Online car-buying risk

Scammer alert: CAB Queenstown manager Rachel Reece warns people of the hidden risks in privately purchasing vehicles online

As the number of locals being stung by dodgy car purchases rises, Queenstown’s Citizens
Advice Bureau (CAB) boss warns it’s a case of ‘buyer beware’.

Rachel Reece says CAB’s seeing a resurgence of people being scammed through private vehicle sales through online platforms like Facebook Marketplace — buyers are paying cash for cars advertised as fully-functional, but once they own it they’re finding mechanical issues and, in some situations, getting stung down the track by finance companies.

‘‘A lot of people are losing money because they’re buying cars that aren’t roadworthy.

‘‘And then they want to try and track back the person they bought it from, and the person
doesn’t return the call or has blocked them.

‘‘A big consequence for some people … they buy a car for, say, $10,000 and happily drive it around and then two or three months down the track a finance company approaches them and says there’s $15,000 owing on your car.’’

Reece believes often the car has been on-sold several times from the person who originally borrowed money on the vehicle, but it’s the current owner of the car that inherits the debt.

‘‘The thing is the person at the end of that chain is the one that carries the can.’’

There’re limited options for people in this situation, Reece says.

‘‘You either pay off the debt with the finance company, or cut your losses and get them to repossess the car.’’

There aren’t regulations for online marketplaces to keep people honest and, because the deals are being done privately, there’s no legal protection in place for the purchaser if the vehicle turns out to be a dud, she says.

While buyers of cars with mechanical issues can lodge an application with the Disputes Tribunal, a positive outcome isn’t easy, and a buyer needs the seller’s address to make the claim stick.

‘‘They’ve spent all their money on a car that’s of no use to them, they’ve basically lost the money … and it’s thousands of dollars to get it fixed, and that’s a really hard pill to swallow.”

She says it’s critical buyers do due diligence before purchasing a car privately, whether it be running an online CarJam check which shows if a car has finance owing or has been stolen, or taking it to a mechanic for a pre-purchase inspection.

Reece encourages people to get as much information as possible about who the seller
is, including their name and address, and get an agreement, even if it’s hand-written.

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