The Law Handbook 2024

Chapter 6.7: Buying a car 629 • Security interest : This is an interest in, or power over, goods (e.g. a goods mortgage over a car bought on finance) to secure the payment of a debt or other obligation. • Seller: A person disposing of a car (a car is usually registered in the seller’s name). • Transfer of registration, disposal and acquisition: This includes the sale, gift, inheritance or delivery of a car in accordance with a court order (reg 74 RSV Regulations). • VIN: A car’s individual vehicle identification number, which is permanently marked on its frame or chassis. The hidden costs of buying a car Buying a car costs more than the purchase price. When calculating how much you can afford to spend, you should consider additional costs, such as: • stamp duty or transfer fees; • registration costs (including a compulsory TAC premium, which insures you and others for death or injury if your car is involved in an accident); • a Royal Automobile Club of Victoria ( RACV ) or Victorian Automobile Chamber of Commerce ( VACC ) inspection of the car to test its mechanical soundness; • any optional extras you might want; • costs associated with borrowing money to buy a car; • insurance premiums; • fuel, spare parts and repairs; and • RACV membership. If you need to borrow money to buy a car, you should shop around because different lenders offer different products. Always check the fees and charges payable, plus the interest rate and whether it is fixed or variable. NOTE Many car traders offer finance or recommend a particular lender. You do not have to borrow money from the car trader or their recommended lender. The finance offered by car traders often has a higher interest rate than bank personal loans. Also, most forms of insurance offered in relation to finance contracts are optional, and you should only sign up for such insurance if you understand what it covers, and you definitely want it. For more information on finance contracts and related insurance, see Chapter 5.7: Understanding credit and finance. Used cars: Before you buy – who owns the car? Certificate of registration Unless you are buying a used car from a licensed car trader, you must check that the person selling the car is the registered operator or has the owner’s authority to sell the car. You should ask the seller to produce the car’s registration certificate (this is issued to registered operators with each renewal of registration). If the seller cannot find the certificate or it has been destroyed, they can apply to have a (replacement) certificate issued (reg 42 RSV Regulations). To check that the person named on the registration certificate is the same as the person from whom you are buying the car, get some photo identification from the seller, (e.g. a driver licence). If you buy a stolen car, you may be forced to give it back to the true owner. Although you can sue the person who sold you the car to try to recover the money you paid, you are unlikely to get your money back. When a car trader acquires a car, its registration is transferred into the car trader’s name; however, a car trader may sell a car before this has occurred. If the car trader is not recorded as the registered operator of the car, you should ask for proof that the car trader acquired the car from the registered operator. However, ensuring that a seller is authorised to sell a car is not as crucial if the seller is a car trader, because you may be entitled to compensation from the Motor Car Traders’ Guarantee Fund if a car trader fails to transfer good title to a car (s 76 MCT Act) . (The Motor Car Traders’ Guarantee Fund is administered by Consumer Affairs Victoria ( CAV ); for CAV’s contact details, see ‘Contacts’ at the end of this chapter.) Certificate of registered security interest As well as checking ownership of a used car, you need to check whether anyone else (e.g. a finance company) has a security interest over the car. This only needs to be done if you are buying a car privately as car traders are prohibited from disposing of cars