Home / Houses, communities and the road / Buying a car / Legislation and key terms related to buying a car

Buying a car

Car sales from either a motor trader or private seller must follow set procedures. A roadworthiness certificate less than 30 days old is mandatory for the seller. Be wary of offers of an extended warranty. Motor traders must give a warranty on a used car less than 10 years old with modest mileage. Cars sold by auction carry no warranty. Cancelling a car sales contract, called recission, must be done quickly. Several grounds exist for legally cancelling a contract. A cooling-off period applies to car sales. The Motor Car Traders Act 1986 (Vic) allows for cancellation of contracts if the odometer reading is wrong or if the contract lacks prescribed particulars. There are financial penalties for withdrawing from a contract.

Buying a car
Contributor

David Niven

Legal Consultant

Legislation and key terms related to buying a car

Last updated

1 July 2022

Key legislation

Several areas of law relate to buying a car. These include the laws dealing with contracts, credit and fair trading. The major pieces of legislation related to buying a car are the:

  • Motor Car Traders Act 1986 (Vic);
  • Motor Car Traders Regulations 2018 (Vic);
  • Personal Property Securities Act 2009 (Cth);
  • Road Safety Act 1986 (Vic);
  • Road Safety (Vehicles) Regulations 2009 (Vic).

Motor Car Traders Act and Regulations

The Motor Car Traders Act 1986 (Vic) (‘MCT Act’) deals with the rights and obligations of purchasers and car traders, including rights related to minimum standards of documentation and used car warranties. It also provides for the licensing of car traders.

Personal Property Securities Act

The Personal Property Securities Act 2009 (Cth) set up the Personal Property Security Register (PPSR), which enables a purchaser to check whether anyone other than the seller (e.g. a finance company) has an interest in a car. You should check the PPSR if buying a used car privately.

Road Safety Act and Regulations

The relevant provisions of the Road Safety Act 1986 (Vic) (‘RS Act’) and the Road Safety (Vehicles) Regulations 2009 (Vic) (‘RSV Regulations’) deal with the sale of cars, vehicle registration, written-off vehicles and roadworthiness certificates. VicRoads also issues Business Rules.

Useful terms and definitions

  • Motor car trader (‘car trader’): A person who carries on the business of trading in cars (s 3 MCT Act). A car trader must be licensed (s 7). You can tell if a seller is a licensed car trader (LMCT) by checking for signs at the dealership and advertisements with ‘LMCT’ followed by the car trader’s licence number. A private seller may be deemed to be trading in cars if they sell four or more cars in a 12-month period (s 7A).
  • PPSR: The Personal Property Security Register, which records details of security interests in vehicles.
  • Purchaser: A person acquiring possession of a car.
  • Registered operator: The person or corporation that owns or manages a car (reg 13 RSV Regulations). Note that the register at VicRoads does not provide evidence of title (s 9B RS Act). It records the registered operator as the person responsible for the car (s 3(1)).
  • Registration certificate: This is issued by VicRoads. It shows details including the name and address of the registered operator, the make of the car, its garage address, registration number, VIN (see below), engine or chassis number if there is no VIN, and the date the car is registered until (reg 41 RSV Regulations).
  • Rescind, rescission, rescinding: The legal cancellation of a contract.
  • Roadworthiness certificate: This is issued by a licensed tester (reg 227 RSV Regulations) and is current if it is issued within 30 days before the disposal of the car (s 42A(4) MCT Act).
  • 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.

Back to
Houses, communities and the road