New car buyers are warned of “lemons” in the market

Australians looking to take out a car loan to purchase a new car are being warned to check car warranties carefully after a survey by consumer advocacy group CHOICE found 66% of respondents discovered faults in their vehicles within five years of buying them.

CHOICE interviewed 1,505 Australians, and of the third with faulty car experiences, 73% were fully covered by a warranty, 11% were partly covered and 11% were not covered at all.

"New cars are expensive purchases, it's shocking to see that most consumers buying new cars should expect problems in the first five years of ownership," said CHOICE advisor Sarah Agar.

The report also found that beyond the direct cost of car repair, on average car owners with lemon cars spent $858 and 31 hours trying to resolve their problems.

This isn’t the first time the quality of new cars has been called into question in Australia. Late last year, the Queensland Government launched a Parliamentary enquiry into customer protections and remedies for new car buyers titled “‘Lemon’ Laws”.

Independent candidate for the seat of Ashgrove, Connie Cicchini recommended for the state adopt a “lemon vehicle register” similar to ones implemented in the US. This would mean consumers could make a more informed choice before settling on a new or used car by referring to the register.

Tips for Australians with a lemon car:

  • Refer to your car warranty and car insurance policy to see if your required repair is covered

  • Give your car dealer or manufacturer a call explaining the situation

  • If you’re still not having any luck, you might want to call the ACCC and seek advice on your legal rights and obligations

  • If you are required to pay for the mending of your car, you do have the option to take out a car repair loan. This can really help you out if getting the car fixed is urgent but you don’t have the funds to make it happen

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Last updated 22 June 2024 Important disclosures and comparison rate warning*
  • Used Car Loan

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    Interest rate
    comparison rate
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    6.57% p.a.to 18.99% p.a.
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  • New Car Loan - Special

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    Interest rate
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    Monthly repayment
    6.24% p.a.
    7.36% p.a.based on $30,000
    over 5 years

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  • Car Loan

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    Interest rate
    comparison rate
    Monthly repayment
    6.49% p.a.
    6.84% p.a.based on $30,000
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    Purchase or refinance a new or used car, caravan or motorbike, up to 7 years old. Fixed rate with terms from 1 to 7 years. Make additional payments and free redraw. No early payout penalties. No monthly fees. Quick start application in less than 5 minutes online.

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    Fixed, Secured

    Interest rate
    comparison rate
    Monthly repayment
    6.24% p.a.
    6.65% p.a.based on $30,000
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  • Green Car Loan

    Home Owner, Variable, Secured

    Interest rate
    comparison rate
    Monthly repayment
    6.09% p.a.
    7.21% p.a.based on $30,000
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* WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

^See information about the Mozo Experts Choice Personal Loan Awards

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