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

By Roisin Kelly-Goldsmith · · 2 min read
Fact Checked
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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

Car loan comparisons on Mozo - last updated 2 December 2023

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  • New Car Loan - Special

    Home Owner Discount, Including Demo, Variable, Secured

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

    Low variable car loan rate for purchasing new and demo vehicles from dealers. Personalised loan amounts between $5,000 and $150,000. Flexible repayment options. Choose between the 3 to 7 year loan terms. Good credit history. Stable employment history and Australian citizenship or PR required.

    Repayment terms from 3 years to 7 years. Representative example: a 5 year $30,000 loan at 6.24% would cost $35,880.27 including fees.

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  • Used Car Loan

    Fixed, Secured, No vehicle age limit

    Interest rate
    comparison rate
    Monthly repayment
    6.57% p.a.
    7.19% p.a.based on $30,000
    over 5 years

    Get a competitive fixed interest rate on a secured used car loan of up to $75,000 depending on your credit score. No vehicle age limits. Easy online application. Fast pre-approval. Pre-approved funds held for up to 3 months. No monthly account keeping fees, no exit fees and no early repayment fees. Flexible weekly, fortnightly or monthly repayments on terms from 1 to 7 years.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.57% would cost $35,528.12 including fees.

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  • Car Loan

    Up to 10 years old, Fixed, Secured

    Interest rate
    comparison rate
    Monthly repayment
    6.69% p.a.
    7.04% p.a.based on $30,000
    over 5 years

    Purchase or refinance a new or used vehicle, up to five years old. Choose a loan term from one to seven years. To be eligible you must be over 18, receiving a regular income and an Australian resident.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.69% would cost $35,629.48 including fees.

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  • New Car Loan

    Fixed, Secured, Excellent Credit Score [832+]

    Interest rate
    comparison rate
    Monthly repayment
    7.29% p.a.to 7.79% p.a.
    8.00% p.a.to 8.50% p.a.based on $30,000
    over 5 years

    Enjoy a quick application process and no monthly fees on NRMA new car loans. Finance also available motorcycles, caravans and motorhomes. Low fixed interest rates with terms of up to seven years. Plus, NRMA Blue Member benefits apply so you could enjoy even lower rates as an NRMA Member**.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 7.29% would cost $36,387.95 including fees.

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  • New Car Loan - Special

    Including Demo, Variable, Secured

    Interest rate
    comparison rate
    Monthly repayment
    7.74% p.a.
    8.85% p.a.based on $30,000
    over 5 years

    Low variable car loan rate for purchasing new and demo vehicles from dealers. Extra low rate for qualifying homeowners. Personalised loan amounts between $5,000 and $150,000. Flexible repayment options. Choose between the 3 to 7 year loan terms. Good credit history. Stable employment history and Australian citizenship or PR required.

    Repayment terms from 3 years to 7 years. Representative example: a 5 year $30,000 loan at 7.74% would cost $37,153.94 including fees.

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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.

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