA — even if you didn’t buy an extended warranty.

If you decide to purchase an extended warranty or breakdown insurance, the dealer must give you:

• a written copy of the extended warranty agreement, terms and conditions and expiration date.
• a summary of your rights under the CGA and how an extended warranty gives you additional protection above the law.
• a summary of your rights to cancel the extended warranty under the Fair Trading Act.

Make sure you know what the warranty covers and what is excluded. There are usually special conditions you must follow to keep your warranty, eg getting it serviced on time by a mechanic approved by the warranty provider.  

Dealers usually contract out of the CGA for cars sold for commercial purposes. So an extended warranty may be a good option if you are buying the vehicle for your business, rather than for your personal use.

Read more about Warranties.

Contracts when you buy privately

Written sales agreements are not required when you buy from a private seller. But you can create your own contract with the seller.

While a do-it-yourself contract won’t offer you more legal protections, you will have some documented evidence on the sale. This will come in handy if there’s a post-purchase problem you can’t resolve with a seller and need to take the matter to the Disputes Tribunal.

Other perks of an on-the-spot DIY contract include:

• makes sure both you and the seller are on the same page
• captures important information for both the buyer and seller
• gives the seller an opportunity to list all the car’s defects, so the buyer can’t later claim the seller misled them about the condition of the vehicle.

Your DIY sales agreement could include:

• the date of purchase
• seller and buyer details, including name, address and phone number
• vehicle make and model
• registration plate
• vehicle identification number (VIN) or chassis number
• odometer reading
• Warrant of Fitness and license expiration date
• the sale price and method of payment
• any delivery details
• any notes or statements about the ownership of the car
• any notes or statements about the condition of the car
• a statement signed by the buyer and seller that all information is correct.

Make sure you give a copy to the seller.

You may also like to include photos of the car taken at the time of purchase.

Read more information on Solving a problem with your private vehicle seller