Solving issues with your private seller

How to use your rights to solve common problems such as faulty vehicles, misleading statements and money owing on the vehicle from a previous owner.

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’. For example, a faulty or water damaged 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 is a dealer pretending to be a private seller

If someone sells more than six, or imports more than three, motor vehicles in a year, they may be considered a motor vehicle trader under the Motor Vehicle Sales Act (MVSA). Look up your seller’s details on private car selling sites, eg Trade Me and Facebook, if you suspect they sell more than six vehicles a year.

You can also search the seller’s name on the Motor Vehicles Trader Register to see if they are listed as a registered trader.

Motor vehicle trader register(external link) — Trading Standards

If the seller is actually in business, you have the same rights as you would if you bought from a car dealer.

You can report them to Commerce Commission.

Online complaint form(external link) — Commerce Commission

See Solving problems with your car dealer.

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.

Ask yourself:

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, water damaged 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 or water damage.
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.

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

More help

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