More TrueCost Information
What is the TrueCost Checklist?
The TrueCost Checklist is a checklist consumers can use
when they're buying, or thinking about buying, a motor
vehicle on finance. It covers important information
consumers need to know about a credit deal before they
sign anything.
The TrueCost Checklist is aimed at helping consumers
ask the right questions when it comes to buying a motor
vehicle on finance.
The Ministry is encouraging consumers to ask motor
vehicle dealers to provide them with all the information
on the Checklist, and then take time to think about the
credit deal before signing anything.
You can ask the car dealers to fill in the Checklist,
or use it as a guide to asking the questions that will
help you make a decision about the credit deal you are
thinking about signing up to.
The Ministry is also encouraging consumers, once they
have this information, to take the Checklist home and
talk about the deal, the car and the finance with
someone you trust, a law centre or budget advisor.
Before you sign anything, make sure the car you want
comes with a loan you can live with.
Buying a Car from a Registered Motor
Vehicle Trader (Car Dealer)
Should I get the car checked before
I buy it?
Yes, get the car checked by your own mechanic before
you buy it. This way you can make sure that the car is good
quality. If you find something wrong with the car but you
still want to buy it, then you can ask the car dealer to
fix all the things on the mechanical report. This will form
part of your contract with the dealer. If the dealer fails
to fix the problems then you can cancel the contract.
Also check that the car has a warrant of fitness less
than one month old. If it doesn't, ask the dealer to get
a new warrant for the car.
Read more about buying a car from a car yard
What should the dealer tell me about
the car?
There must be a notice in the car window (called a
Consumer
Information Notice) that tells you important information
about the car like the year it was first registered, if
there is money owning, the name and business address of
the car dealer, the cash price, whether the dealer is registered.
On the back of this notice it must tell you about your
rights under the law when buying a car. You must be given
a copy of this notice.
If there is no notice then you should contact the Commerce
Commission on 0800 943 600 and tell them as it is their
job to make sure all car dealers display this notice.
Read more about the Consumer Information Notice – window
card
How do I know if there is any money
owing on the car?
Look for the box near the top of the notice headed "security
interest" if this box says "there is a security interest
registered over this vehicle" don't buy the car, because
it means that there is money owing on this car by the previous
owners. If this statement is not there, and if you are buying
from a registered car dealer, this means that you don't
have to pay for any debts that are still owing on the car
by the owners before you.
Read more about the Consumer Information Notice – window
card
Should I buy an extended warranty?
Not unless you are sure it will be useful. These warranties
are usually very expensive, and you often have to pay money
to make a claim. They usually have lots of things that aren't
covered, and require you to get your car serviced regularly
only at certain mechanics. If you miss a service – the whole
warranty will be invalid.
The car dealer will tell you that this is an added protection
on the car if there are any mechanical problems.
Remember though in most situations the law requires the
dealer to repair many faults for free. The Consumer Guarantees
Act gives you rights when a car is not of acceptable quality.
Read more about extended warranties
So how can I tell if a warranty will
be useful?
If you are going to use the car in your business, for
example if you are a taxi driver or a courier, a warranty
may be useful because you won't have the protection of the
quality guarantees under the Consumer Guarantees Act.
If you are buying the car at an auction or by tender
a warranty may be useful because you won't have the protection
of the quality guarantees under the Consumer Guarantees
Act.
What does the Consumer Guarantees Act
cover?
Under the Consumer Guarantees Act, when you buy a car
from a dealer, the car must be of acceptable quality. This
means your car should be free of small faults, safe, durable,
does what a car is supposed to do, acceptable in look and
finish and able to take a reasonable amount of wear and
tear considering its age, condition and price. The car should
also match its description and be fit for any particular
purpose you tell the car dealer about e.g. if you want a
car that can tow a boat, then the car you get should be
able to do this.
Read more about the Consumer Guarantees Act
Getting more information
Call 0508 TRUECOST - 0508 878326 (8.30am – 5pm Monday
to Friday) for a copy of any of the information you have
seen here.
We also have a booklet available with information about
what you need to know before you buy.
Fit for the Road - What you should know BEFORE
buying a motor vehicle is available in
Adobe Acrobat format [213 KB] (instructions
for obtaining the viewer)
If you require a printed copy of the booklet, single
copies can be ordered from our
Publications section or pick up a copy from your nearest
Citizens Advice Bureau.
What if I have problems with the car?
Who do I go to first if I have problems
with a car I have bought?
If you have problems with the car then go back to the
car dealer and ask to have the problem fixed. Tell the dealer
about the Consumer Guarantees Act. Take along some of our
printed information to show the dealer.
Read more about what to do if you have problems with your
car
What if I caused the fault?
If the problem with the car is because of your driving
then you have no rights to get it fixed under the law called
the Consumer Guarantees Act. If you have a warranty you
can see whether it can be fixed under this.
What rights does the Consumer Guarantees
Act give me?
Under the law if the problems are because the car is
poor quality and it is something that can be easily fixed
then you must give the car dealer the chance to fix it.
In these cases, if you have bought a warranty the car dealer
cannot tell you to use your warranty to fix the problems;
they must fix them for free.
Read more about what to do if you have problems with your
car
What if the car is a lemon can I give
it back and get my money back?
Where the car is poor quality and the problems with the
car are serious then under the law you have the right to
choose to have the car repaired, replaced or get a refund.
Read more about what to do if you have problems with your
car
How long do my rights last?
There is no time limit on your rights under the Consumer
Guarantees Act, but you should contact the dealer as soon
as you find the faults or have a problem with the car.
What if the dealer told me something
about the car that wasn't true?
The car dealer must not mislead or deceive you or make
false representations about the car. This means that everything
on the window notice (called the Consumer Information Notice)
must be correct and accurate and anything the car dealer
tells you about the car must be true.
If you have been misled about something then you have
rights against the car dealer under a law called the Fair
Trading Act. You can also report them to the Commerce Commission
by calling 0800 943 600.
Read more about what to do if you think you have been misled
about the car
What do I do if the dealer won't agree
to fix the car or refund my money?
You can go to a tribunal and ask them to order the dealer
to make it right. There is a special disputes tribunal just
for problems with cars called the Motor Vehicle Disputes
Tribunal, it costs $50 to put in an application, just ring
0800 367 6838 for an application form. You can claim for
repairs, refunds or extra costs that you have had to pay
because of the problems with the car.
Read more about the Motor Vehicle Disputes Tribunal
Can I reject the car if it is poor
quality?
You have the right to reject a car if it has a serious
fault, you can apply to the Tribunal for a refund of the
money you paid and for the finance to be transferred to
the car dealer.
What is a serious fault?
A serious fault is one where a reasonable consumer would
not have bought the vehicle if they had known that the fault
existed.
Read more about the serious faults
Do I have to keep up my payments on
the car if it is faulty?
Yes, if you have taken out a loan to buy the car, make
sure you keep up your loan payments, even if there are problems
with the car. Otherwise you risk adding on extra penalties
or having your car repossessed.
I have bought a car and have been
told that there is money owing on it by a previous owner
- what should I do?
Contact a community law centre for help.
Read more about what to do if there is money owing on the
car
Getting more information
Call 0508 TRUECOST - 0508 878326 (8.30am – 5pm Monday
to Friday) for a copy of any of the information you have
seen here.
We also have booklet available with detailed information
about how to deal with problems with cars you can see this
on the website or order a copy.
Back on the Right Road
- Consumers' rights AFTER buying a motor vehicle
is available in
Adobe Acrobat format [222 KB] (instructions
for obtaining the viewer).
If you require a printed copy of the publication, single
copies can be ordered from our
Publications section or picked up from your nearest
Citizens Advice Bureau.
Buying a car on finance – taking out
a loan or buying on credit
It is important to check the paperwork before you sign
a contract. When you are buying a car there are several
ways you can pay for it, getting finance is one of them.
Use the TrueCost checklist to help
you decide.
Ask the dealer to fill it in and don't sign anything
until you have talked with someone about the deal. Talk
with your friends and family. Think about whether you can
afford the car, if you are need help with this go to a budget
advisor.
To find the free budget advice service nearest you look
under "Budget Advice Services" in the White Pages of the
phone book or go to the
Family Budgeting website.
Check the contract before you sign
If you decide to buy a car on finance you will be asked
to sign a credit contract. These contracts are often long
and complicated. Here are some things to check before you
sign.
Check the part of the paperwork headed
"What could happen if you fail to meet your commitments?"
This will tell you what the finance company can repossess
if you don't keep up the payments. If it says "all personal
and after acquired property", or something similar get advice
from a law centre or budget advice service. This means the
finance company wants the right to take other property that
you own, not just the car, if you do not pay.
Check the cash price
The cash price of the car must be lowest price the car
is sold on the day; the car dealer cannot make the cash
price of the car higher because you are buying it using
finance, and they cannot, for example, add registration
on afterwards.
Check the figures
Make sure the amount you pay back is the same as what
the car dealer tells you.
Check the contract to find out who
you make your payments to
Some car dealers are also the finance company, so you
need to be clear about who you are dealing with so you know
who to contact should anything go wrong.
Check you are given the right paperwork
You must be given a copy of your loan contract and ‘disclosure
statement' either when you sign your contract or within
five working days of signing it. This loan
contract must tell you important things like the total amount
you will end up paying back in full, how much each of your
repayments are and for how long, what the fees are, what
your rights are to cancel the contract and what the interest
is that you are paying on top of the cost of the car.
Check all the fees
It is important that you check all the fees that you
are paying and ask to have them explained if you are not
sure what some of those fees are for. Fees have to be reasonable.
If all the fees look too high then try another finance company.
Make sure the figures add up.
Check the penalty fees
Go through all the pages of your contract, as there may
be other fees that you will have to pay, e.g. fees if you
are late with your payments, any debt collection costs.
Check how much money you will end
up paying back in total
Once you buy your car you are stuck with it unless it
is poor quality then you may be able to get a refund. If
you find that later on down the track you can't afford your
car loan repayments and the finance company repossess your
car, you may still end up paying something back, like the
balance of whatever is left after the finance company sells
it.
Check the insurance
When you're taking out your loan you might get asked
to take out insurance on the car you're buying or to cover
your loan repayments. You might want to ask yourself "Do
I need this insurance?"
There are two types of insurance, insurance on the car,
e.g. in case of accidents. There is also insurance to cover
your payments, e.g. in case of you becoming redundant. Sometimes
you might not need to get the insurance to cover your payments
and finance companies can't make you buy this extra insurance.
But you do have to have the car insurance as some finance
companies will repossess the car if you don't have it. Also
if you are not in paid employment, insurance for redundancy
is of no use to you.
If you are paying for insurance on your loan, then you
should be given a separate paper from the insurance company
telling you what you are paying for.
Check that the free extras really
are free
If there are special offers on the car finance, i.e.
cash backs or gifts. Make sure that you are not paying for
this yourself somewhere in your loan. These cash backs and
gifts might get added to the cost of your loan.
If you are unsure about your contract
get advice
Take your contracts to a lawyer or law centre to have
it checked before you sign.
How do I take action if I have problems
with the finance company?
Read more about dealing with a credit problem
Getting more information
Call 0508 TRUECOST - 0508 878326 (8.30am – 5pm Monday
to Friday) for a copy of any of the information you have
seen here.
We also have booklet available with detailed information
about borrowing money or buying goods on credit you can
see this on the website or order a copy.
Credit - What you need to know when borrowing money
or buying goods on credit is also available in
Adobe Acrobat format [587 KB] (instructions
for obtaining the viewer).
If you require a printed copy of the publication, single
copies can be ordered from our
Publications section or picked up from your nearest
Citizens Advice Bureau.
For more information on credit issues visit our
Consumer Information – Credit Issues section.
Problems with finance
If you take out a loan to buy a car, the car is owned
by the finance company until you pay it off. That means
you can't sell the car or give it away. Here are some things
to note after you sign.
I have signed a contract, but I have
changed my mind can I get out of it?
You can change your mind about buying the car if you
haven't taken the car home because you have three working
days from the day you get your contract to cancel the whole
deal.
What if I have taken the car home?
If you have taken the car home then you have three working
days from the day you get your contract to cancel the finance
but you still have to buy the car. You can't cancel the
sale part of the agreement. After that you have 15 working
days to come up with the cash price of the car.
Read more about your rights after you have signed the contract
What do I do if I can't make the payments?
If you can't keep up your payments due to something unexpected
happening, e.g. illness, injury or losing your job and you
are up-to-date with your payments, you must contact the
finance company as soon as you realise you can't afford
the payments. You can ask them if you can apply to spread
at the payment over a longer period of time or apply for
"Hardship". This lets you change your contract to give you
more time to make your payments. You could also the finance
company to take back the goods.
Read more about what to do if you have problems with credit
The car dealer didn't give me all
the paperwork, what are my rights?
If you didn't get a copy of your loan contract and your
‘disclosure statement' or you were not told the correct
information about the loan then the finance company cannot
force the contract against you and you may be able to have
some money wiped off your account.
Read more about what to do if you didn't get a copy your
contract documents
The finance company is treating me
really unfairly what can I do?
You can take a claim to the Disputes Tribunal if you
think your contract or the way you have been dealt with
is oppressive. This means harsh, unfair or unreasonable.
You can also take a claim to the Disputes Tribunal to have
an amount wiped off your loan if the finance company didn't
follow the law. But you should see a lawyer or go to a law
centre for more help on making a claim.
The Disputes Tribunal can deal with claims up to $7,500
(or up to $12,000 if both parties agree). You have to pay
a fee to put in an application, the amount of the fee depends
on the amount of your claim.
Read more about what to do if you think the contract terms
are ‘oppressive'
The car is faulty can I stop making
payments?
No, keep making payments. If you don't make payments
because the car you bought is faulty then you should contact
the car dealer and ask them to fix the car otherwise you
might end up paying for something that doesn't work. If
the car dealer doesn't help then take a claim to the Motor
Vehicle Disputes Tribunal for either a repair or refund.
Read more about what to do if the car you bought with a
loan is faulty
What happens if I don't keep up the
payments?
If you do not keep up your payments then you could risk
losing the car through repossession. There are set rules
the finance company must follow for repossession so you
should try and sort it out as soon as you get the first
letter giving you 15 working days to bring
your account up to date.
What do I do if my car is being, or
has been, repossessed?
A finance company must always stick to the rules before
and after they repossess your car. If they do not you have
rights, check here for more information
Read more about repossession
My car has already be repossessed
and sold, how much do I still have to pay?
You have to pay the balance owing after the sale of the
car. This is the amount shown on the account after sale
notice that the finance company must send you after they
have sold the car. The finance company should not add on
any extra amounts to this figure – no interest, no penalty
interest and no further collection costs.
Read more about repossession
For more information on credit issues visit our
Consumer Information – Credit Issues section.
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