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Faulty or defective vehicles

Your rights for a remedy if your car or other motor vehicle is faulty or defective.

Tow truckYour rights for a remedy if your car or other motor vehicle is faulty or defective.

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Follow our 7 steps

See Seven steps for sorting out a motor vehicle problem for general advice about how to sort out a problem with your vehicle.

Your rights for a remedy under Consumer Guarantees Act

The Consumer Guarantees Act gives you quality guarantees and rights for a remedy if you bought your new or used motor vehicle from a business.

The guarantees don't cover private sales. They also don't cover vehicles that are not of the kind that consumers would normally buy for personal use. This means you won’t be covered by these guarantees if you bought an industrial type vehicle (like a forklift, truck or steam roller) or a commercial type vehicle (like a delivery van or passenger bus).

See Quality of your vehicle – Consumer Guarantees Act for more information about the guarantees and the vehicle sales they cover.

The remedy depends on how serious your problem is

The remedy that you’re entitled to under the Consumer Guarantees Act depends on the how serious the problem is with your vehicle.

  • If the problem is not serious, the business can choose the remedy.
  • If the problem is serious, you may claim from a choice of remedies.

How do I know if the problem is serious?

The business should look at the vehicle and discuss the faults with you first.

To decide if a fault is 'serious', ask yourself the following questions:

  • How soon after I bought the vehicle did it develop the fault? The shorter the time, the more serious the fault.
  • How much did I pay for the vehicle? The more expensive the vehicle, the less acceptable any fault is.
  • What was I told about the vehicle – in advertising, on the Consumer Information Notice, or by the trader? If the vehicle is very different from what you were told, this may make the problem serious.
  • Does the fault make the vehicle unsafe? If the vehicle is unsafe, the fault is serious.
  • Have there been any other faults with the vehicle? If so, the fault is more likely to be considered serious. A collection of minor faults with the same vehicle can add up to a serious fault.
  • How much will the repair cost? The fault may still be serious even if the repairs are not expensive if the cost of the repair adds up to a large percentage of the purchase price.
  • Can the fault be remedied? If the vehicle is not fit for a particular purpose that you told the business about, can it be made fit for this purpose easily and quickly?

What if the business doesn't agree that the problem is serious?

Take the vehicle for an independent check. Ask for a written report on the fault and a quote for the repairs. You will have to pay for this report yourself, but you could claim the cost back.

See Damage and other loss ('consequential loss') below.

If the report supports your claim that the fault is serious, go back to the business.

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If the fault is not serious

You must give the business the chance to sort it out. They can choose how to remedy this type of fault. Their remedy can be either to:

  • repair the vehicle
  • replace it with an identical vehicle, or
  • refund the purchase price.

But they must remedy the fault within a reasonable time.

If the business refuses to remedy the fault, or do so in a reasonable time, you can do one the following:

  • You can have the vehicle repaired elsewhere. You will have to pay for this repair, but you can claim the cost back from the business. You don't have to get the business’s agreement before taking the vehicle elsewhere. However, it's a good idea to tell them you are doing this as it may help you recover the cost of the repair later.
  • You can reject the vehicle and claim either:
    • a refund, or
    • a replacement of the same type and similar value if the business has one available in stock.

What is a reasonable time to repair a vehicle?

The business should repair the vehicle within a reasonable time. What is 'reasonable' will depend on the type of problem. The business needs to take into account that many people rely on their cars for transport so need their vehicles fixed quickly.

You could ask the business for a 'courtesy car' or to meet your costs of having to use other transport (eg taxi or bus fares) while they repair the vehicle.

If a business doesn't fix the problem within a reasonable time, you have the right to reject the vehicle and get a refund.

The business wants to give me a refund. Can I demand a repair instead?

No, you can't force the business to repair the vehicle. If a business thinks the repairs will be too expensive, they can choose to give you a refund.

Extended warranty claims

If you purchased an extended warranty with the vehicle or it was part of the vehicle’s price, the business may tell you to make a claim under this warranty to fix the vehicle.

See Warranties and extended warranties for more information about your rights with extended warranties.

If the problem is one that the business should fix under the Consumer Guarantees Act, you shouldn't have to claim under your warranty.

See Guarantees for goods for more information about the guarantees under the Act.

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If the fault is serious or can't be remedied

If the fault is serious, or is one that can't be remedied, you can choose between:

  • rejecting the vehicle and claiming a refund
  • rejecting the vehicle and claiming a replacement of the same type and similar value (if one is available in the business's stock)
  • keeping the vehicle, but getting some of your money back.

Often where there is a serious fault, the business will offer to repair it. It's your choice whether to accept this offer. If you agree to a repair and it doesn't fix the problem properly, or if the vehicle develops further faults, your rights continue. You can choose your remedy options again until your problem is sorted.

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Getting a refund

To claim a refund for a serious fault, you must first 'reject' the vehicle.

Rejecting the vehicle

The Act says you must tell the motor vehicle business that you’ve decided to reject the vehicle and give your reasons for doing so. You can request that the business collects the vehicle if it can't be driven because of the fault. The business should pay the cost of transporting the vehicle.

We suggest the best way to reject a motor vehicle is to write a letter or email to the business stating you are rejecting the vehicle. Make sure you date a letter. Keep a copy of your letter or email.


A sample ‘rejection’ letter or email…

The car I purchased from you on [date] has a serious fault. The fault is [describe the problem]. I have included a mechanic’s report that proves this. I am entitled to reject the car under the Consumer Guarantees Act.

This letter [or email] is to inform you that I am rejecting the car today. I now require that you refund me the purchase price [and/or return my trade-in]. Please contact me to arrange this.

I will return the car once you have agreed to refund the purchase price and/or the trade in. I would appreciate a reply within two working days of you receiving this letter [or email].


If the business won't take your vehicle back or refund money

If the business refuses to take your vehicle back or refuses to refund your money, it's important that you have a written record that you tried to reject it.

You don’t have to return the vehicle if the business won’t refund your money, but you must tell them that you reject the vehicle.

How long do I have to reject the vehicle?

You must reject the vehicle within a reasonable time if you want to claim a cash refund or a replacement vehicle because of a serious fault.

A 'reasonable' time is the time in which such a defect would normally become noticeable, taking into account:

  • the type of vehicle
  • how the vehicle has been used
  • how much it has been used.

So you need to advise the business you are rejecting the vehicle as soon as possible after you discover a serious fault. And you should do this whether or not the business agrees with you that the fault is serious.

Example

William’s car fails its first Warrant of Fitness check because of rust in the chassis. He may lose the right to reject the vehicle if he waits several months after this failed check before telling the motor vehicle business he is rejecting the vehicle.

Refunds in cash

The Act requires refunds to be given in cash. You don't have to accept a replacement vehicle. If you paid by cheque and the cheque has not been cleared, the business can wait until it clears before giving the cash refund.

Can the motor vehicle business reduce my refund because the vehicle’s value has depreciated?

No. The Act says the business must refund the price paid for the vehicle.

Will the refund include the value of my trade-in?

You should also receive, as part of the refund, an amount equal to the value you were given for the traded-in vehicle. The business can return the trade-in vehicle instead – if you agree.

I want to keep the vehicle – can I get compensation for the fault?

Yes. You are entitled to be compensated for the difference between the value of the vehicle with the fault and the value it would have if the fault didn't exist.

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Vehicles bought with a loan or under a credit contract with a finance company

If you bought your vehicle on a credit contract, your rights to a remedy from the seller are the same as a cash buyer as discussed above.

If you bought the vehicle with finance arranged by the motor vehicle business, the finance company will also be responsible under the Consumer Guarantees Act and have the same obligations to provide you with a remedy as the seller. This means you can go directly to the finance company for a remedy if there are faults with the vehicle. It's a good idea to talk with, and send correspondence to both the finance company and the business who sold you the car.

Go directly to the finance company if the business who sold you the vehicle has gone into liquidation or receivership.

Send the finance company this statement if they tell you they are not responsible. Suggest that they sort the matter out with the business that sold you the vehicle and arrange for your remedy to be provided as soon as possible.

If you take the business who sold you the car to a court or tribunal and they uphold your right to reject a vehicle under the Consumer Guarantees Act, the court or tribunal can order that the motor vehicle business take over your obligations under the credit agreement.

If the motor vehicle business and the finance company won't refund your money

Get an independent mechanic’s report showing there is a serious fault. Don't stop your payments until you have received this report and sent the letter explaining that you are rejecting the vehicle.

The car may be repossessed if you stop making payments without taking steps to inform the motor vehicle business and the finance company. And if you don't have an independent report, once the vehicle is repossessed it may be difficult for you to prove it was faulty. 

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Damage and other loss ('consequential loss')

You may be able to claim for damage and extra loss you've suffered due to a problem with a vehicle (eg cost of taxi fares, phone calls). This extra loss is called 'consequential loss'. Your claim is limited to loss or damage that could have been expected to result from the fault with the vehicle.

  • Example: Alan finds that the station wagon he bought 3 weeks ago has an oil leak. Oil has stained his driveway, which will be costly to clean up. Alan can ask the business to repair the leak and pay the cost of having the driveway cleaned if he can show that the damage to the driveway was caused by the oil leak.

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Cars bought at auction or by competitive tender before 17 June 2014

The Consumer Guarantees Act doesn't apply to vehicles sold at auction or by competitive tender before 17 June 2014.

You may have a claim under the Fair Trading Act if you were misled about the fault (or lack of faults) at the time you bought the vehicle.

See What a business tells you about a vehicle – Fair Trading Act for more information.

You may have rights against an auctioneer for a defective vehicle under the Sale of Goods Act. Under this Act, vehicles must be fit for their purpose and of merchantable quality, which means they must be in a fit state for sale. Be aware – auctioneers can contract out of their obligations under the Sale of Goods Act at the time of sale.

See Quality issues for vehicles not covered by the CGA – Sale of Goods Act for more information.

Extended warranty or breakdown insurance

You may be covered for any fault that occurs in a vehicle if you bought an extended warranty or breakdown insurance from the auction house. Read the terms and conditions of the contract or policy to see if you're covered and how to make a claim.

See Warranties and extended warranties for more information about your rights with extended warranties.

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Private sales (or private sales from a car fair or market)

The Consumer Guarantees Act doesn't apply to private sales, but the Contractual Remedies Act might. 

See What a private seller tells you about a vehicle – Contractual Remedies Act for more information.

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Resolving common problems

My car has broken down out of town

Contact the motor vehicle business and tell them what has happened with your car. The business may ask you to take the car to a local agent or mechanic who they do business with. Make sure the motor vehicle business has agreed to pay for any out-of-town repairs they have approved.

If the business tells you to return the car to them, make sure you are clear who will pay as the business may be responsible for paying the cost of transporting the car.

I caused the problem because of the way I drove

You can't expect a motor vehicle business to fix damage caused by your misuse or neglect of the vehicle.

  • Example: You take your car off-road, but it isn't a four-wheel drive and the suspension is damaged. You can't expect the motor vehicle business to fix this damage.

Replacement if the motor vehicle business doesn't have any similar vehicles in stock

The business must give you a replacement vehicle if a suitable one is reasonably available to them. If no similar vehicle is available to the business, you will have to choose another option.

I received my car as a gift. Do I have rights?

Yes. If you received a car as a gift, you have the same rights to claim under the Consumer Guarantees Act as the person who bought the vehicle. 

Statement to send to a finance company explaining their legal obligations under the Consumer Guarantees Act

Send the finance company this statement if they tell you they are not responsible for providing a remedy for your faulty vehicle:

A finance company is a supplier if the seller arranged the finance

The definition of 'supplier' in section 2 of the Consumer Guarantees Act makes it clear that when goods are bought with finance arranged by the seller of the goods, the finance company will also be a supplier of those goods under the Consumer Guarantees Act and will also be responsible directly to a consumer if those goods are not acceptable.

Definition of supplier from section 2 of the CGA (sections 2b(i) and (ii) are the relevant parts):

"supplier

(a) means a person who, in trade,—

(i) supplies goods to a consumer by—

(A) transferring the ownership or the possession of the goods under a contract of sale, exchange, lease, hire, or hire purchase to which that person is a party; or

(B) transferring the ownership of the goods as the result of a gift from that person; or

(C) transferring the ownership or possession of the goods as directed by an insurer; or

(b) includes,—

(i) where the rights of the supplier have been transferred by assignment or by operation of law, the person for the time being entitled to those rights:

(ii) a creditor within the meaning of the Credit Contracts and Consumer Finance Act 2003 who has lent money on the security of goods supplied to a consumer, if the whole or part of the price of the goods is to be paid out of the proceeds of the loan and if the loan was arranged by a person who, in trade, supplied the goods:

(iii) a person who, in trade, assigns or procures the assignment of goods to a creditor within the meaning of the Credit Contracts and Consumer Finance Act 2003 to enable the creditor to supply those goods, or goods of that kind, to the consumer:

(iv) a person (other than an auctioneer) who, in trade, is acting as an agent for another, whether or not that other is supplying in trade"

See Consumer Guarantees Act wording on the New Zealand Legislation website (http://www.legislation.govt.nz/act/public/1993/0091/latest/DLM311058.html).

 

Last updated 29 August 2014
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