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This section explains whether a finance
company is entitled to take your car if money is owed by a previous
owner.
Be Aware
The information on sales by registered motor vehicle traders
applies only to vehicles bought on or after 15 December 2003.
If you bought your vehicle before 15 December 2003 from licensed
motor vehicle dealer and the security interest was not disclosed to
you, then the vehicle cannot be taken from you.
The information on buying from a private seller is the same
whether you bought before 15 December 2003 or after this date.
Sales by registered motor vehicle
trader
Personal Property Securities Act
The Personal Property Securities Act (PPSA) protects consumers
who buy vehicles from registered motor vehicle traders where there
is an existing security interest over the vehicle.
If the security interest is not disclosed in writing to you, the
law provides that you will purchase the vehicle from the motor
vehicle trader free of any security interest. This means the finance
company must recover their money from the motor vehicle trader, not
from you.
If a security interest is disclosed, you will buy the vehicle
subject to the security interest. This means the finance company has
rights over the vehicle.
Supplier Information Notice
If you bought your vehicle from a registered motor vehicle
trader, and there was no warning on the Supplier Information Notice
that said "There is a security interest registered over this
vehicle", the finance company has no right to take the vehicle (as
explained under Personal Property Securities Act above). You must
tell the finance company to contact the registered motor vehicle
trader for their money.
eg, Mele bought a car from Cheep Cars Ltd (a registered motor
vehicle trader). There was no security interest noted on the
Supplier Information Notice. A few weeks later Snee Key Loans Ltd
calls her to say there is still money owing on the car by a
previous owner. Mele tells Snee Key Loans to go and see Cheep Cars
for their money because they have no right to claim the car or any
money from her.
Checking if the trader is registered
You can check if the motor vehicle trader is registered by
searching the Motor
Vehicle Traders Register. The register search is free.
Checking for a security interest
You can search the Personal
Property Securities Register (PPSR) to find out if there is
security interest on a vehicle. To check the PPSR you must first
register as a user at the PPSR website. There is no charge to
register but searches cost $1. Searches are payable by credit card.
Or, you can check a security interest through using the services of
a business which provides vehicle information checks. See listings
in the telephone book or Yellow Pages under car, vehicle, or
automobile "information" or "inspection".
For more information on searching the register, see the
Fit for the Road section on money
owing.
Consumer Guarantees Act (CGA)
The CGA provides a guarantee of title. The trader must have the
right to sell the vehicle.
- If your vehicle is taken because someone else owed money on
it, you can claim your money back from the trader.
- If the vehicle you bought from the trader was stolen, you do
not get title to it.
You may have to return the car. The CGA entitles you to claim
compensation from the trader in this situation.
The Act does not apply to private sales, sales by auction or
sales by tender.
Private sales, private sales through car
markets and fairs
Personal Property Securities Act (PPSA)
If a finance company had a registered security interest in the
vehicle at the time you bought the vehicle, then they will have the
right to claim the vehicle from you. But there are some exceptions
to this rule.
Exception 1
The PPSA has a special rule for consumer goods worth less than
$2,000 at the time the previous owner used them as security - eg,
buying the goods on hire purchase, or using them to get a loan.
Consumers who buy these types of goods take them free of any
security interest even if the interest is registered. If you bought
a cheap car, ask the finance company to prove that it was worth more
than $2,000 at the time the loan was taken out or hire purchase
contract was signed.
Exception 2
If at any time between when the security interest was created and
when you bought the vehicle, the vehicle passed through a registered
motor vehicle trader.
eg, Sione bought a car from his friend Etta. Etta had bought
the car for cash a few months before from Easy Cars Ltd, a
registered motor vehicle trader. Sione gets a call from a finance
company to say that the car is still on hire purchase to a past
owner. Sione finds out that the person who sold the car to Easy
Cars Ltd used the car as security on a cash loan. Sione tells the
finance company to get their money from Easy Cars. The finance
company can’t take Sione’s car because it was sold through a
registered motor vehicle trader after it became subject to the
security interest.
Exception 3
If there was something wrong with the information the finance
company included on the Personal Property Securities Register - eg,
if the registration or Vehicle Information Number is incorrect.
eg, John bought a car at a car fair and he paid for a PPSR
search before he bought the car. He was very surprised when a
finance company called him and said they were coming to take the
car because it still had money owing on it. John asked the company
to send him proof that they could take the car. When he gets the
information he finds out that the finance company listed the wrong
VIN number on the PPSR when they registered their interest. John
tells the finance company that this means that they cannot take
his car.
Even if John had not checked the PPSR before he bought the car,
the result would have been the same. The fact that the finance
company entered the wrong VIN number means the registration of the
security interest is invalid.
Claiming your money back
If the finance company does have the right to take the vehicle,
you may be able to claim your money back from the seller.
Sale of Goods Act
The Sale of Goods Act gives you the right to cancel a contract or
claim compensation where, unknown to you, the seller did not have
the right to sell the goods, or the goods were being used as
security. You can claim your money back from the seller because they
sold you a vehicle when they did not have the right to.
eg, Tusi buys a car from a friend. She’s had the car for two
weeks when she gets a call from a finance company saying that the
car was on hire purchase, and they want it back. Tusi can take a
claim to the Disputes Tribunal to recover her money from her
friend.
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