Buying a lemon in New Zealand, your rights and the Motor Vehicle Disputes Tribunal

Last updated 23 June 2026. This is general information, not legal advice.

You bought a car, drove it home, and within days or weeks something went badly wrong. The gearbox is slipping, the engine light is on, the thing you were told was immaculate is anything but. What you can do about it depends almost entirely on one fact, whether you bought from a registered dealer or from a private seller. This guide explains your rights in both cases, when you can hand the car back, and how the Motor Vehicle Disputes Tribunal works. Everything here ties back to the Consumer Guarantees Act 1993, the Motor Vehicle Sales Act 2003, and guidance from Consumer Protection.

Who you bought from changes everything

There is no “lemon law” in New Zealand in the American sense. Instead, your protection comes from the Consumer Guarantees Act, and that Act only applies when you buy from a business that sells in trade. A registered motor vehicle dealer is in trade. A private individual selling their own car is not.

So the first thing to establish is who sold you the car. If it was a car yard, a dealership, or a trader operating online, you are almost certainly covered. If it was a person selling their own vehicle through a classified listing, you are largely on your own, and the rules are very different. A trader cannot dodge the Act by pretending to be a private seller, and someone who sells cars regularly may be treated as a trader even if they are not registered.

You can check whether a seller is a registered trader on the Motor Vehicle Traders Register. Anyone who sells more than six vehicles in a 12-month period generally has to be registered.

Before you buy, how to avoid a lemon

The cheapest dispute is the one you never have. Before you hand over any money, a few steps weed out most bad cars.

• Get a pre-purchase inspection from the AA or VTNZ. An independent check costing a few hundred dollars can save you thousands.
• Search the Personal Property Securities Register so you know there is no money owing on the car.
• Check the history. Make sure the odometer reading is consistent with the wear and the service records, and check whether the car was imported as a statutory write-off.
• Take it for a proper test drive from cold, and listen for anything that only shows up once the engine is warm.

You may be offered mechanical breakdown insurance at the point of sale. It is optional, it is not a substitute for your Consumer Guarantees Act rights against a dealer, and the exclusions matter, so read the policy before you rely on it.

Your rights when you buy from a dealer

When you buy a car from a dealer, the Consumer Guarantees Act gives you a set of guarantees that the dealer cannot remove. The three that matter most for a used car are these.

Acceptable quality. The car must do what it is meant to do, be safe, be free of minor defects, and last a reasonable time, taking into account its age, price and mileage. A 15-year-old car with 200,000 kilometres is held to a different standard than a near-new one, but it still has to be roadworthy and reasonably durable for what it is.

Fit for purpose. If you told the dealer you needed the car for something specific, towing a boat, for example, it has to be suitable for that.

Matches its description. If the car was advertised as having a full service history, one owner, or no accident damage, it has to actually be that.

If the car fails one of these guarantees, the dealer is responsible for fixing the problem, and you do not pay for the repair. The age and price of the car affect what counts as acceptable quality, but they do not remove the guarantee. Crucially, a dealer cannot contract out of the Act for a consumer sale. A “sold as is where is”, “no returns” or “no warranty” sign has no effect on your statutory rights, and a trader who tries to rely on one is committing an offence under the Fair Trading Act.

When you can reject the car

Not every fault lets you hand the car back. The law splits problems into two kinds.

A minor fault is one that can be put right. Here the dealer has the right to repair it within a reasonable time, at their cost. You cannot demand a refund for a small, fixable problem on the first go. But if the dealer refuses to fix it, takes too long, or cannot fix it after a fair chance, you can then have it repaired elsewhere and recover the cost, or reject the car.

A failure of a substantial character is the serious category. This is a fault so significant that a reasonable buyer would not have bought the car had they known about it, or that makes the car unsafe or substantially unfit. For a substantial failure you have the right to reject the car outright and choose either a full refund or a replacement of similar value. You do not have to give the dealer a chance to repair it first.

To reject a car, tell the dealer in writing that you are rejecting it, give the reason, and say whether you want a refund or a replacement. Stop driving it where you safely can, and return it or make it available for collection. You must reject within a reasonable time of the fault becoming apparent, so do not sit on it. Keep copies of every report, invoice and message.

The Motor Vehicle Disputes Tribunal

If you bought from a registered trader and cannot resolve the problem directly, your forum is the Motor Vehicle Disputes Tribunal. It is a specialist tribunal that deals only with disputes about vehicles bought from registered traders, or from someone who should have been registered. The vehicle must have a gross weight of less than 3,500 kilograms, which covers ordinary cars, utes and vans.

The Tribunal can hear claims up to $100,000, and more if both sides agree in writing. The application fee is $87, rising to $89 from 1 July 2026, and it is not refundable. You do not need a lawyer. The Tribunal has an adjudicator and a technical assessor with motor industry expertise, which is a real advantage when the dispute turns on a mechanical question.

Before you apply, complain to the trader in writing and give them a genuine chance to put it right, then gather your evidence, the advertisement, the purchase agreement, any rejection letter, repair invoices and an independent mechanic’s report. You apply on the Tribunal’s application form, online, in person at a court, or by post. The decision is binding on both parties. If you disagree with it, you can appeal to the District Court, generally within 10 working days. For larger awards the appeal can cover the facts and the law, while for smaller ones it is limited to whether the process was fair.

Buying privately, why it is buyer beware

Buying from a private seller is cheaper for a reason. The Consumer Guarantees Act does not apply, and neither does the Fair Trading Act, because the seller is not in trade. There is no acceptable quality guarantee, no right to a free repair, and no access to the Motor Vehicle Disputes Tribunal. The principle is buyer beware. If the car turns out to be a dud, that is generally your risk.

There is one important exception. A private seller is not allowed to lie to you. If they actively misrepresented the car, told you it had never been in a crash when it had, or wound back the odometer, you may have a claim for misrepresentation under the Contract and Commercial Law Act 2017. Winding back an odometer is also a separate offence. The forum for a private-sale dispute is the Disputes Tribunal, which hears claims up to $60,000. The fee depends on the amount claimed, from $61 for small claims up to $468 for the largest.

The practical lesson is to do your homework before you hand over the money for a private sale. Get a pre-purchase inspection from the AA or VTNZ, take it for a test drive, and check the history. Once the deal is done, your options are limited.

Money owing and the PPSR

One trap catches buyers in both dealer and private sales, a car with money still owing on it. If the previous owner took out a loan secured against the car and has not paid it off, the lender can in some cases repossess the car even after you have bought it.

Protect yourself by searching the Personal Property Securities Register before you buy. A search costs a few dollars and tells you whether there is a security interest registered against the vehicle. When you buy from a registered dealer, the dealer must disclose any money owing on the vehicle on the Consumer Information Notice, and you are protected if they fail to. You are also protected where the security interest was not registered at the time you bought, where the recorded information was wrong, or where the car was worth under $2,000 when the loan was taken out. But if you search, see a registered interest, and buy the car anyway, you are not protected. So never buy a car with money owing unless the debt is being cleared as part of the sale. For private sales the PPSR search is essential, because there is no dealer standing behind the deal.

The practical playbook

One. Confirm who you bought from. Check the Motor Vehicle Traders Register. Dealer means Consumer Guarantees Act cover. Private means buyer beware.

Two. Write it down. Put the fault in writing to the seller, with dates, and say what you want, a repair, a refund, or a replacement.

Three. Get an independent report. A written report from a qualified mechanic identifying the fault and its likely cause is the single most useful piece of evidence.

Four. Use the right category. Minor fault, the dealer gets to repair it. Substantial failure, you can reject and choose a refund or replacement.

Five. Escalate to the right tribunal. Dealer dispute goes to the Motor Vehicle Disputes Tribunal. Private-sale dispute goes to the Disputes Tribunal.

Six. Keep paying any finance. If you have a car loan, keep up the payments while the dispute runs, so a separate default does not make things worse.

Free help when you need it

• Consumer Protection on 0508 426 678 explains your rights under the Consumer Guarantees Act and Fair Trading Act.
• Citizens Advice Bureau on 0800 367 222 gives free, confidential advice.
• Community Law Centres provide free legal help and a detailed consumer manual.
• Motor Vehicle Traders Register to check whether a seller is a registered trader.

Frequently asked questions

Can I return a used car after buying it in New Zealand

If you bought from a registered dealer and the car has a serious fault, a failure of a substantial character, you can reject it and demand a refund or replacement under the Consumer Guarantees Act. For a minor fault the dealer gets to repair it first. If you bought privately there is generally no right to return the car unless the seller misled you.

Does the Consumer Guarantees Act cover private car sales

No. The Consumer Guarantees Act only applies when you buy from a business selling in trade, such as a registered motor vehicle dealer. Private sales are buyer beware. Your only real protection in a private sale is that the seller must not lie to you, and a dispute goes to the Disputes Tribunal rather than the Motor Vehicle Disputes Tribunal.

Is sold as is where is legal in New Zealand

Not for a normal consumer sale by a dealer. A dealer cannot contract out of the Consumer Guarantees Act for a consumer, so “sold as is where is” and “no refunds” signs do not remove your rights, and using them is an offence under the Fair Trading Act. The phrase has more force in genuine private sales and trade or auction sales, where the Act does not apply in the same way.

How much does the Motor Vehicle Disputes Tribunal cost

The application fee is $87, rising to $89 from 1 July 2026. The fee is not refundable. The Tribunal hears claims up to $100,000 about vehicles bought from registered traders, you do not need a lawyer, and its decisions are binding.

What counts as a serious fault in a used car

A failure of a substantial character is one a reasonable buyer would not have accepted had they known about it, or that makes the car unsafe or substantially unfit. Major engine, transmission or structural problems usually qualify. Acceptable quality is judged against the car’s age, price and mileage, so an old, cheap car is held to a lower standard than a near-new one, but it still has to be safe and reasonably durable.

Should I check the PPSR before buying a car

Yes, especially for a private sale. A Personal Property Securities Register search costs a few dollars and shows whether there is money owing against the car. If you buy a car with an unpaid secured loan, the lender may be able to repossess it. A search protects you from inheriting someone else’s debt.

Is there a lemon law in New Zealand

No. New Zealand has no standalone lemon law. The job a lemon law does in some other countries is done here by the Consumer Guarantees Act, which makes a dealer responsible for a faulty car, and by the Motor Vehicle Disputes Tribunal, which enforces those rights. Private sales are not covered.

What if the dealer has gone out of business

Your Consumer Guarantees Act rights are against the trader, so if the trader has been liquidated they are hard to enforce. The Motor Vehicle Disputes Tribunal can still hear a claim, but a paper win is worth little if there is no business left to pay it. This is one reason to buy from an established registered trader, ideally a Motor Trade Association member, and to check the Motor Vehicle Traders Register before you buy.

Have you had to fight a dealer or seller over a dud car? Tell us what happened, and what the Tribunal decided, in the comments below.