There are Provisions within the Code to ensure the credit provider gives you information on:

• the credit providers name
• the amount of credit that is to be provided
• the annual percentage rate/s
• how the interest is calculated and when it is charged
• the amount of interest if the contract is to be paid within 7 years
• any enforcement expenses that may become payable
• the credit fees and charges to be paid
• how you are to be informed about changes to the contract
• any default rate of interest and how this is to be calculated
• the frequency of account statements
• relevant commission charges
• whether a mortgage or guarantee applies
• any related insurance financed under the contract
• any commission to be paid by or to the credit provider.

This information must be presented in a pre-contractual statement prior to you entering into the contract. You must also be provided with an information statement that outlines your rights and obligations.

Changing the contract

Your credit provider can only change the contract if there is specific provision in the contract for changes. Notification of changes may be made in the following manner:

• Interest rate charges may be published in the newspaper, and only require one day’s notice.
• If the interest rate change affects your liabilities such as increased repayments, 20 days notification must be given.
• 20 days notification must be given for changes to credit fees and charges.

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You can end a credit contract before the money comes through, or by giving your notice in writing. Guarantors can withdraw before the credit is given, or at any time if the credit contract differs materially from the proposed credit contract or the pre-contractual statement.

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From 28 January 2003 a one day, waivable cooling off period was introduced for purchases of new and used cars where the purchase is financed by a linked credit arrangement. Linked credit is where finance for the purchase is provided by or facilitated by the motor dealer selling the vehicle.

The cooling off period will be given effect by the commencement of Schedule 1 [39] of the Motor Trade Legislation Amendment Act 2001 and the Motor Dealers Amendment (Cooling Off Periods) Regulation 2002 (amending Motor Dealers Act 1974  - Sections 29CA-29CD; and Motor Dealers Regulation 1999 - Clause 41A). Copies of the legislation may be purchased from the Government Information Service or downloaded from www.legislation.nsw.gov.au.

How does a purchaser 'cool off' from a purchase?

A purchaser may terminate the contract by giving written notice to the dealer during the cooling off period. The notice of termination must be signed, either by the purchaser or the purchaser’s solicitor or barrister. The right to terminate a contract may be exercised even though the purchaser has taken delivery of the motor vehicle concerned.

What does ‘cooling off’ cost?

On termination of the contract the purchaser is liable to pay the dealer $250 or 2% of the purchase price, whichever is the lesser. This means 2% of the purchase price for cars priced $12,500 or lower and $250 for all cars over $12,500.

When does the cooling off period apply?

The cooling off period only applies to purchases of cars by linked credit.

What is linked credit?

Linked credit is where finance for the purchase is provided by or facilitated by the motor dealer selling the vehicle. Linked credit has the same meaning as in the Consumer Credit (New South Wales) Code.

When does the cooling off period not apply?

There is NO cooling off period for sales:

• of motor vehicles other than cars (eg motor bikes, farm equipment);
• of commercial vehicles;
• at an auction;
• paid for by cash;
• on credit other than linked credit. (The cooling off period does not apply where credit is provided by a finance institution contacted directly by the purchaser, that is, where the dealer does not provide, arrange or facilitate the credit);
• where credit is provided by a linked credit provider of the dealer but the provision of credit is not arranged or facilitated by the dealer;
• made by a motor dealer to a trade owner.

When does the cooling off period begin and end?

The cooling off period begins when the contract is signed (entered into) and ends at 5pm on the next day on which the dealer carries on business with the public. However, if the dealer closes for business before 5pm on that day, the cooling off period ends at the close of business on the next day the dealer is open for business following that day.

Example A: a dealer is open for business 9am to 6pm Monday to Saturday and 11am to 3pm on Sunday. If a contract to purchase was signed on Friday the cooling off period would end at 5pm on Saturday.

Example B: a dealer is open for business 10am to 7pm Monday to Friday, 10am to 3pm on Saturday and closed Sunday. If a contract to purchase was signed on Friday the cooling off period would end at 7pm on Monday.

Example C: a dealer is open for business 9am to 4pm Monday to Friday, 10am to 4pm on Saturday and closed Sunday. If a contract to purchase was signed on Saturday the cooling off period would end at 4pm on Tuesday.

Does the dealer have to advise the purchaser of the cooling off period?

Yes, the notice of a purchaser’s right to the cooling off period must be included in the contract. The notice must be in the prescribed form. The prescribed form is Form 20 in the Motor Dealers Regulation 1999.

Can the cooling off period be extended?

The cooling off period may be extended by a provision in the contract of sale or by agreement with the dealer.

How is the cooling off period ‘waived’?

The cooling off period can only be waived by the purchaser signing the prescribed form. The prescribed form is Form 21 in the Motor Dealers Regulation 1999.

What happens to the purchased vehicle during the cooling off period?

The purchaser is not entitled to possession of the motor vehicle during the cooling off period, unless the purchaser and the dealer agree. If they agree and the purchaser ‘cools off’, the purchaser will be liable for any damage to the motor vehicle while it was in the purchaser’s possession, other than fair wear and tear.

What happens to any ‘trade-in’ vehicle during the cooling off period?

A dealer must not sell, give in exchange or otherwise dispose of a trade-in, or any interest in or related to a trade-in, given or agreed to be given by a purchaser under a contract during the cooling off period. If the purchaser ‘cools off’ from the purchase, the dealer must return to the purchaser any ‘trade-in’ vehicle. The dealer is liable for any damage to the ‘trade in’ vehicle other than fair wear and tear.

What happens if the contract is cancelled and either the ‘trade-in’ or purchased vehicle cannot be driven?

A purchaser or dealer is not liable to return a motor vehicle as required by the legislation if the purchaser or dealer is unable to return it because of a defect in the car, not caused by the purchaser or dealer, that has rendered the motor vehicle incapable of being driven or unroadworthy. The purchaser or dealer must, however, permit the collection, or arrange for the collection, of the motor vehicle.

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