You bought a car privately if:
- you bought directly from a private seller
- a trader provided a venue for private sellers but was not involved in the sale, eg a car market.
Common problems with a private seller
The most common problems with buying vehicles privately include:
- ‘buying a lemon’, ie a faulty car
- being misled about a vehicle’s make, price, quality or performance
- the seller still owing money to a finance company, in which case your vehicle may be repossessed.
Your rights if something goes wrong
If you were persuaded to buy a car based on misleading statements from a private seller, you may be able to get a refund or compensation under the Contract and Commercial Law Act (CCLA).
You may also make a claim under the CCLA if the seller:
- still owed money on the car and was dishonest with you about it
- didn’t have the right to sell the car, eg didn’t own the car.
Otherwise, you have very few legal protections. Private sellers do not have to comply with the Consumer Guarantees Act (CGA) or the Fair Trading Act (FTA). This doesn’t mean you shouldn’t contact the seller to try to work out a solution to the problem.
It’s important to get as much information as you can about the condition of the car before you buy it.
Find out if you have the right to a remedy
Know your rights if you bought a car from a private seller and the:
Seller made misleading or false statements
If you have a problem with your vehicle because the seller misled you, you may be able to cancel the contract and get compensation under the Contract and Commercial Law Act.
- How soon did the problem appear after purchase?
- Did the seller make any false claims about the car before you bought it? They could have done this verbally or in their written descriptions or adverts.
- Was the seller purposely dishonest with you when you asked questions about the car before purchase?
If so, you need to show that:
- you were persuaded to buy the vehicle by the seller’s untrue statements
- the vehicle is very different from what you and the seller agreed to
- these untrue statements caused you to lose money.
Some examples include:
- if the car has been ‘clocked’ – the odometer has been deliberately changed by the seller
- if the seller doesn’t have the right to sell the vehicle, ie money is owing or the car is stolen
- if the age, history or condition of the vehicle is misrepresented.
Compensation would be based on the difference between what you paid and what the vehicle would have been worth if the seller’s statements had been true.
Read Misleading prices or advertising to find out more.
Previous owner still owes a finance company money on the car
Generally speaking, if there is money owing on a vehicle you purchase then you risk losing it – whether or not the security interest is disclosed.
A security interest is the right a finance company has to repossess a borrower’s belongings, eg their car, if the borrower does not pay back their loan.
If a finance company says they have a security interest on the car you just bought:
- They can't enter your property and take the car without your permission. Because you did not sign a contract with the finance company, they do not have the right to repossess the vehicle from you on-the-spot.
- You do not have to hand over the car immediately. Tell them you need time to get advice.
- Ask them to provide the paperwork to prove they have a right to the car.
You can then find out if there is a valid security interest registered on the vehicle by using the PPSR mobile-friendly search.
PPSR mobile-friendly search(external link) – Personal Property Securities Register
A finance company does not have a right to take the car if:
- it was worth less than $2,000 at the time the original owner took out their loan
- the security interest was not registered when you bought it
- the security interest information on the PPSR is incorrect
- it was sold through a registered car dealer who didn’t state there was money owing on the consumer information notice.
If you find out there is a valid security interest on the car, you generally have three options:
- Keep the car by paying back any money left owing on the car — you can try to negotiate the price with the finance company.
- Give the car up.
- Do nothing — if you choose this option the finance company may take you to court, and you may end up having to give the car back and pay court costs.
If you give the car up, the finance company will often sell the vehicle to reclaim their money. If the car sells for more than the money left owing, the finance company should pay this amount back to you.
A lawyer or someone at a community law centre can help you decide what your best options are.
You may be able to make a claim under the Contract and Commercial Law Act if the seller did not tell you about money owing on the car, and you have proof the seller was dishonest.
What to do if you have a problem
Contact the seller and explain the problem before you do anything else.
You should contact the seller yourself – or have someone else do it for you – if you have bought a vehicle and:
- were misled into doing so, either by false advertising or something the seller has said
- the vehicle is faulty or unsafe
- you find out there is money owing on the vehicle.
Often by contacting the private seller, you can work out an arrangement between the two of you. This might include:
- some kind of refund
- the seller paying for mechanical work
- an alternative arrangement.
It is important you don’t give up without trying.
Always talk to the seller first. If they disagree or refuse to deal with the issue, get a report from a mechanic or inspection service.
If you bought from an auctioneer, and purchased an extended warranty or breakdown insurance, you may have extra protection. Read the terms and conditions of the contract or policy to see if you are covered and how to make a claim.
If the vehicle is sold online through Trade Me, you’ve been through these steps, and still can’t reach a resolution with the seller you can file a dispute report to give Trade Me feedback.
What to expect when you approach the seller
When you go back to the seller:
- Bring any proof of purchase and evidence of the problem, eg a copy of the original advert, any agreements or documents you signed, a mechanic’s report and photographs of the fault.
- Know what outcome you want.
- Take a support person to witness the conversation.
- Be honest and state the facts of the situation.
- Try to remain calm and reasonable.
Be prepared to honestly answer questions a seller may ask you, including:
- what the problem is, when it appeared and how often it appears
- if anyone else, eg a mechanic, has looked at the car before you contacted them
- if so, what they did to the car
- how you have looked after the car, eg regular servicing, kilometres driven, etc.
How to complain
Next steps if the seller doesn’t agree
If you cannot solve your issue directly with the seller, you can take it to the Disputes Tribunal.
The Disputes Tribunal is similar to going to court, but is quicker, cheaper and less formal. Hearings are run by a referee rather than a judge, with no lawyers.
The Disputes Tribunal can hear disputes with private sellers — unlike the Motor Vehicle Disputes Tribunal, which only deals with cases about motor vehicle traders.
How they can help
Private sellers are not bound by the same consumer laws that apply to registered motor vehicle traders. But the Disputes Tribunal may order the seller to:
- cancel the sale and refund your money
- pay compensation for the loss in value of the car.
How to make a claim(external link) — Disputes Tribunal
Get support at any point from:
- Citizens Advice Bureau (CAB) — a free, independent service, run by volunteers. CAB can advise you on your consumer rights and obligations, in person, by phone, or online.
- Community Law Centre — offers free one-on-one legal advice to people with limited finances. The organisation has 24 community law centres throughout the country. You can find legal information and other resources on its website.
Find a CAB(external link) — Citizens Advice Bureau
Our law centres(external link) — Community Law Centres