Consumers take out loans for lemons as dodgy used car sales surge in Queensland

A North Queensland mother who took out a $10,000 loan to buy a used family car says she feels helpless after having to pay off a debt for a non-working vehicle.

Michelle Thomas’ experience is one of a growing number of cases piling up before Queensland’s Office of Fair Trading (OFT) over used car sales, with consumer advocates saying vulnerable people are the most victimized.

Prolonged supply chain shortages in the global automotive industry since the onset of the COVID-19 pandemic have led to strong demand for used cars.

Ms Thomas said she bought her dream seven-seater car in Cairns in April for her large family, but her joy was cut short when it broke down a week later.

“There was something wrong,” she said.

“I just felt it, you know. I’ve been driving for over 20 years.”

Michelle Thomas admits she should have done more checking before buying the car.(Provided: Michelle Thomas)

Ms Thomas said she took her car to a mechanic a few weeks after purchase and found it had a major oil leak.

“They couldn’t diagnose the problem without cleaning all the oil out from under the engine,” she said.

“It would have cost me $1,600 and I didn’t have that kind of money lying around.”

She admitted that she had not carried out the necessary mechanical checks recommended before purchase, but had paid for an extended warranty.

Ms Thomas said after constant back and forth with the dealership, her car had been sitting at the dealership for months.

“Since then I’ve been waiting for them to fix it,” she said.

“I’m paying the loan and I’ve paid this extended warranty and it’s almost over.

“It’s been six months since I bought the car.”

A row of cars sits at a car dealership.
The OFT says the motor industry accounts for a large percentage of its annual complaints.(AAP: Patrick Hamilton)

Thousands of complaints statewide

The OFT said the car industry was one of the most criticized sectors in the state.

Across Queensland, it had received more than 13,000 complaints over the past five years, including 792 from Townsville and Cairns.

There were 34 lawsuits statewide during this period relating to the auto industry.

Jillian Williams of the North Queensland-based Aboriginal Consumer Support Network said the organization had been getting more and more calls from used car buyers.

“Right now it’s almost once a week,” Ms Williams said.

“It certainly happens very regularly on our doorstep – people struggling with a car loan or with a car they bought that broke down a few months after buying it.”

A close up of a white car
Michelle took out a $10,000 loan to pay for the car.(Provided: Michelle Thomas)

The consumer support group said people were particularly vulnerable because the used car market was so hot.

“In many cases we find that the cars themselves are very poor quality and not worth the cost or sale price they were sold for and they break down very quickly,” Ms Williams said.

“So people end up with a car they can’t drive and a loan they can’t pay back.

“I think some dealerships are definitely taking advantage of people who just don’t know about it.

“Most people in the community don’t know how to check whether a car is good quality or not. That’s a pretty expert area.”

The dealer responds

The car dealer Ms Thomas bought her car from said each vehicle had been independently inspected for a certificate of inspection.

“It is important to remember that we are selling used vehicles, which may be older vehicles and therefore more prone to problems,” a spokesperson said.

“We do our best to rectify any issues brought to our attention as soon as possible.

“There are three common problems we have with vehicles that break down after purchase: filling up with water when the car overheats and not fixing the problem early on; not checking the oil properly and overfilling the engine; and electrical problems.”

He said the majority of vehicles that have been sitting in their yard “for any length of time have not been under legal warranty and have in fact been misused by the customer.”

Lemon laws introduced

The Queensland Government introduced lemon laws in 2019 in a bid to provide better protection for people who buy used cars, but Ms Williams said the process of filing a claim in Civil Court and Queensland Administrative Authority (QCAT) was not straightforward.

She said the introduction of an ombudsman to investigate complaints would help.

“It should be free to the consumer with in-house mechanical experts who can inspect the vehicle,” Ms Williams said.

“The decisions must be binding on the concessionaire.”

woman in purple shirt and sunglasses on her head
Michelle Thomas says she ended up with huge debt and a car that didn’t work.(Provided: Michelle Thomas)

Calls to Action

Consumer advocacy group Choice has looked into the matter and is calling for action to clean up the industry.

“[And] firmer and more consistent action by the OFT in Queensland against dealers who have received multiple complaints over many years,” Choice spokesman Jarni Blakkarly said.

“The same dealers come back again and again.

Mr. Blakkarly said the federal government also had a role to play.

“The government is currently looking to legislate tougher penalties under consumer safeguards where businesses fail to comply with Australian consumer law,” he said.

“So that’s something that could also potentially help people in that situation.”

Waiting in limbo

In the meantime, Ms Thomas borrowed a small car as she remained in limbo in her own vehicle.

“To be honest, I don’t know what to think. I’m just waiting,” she said.

She hopes others can learn from her experience.

“Just be careful where you buy cars from,” Ms. Thomas said.

“Take it for a test drive and get a check.”

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