Dealer or private seller: what changes when you buy a used car
Buying from a licensed dealer gives you consumer guarantees and usually a statutory warranty. A private sale is often cheaper but comes with almost none of that protection. Here is the difference in plain terms.
Short answer
A licensed dealer must meet the consumer guarantees in Australian Consumer Law, and most second-hand cars from a dealer also carry a statutory warranty set by the state or territory. A private sale has no warranty and no cooling-off period, and most consumer guarantees do not apply. Private sales are often cheaper for exactly that reason.
Neither choice is right for everyone. The useful question is how much risk you are prepared to carry yourself, and how much you are willing to pay a dealer to carry it for you.
The protection you get from a dealer
When you buy from a licensed dealer, new or second-hand, the car comes with consumer guarantees that the dealer cannot remove. The car must:
- be of acceptable quality
- be fit for any purpose you told the dealer about before the sale
- match the description you were given
- come with clear title, so nobody else has a claim on it
If the car fails one of these, you can ask the dealer for a remedy: a repair, a replacement or a refund, depending on the problem. The dealer has to deal with it and cannot send you to the manufacturer instead.
On top of that, most second-hand cars bought from a dealer are covered by a statutory warranty. These are set by each state and territory, so the length and conditions differ depending on where you buy. Cooling-off periods also vary and are not available everywhere. Your state or territory consumer protection agency publishes the rules that apply to you.
Dealers must also be honest about the car. That includes the kilometres travelled, the service history, any accident history and whether the car has been written off.
What you give up in a private sale
In a one-off sale between two people, most consumer guarantees do not apply. There is no warranty and no cooling-off period. If the gearbox fails a week later, that is generally your cost.
Three guarantees still apply to a private sale:
- the seller has the right to sell the car (title)
- nobody will try to take it back from you (undisturbed possession)
- there are no hidden debts or charges on it
Those matter, but enforcing them against a private individual is far harder than dealing with a licensed business. This is why the checks are your job in a private sale.
Side by side
| Licensed dealer | Private seller | |
|---|---|---|
| Consumer guarantees | Yes | Only title, possession and no hidden debts |
| Statutory warranty | Most second-hand cars, rules differ by state | No |
| Cooling-off period | In some states and territories | No |
| Protection if finance was owing | Generally protected from repossession | Only if you checked the PPSR |
| Price | Usually includes the dealer's margin | Often lower |
| Who checks the car | You, with the dealer legally bound to be truthful | You |
What a dealer does not protect you from
A guarantee is not a promise that nothing will go wrong. You are not entitled to a refund because you changed your mind, found the car cheaper elsewhere, or were told about a fault before you bought. An extended warranty offered at the point of sale is optional, costs extra, and may give you little beyond the rights you already have, so read its terms before paying for one.
How to protect yourself in a private sale
- Run a PPSR check on the VIN, on the day you buy.
- Do a registration check with the state or territory transport authority.
- Have the car inspected. Start with our used car inspection checklist, and use a qualified mechanic for anything you cannot afford to get wrong.
- Meet the seller in person, see the car, and make sure the name on the registration papers matches the person selling it.
- Get a signed receipt with both parties' details.
Checking that a dealer is licensed
Licensed dealers have to display their licence number, and you can check it with your state or territory consumer protection agency. Approved dealers may receive a verified dealer badge after Australia Motors reviews their application and business details. You can browse dealers or filter any search by seller type.
On Australia Motors
Related guides
Sources
The facts in this guide were checked against these sources. Rules and processes differ between states and territories and change over time: always confirm with the authority for where you live. This guide is general information, not legal or financial advice.
- Australian Competition and Consumer Commission, New and second-hand cars (checked )
- Australian Competition and Consumer Commission, Consumer rights and guarantees (checked )
- Moneysmart (ASIC), Buying and running a car (checked )
- Personal Property Securities Register (Australian Financial Security Authority), Do a used car or vehicle search (checked )