Buying a used car is a big decision, and most buyers want to know one thing: what happens if it breaks down a week later? In Victoria, the law gives them a clear answer. Licensed dealers must back certain used cars with a statutory warranty, and they cannot sign it away in the fine print.
For dealers, understanding this obligation is part of running a trustworthy, compliant business. This guide explains what the warranty covers, which cars qualify, what is excluded and how to handle claims without stress.
What Is a Statutory Warranty on a Used Car?
A statutory warranty is a legal protection that applies automatically when a licensed motor car trader sells an eligible used car. It is not an optional extra and it does not depend on the dealer’s goodwill. It comes from Victoria’s Motor Car Traders Act, and it sits alongside the Australian Consumer Law, which gives buyers separate rights.
In simple terms, if a covered fault appears during the warranty period, the dealer must fix it at their own cost so the car is in a reasonable condition for its age. If you want the wider legal picture, this overview of the Motor Car Traders Act in Victoria covers the key rules dealers follow every day.
Which Used Cars Must Be Covered?
Not every vehicle qualifies. A licensed dealer must provide the warranty when the car:
- is less than 10 years old (measured from the build date on the compliance plate), and
- has travelled less than 160,000 kilometres.
The requirement applies to licensed traders. If you sell cars regularly, you need to be licensed first, and this guide on whether you need a dealer licence to sell cars in Australia explains where the line is drawn.
Sales That Fall Outside the Warranty
The warranty does not apply in every situation. Common exceptions include:
- Cars older than 10 years or with 160,000 km or more on the odometer
- Motorcycles and commercial vehicles
- Sales to another motor car trader
- Sales to an employee or related company of the dealer
- Sales to a person who has had the car for three months or more before buying it
If your business focuses on commercial vehicles, the rules differ, so it helps to understand how a truck dealer licence in Victoria works before you set your policies.
How Long Does the Warranty Last?
The statutory warranty lasts for three months or 5,000 kilometres from delivery, whichever comes first. Any time the car spends at the dealership being repaired under the warranty does not count toward the three months. So a buyer who drops the car off for two weeks effectively gets those two weeks back.
The warranty belongs to the sale. If the buyer sells the car privately before the period ends, it does not transfer to the next owner.
What Dealers Must Repair
During the warranty period, dealers must repair or make good defects that affect the car’s reasonable condition, whether or not the fault existed at the time of sale. This generally includes major mechanical and electrical components such as:
- Engine and cooling system
- Transmission and driveline
- Brakes, steering and suspension
- Electrical systems and air conditioning
- Fuel system
The repair must be done at the dealer’s expense. Asking the buyer to pay for parts, labour or a “diagnostic fee” on a covered fault is a fast route to a dispute.
What the Warranty Does Not Cover
The law also protects dealers from unfair claims. The warranty does not cover:
- Faults listed on a valid defect notice
- Accidental damage that happens after delivery
- Damage caused by misuse or negligence after delivery
- Tyres, batteries and certain prescribed accessories
Fair wear and tear consistent with the car’s age and mileage is also taken into account when deciding whether something is a covered defect.
Why the Defect Notice Matters
A defect notice is one of a dealer’s best tools. If you know a car has a fault that is not covered by the warranty, you must list it clearly, along with a reasonable estimate of the repair cost. The buyer then knows exactly what they are getting.
Vague or missing notices are a common cause of complaints. Be specific, be honest and give buyers time to read the notice properly before they sign.
Handling Warranty Claims the Right Way
How you respond to a claim says a lot about your business. A smooth process usually looks like this:
- Acknowledge the claim quickly. Record the date, the odometer reading and the reported fault.
- Inspect the car promptly. Decide in good faith whether the fault is covered.
- Communicate in writing. Confirm what you will repair, or explain clearly why a fault is excluded.
- Complete repairs within a reasonable time. Keep the buyer informed and keep records of all work.
If a buyer is unhappy, a calm and documented approach often resolves the issue before it escalates. These practical tips on how LMCT dealers should handle customer complaints can help you build a process that works.
What Happens If a Dealer Does Not Comply?
Ignoring the warranty can be costly. Buyers can seek help from Consumer Affairs Victoria, bring a claim to the Victorian Civil and Administrative Tribunal (VCAT), or make a claim on the Motor Car Traders Guarantee Fund if a trader fails to honour their obligations. Beyond the financial risk, repeated complaints can affect your reputation and, in serious cases, your licence.
A Quick Compliance Checklist for Dealers
- Confirm the age and odometer reading of every car before sale
- Give the statutory warranty where the car qualifies
- Prepare accurate, specific defect notices
- Keep signed copies of all sale documents
- Record every warranty claim and repair
- Train your sales team so they never tell buyers that “used means no warranty”
If you are still building your business, this complete guide on how to start a used car dealership walks through the practical steps, and the step-by-step LMCT application guide explains how to get licensed in the first place. For dealers who want to expand into wider vehicle categories, the car dealer licence in Victoria page outlines the process and what to expect.
Stay Compliant and Protect Your Dealership
Knowing your warranty duties is only one piece of running a licensed dealership. Regulators look closely at how businesses operate, so it is worth understanding what Consumer Affairs checks in an LMCT application and how those standards carry into day-to-day trading.
We support dealers and aspiring dealers across across Victoria, including Melbourne, Ballarat, Geelong, Bendigo, Shepparton, Wodonga, Warrnambool, Dandenong, Brighton, Cheltenham, and Springvale . Whether you are applying for your first licence or tightening up your compliance, the right guidance early can save you time, money and stress.
Frequently Asked Questions
It is a legal guarantee that a licensed dealer must give on eligible used cars. If a covered fault appears during the warranty period, the dealer must repair it at no cost to the buyer.
Three months or 5,000 kilometres from delivery, whichever comes first.
Cars sold by a licensed dealer that are less than 10 years old and have travelled less than 160,000 km.
No. A dealer cannot contract out of the statutory warranty for an eligible car. Faults that are not covered must be listed on a defect notice instead.
Faults listed on a defect notice, accidental damage after delivery, misuse or negligence, and items such as tyres and batteries.
No. It applies only to sales by licensed motor car traders. Private sales and auction purchases from private sellers are not covered.
No. The warranty applies to the original sale and does not pass to a later private buyer.
They can contact Consumer Affairs Victoria, apply to VCAT or, in some cases, claim against the Motor Car Traders Guarantee Fund.
Yes. The Australian Consumer Law may still apply, depending on the car’s age, price and condition.
