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.


David Niven

Legal Consultant

The hidden costs of buying a car

Last updated

1 July 2022

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;
  • 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.


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.

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