Legislation and useful terms


Several areas of law relate to buying a car. These include the laws of contract, credit and fair trading. The main terms such as ‘roadworthiness certificate’ are defined. Car purchases involve hidden costs such as transfer fees and registration.

Key legislation

Several areas of law relate to buying a car. These include the laws of contract, credit and fair trading. The major pieces of legislation related to buying cars are the:

Motor Car Traders Act 1986 (Vic);

Motor Car Traders Regulations 2008 (Vic);

Personal Property Securities Act 2009 (Cth);

Road Safety Act 1986 (Vic); and

Road Safety (Vehicles) Regulations 2009 (Vic).

The Motor Car Traders Act 1986 (Vic) (“MCT Act”) deals with the rights and obligations of purchasers and motor car traders, including rights related to minimum standards of documentation and used car warranties. It also provides for the licensing of motor car traders.

The Personal Property Securities Act 2009 (Cth) (“PPS Act”) sets up the Personal Property Security Register (PPSR), which enables a purchaser to check whether anyone other than the seller (e.g. a finance company) has an interest in the car. You should check the PPSR if buying a used car privately.

Finally, the relevant provisions of the Road Safety Act 1986 (Vic) (“RSA”) and the Road Safety (Vehicles) Regulations 2009 (Vic) (“RSV Regulations”) deal with the sale of cars, vehicle registration, written-off vehicles and roadworthiness certificates. The Roads Corporation (trading as VicRoads) also issues Business Rules, some of which may relate to this chapter.

Unless otherwise specified, this text applies to the purchase of both new and used cars.


From 1 July 2015, the value of 1 penalty unit (pu) is $151.67. For more information, seeA note about penalty units”.

Some useful terms and definitions

Seller: The person disposing of the car (the car is usually registered in the seller’s name).

Purchaser: The person acquiring possession of the car.

Transfer of registration/disposal and acquisition: This includes sale, gift, inheritance or delivery of the car in accordance with a court order (reg 74 RSV Regulations).

Motor car trader: A person who carries on the business of trading in cars (s 3 MCT Act). A motor car trader must be licensed (s 7). You can tell if a seller is a licensed motor car trader by checking for signs at the dealership and advertisements with “LMCT” followed by the trader’s licence number. A supposedly private seller may be deemed to be trading in cars and therefore caught by the provisions of the Act, if they sell four or more cars in a 12-month period (s 7A).

Registration certificate: This is issued by VicRoads. It shows details including the name and address of the registered operator, the make of the car, its garage address, registration number, VIN (see below), engine or chassis number if there is no VIN, and the date the car is registered until (reg 41 RSV Regulations).

Registered operator: The person or corporation that owns or manages the car (reg 13 RSV Regulations). Note that the Register at VicRoads does not provide evidence of title (s 9B RSA). It records the registered operator as the person responsible for the car (s 3(1)).

VIN: The car’s individual vehicle identification number, which is permanently marked on its frame or chassis.

Roadworthiness certificate: This is issued by a licensed tester (reg 227 RSV Regulations) and is current if it is issued within 30 days before disposal of the car (s 42A(4) MCT Act).

Security interest: This is an interest in or power over goods (such as a goods mortgage over a car bought on finance) to secure the payment of a debt or other obligation.

PPSR: The Personal Property Security Register, which records details of security interests in relation to vehicles.