Car traders have a legal obligation to treat their customers fairly. After all, nobody wants to buy a ‘lemon’; we all want decent cars at fair prices.
At best, selling poor-quality cars will lead to a bad reputation. At worst, you could be endangering the life of the driver, their passengers, or members of the public.
For these reasons, it is vital to:
- Accurately describe the vehicles you sell.
- Ensure you meet your legal obligations.
If you mislead a buyer or mis-sell a car, you could end up in court. That is not good for your bank balance, your health, or your reputation.
This guide explains your responsibilities as a car dealer, including:
- How to advertise cars
- ‘Sold as seen’ or ‘no refund’ descriptions
- Dangerous or unroadworthy cars
- Checking your customers are genuine
- The paperwork needed to complete a sale
The law says a car sold must be ‘as described’ – so stick to the facts.
You need to make sure that the description is truthful and free from subjective wording.
Describe the vehicle accurately
- 2010 Ford Mondeo 2.0 TDCi
- Electric Blue
- 2 litre diesel, manual 6 speed gearbox
- 99,280 miles
- 5 doors
- 2 previous owners
- HPI checked
- MOT until Nov 2021
- Part service history
- New tyres and exhaust fitted July 2020
- Sat nav
- Climate control
- Cruise control
- Leather seats
- Heated mirrors
- All inspections welcome
- Finance available
This description leaves nothing to interpretation, so the buyer knows exactly what they are getting. Avoid using phrases like ‘runs like new,’ ‘factory condition,’ ‘excellent condition’, or similar.
Take lots of photographs with a high-quality camera
This is your chance to show off the car in its best light. However, don’t forget to photograph visible damage to the vehicle. An older vehicle may display signs of wear and tear, but a purchaser should expect that. If any damage is photographed, the purchaser is aware of the issue before they buy it.
Create video footage if possible
Sharing a video to potential buyers will help secure a sale and visibly indicate the condition of the car.
Declare if the vehicle has previously been written off
If you are selling a car that has been written off (e.g. has category N damage), the advert should explicitly state this. It is illegal to misrepresent the vehicle you are selling.
When it comes to pricing your vehicle, account for the age, condition, and service history compared to similar models available in your area. If the vehicle is described correctly and priced reasonably, buyers will be happy that the car is of satisfactory quality.
By law, any car you sell must be of satisfactory quality, fit for purpose, and as described.
Trading Standards give any buyers time to reject a car from a motor trader and ask for a full refund (usually 30 days). Buyers can also choose to have a vehicle repaired or replaced if they are unhappy with it.
A car that is sold online by a dealer is subject to additional protections in England and Wales under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. This law allows for the return of the vehicle within 14 days if the buyer cancels their contract. You could advertise this as a benefit if you are unable to offer a test drive, or are only doing virtual test drives (under coronavirus pandemic restrictions, for example).
What is ‘sold as seen’?
Previously, some car dealers have attempted to use ‘sold as seen’ or ‘no refunds’ (especially on second-hand cars) to minimise their liability. However, according to Trading Standards, no vehicles can legally be ‘sold as seen’.
As you are selling a car under a legally-binding contract, adding ‘sold as seen’ or ‘no refunds’ to an advert provides no legal protection to you as a seller. It is therefore vital that your description of what you are selling is accurate, so the buyer can’t argue about unforeseen issues.
It is legal to sell an unroadworthy car. However, cars that have been written off under category A should only ever be sold as scrap. Likewise, category B cars can only donate safe and serviceable parts.
Insurance write-off categories:
- Category A – the entire car should be crushed, as it is too severely damaged.
- Category B – the vehicle has been significantly damaged, so the bulk of the car should be crushed, but salvageable parts can be re-claimed.
- Category S or Category C – the car has had structural damage; for example, the chassis or crumple zone, and needs to be repaired by a professional.
- Category N or Category D – the vehicle has not sustained structural damage. Still, it may have damage to non-structural elements, such as brakes or steering, which will need to be repaired. Cosmetic damages do not need to be repaired.
The important thing is to tell the buyer that the vehicle is unroadworthy, and the reasons why.
Do not omit anything serious from your vehicle description, as there are serious legal consequences if you mislead consumers.
Unroadworthy or dangerous vehicles include:
- MOT failures.
- Vehicles written off with any category of damage and not repaired (or been deemed irreparable).
And serious issues with:
An unroadworthy or dangerous vehicle can endanger lives and lead to substantial injury claims.
If a car is sold as unroadworthy, you must not allow the purchaser to drive the vehicle away. Instead, it should be towed or transported safely.
Sometimes, classic cars are sold as “unroadworthy.” Older vehicles may not need an MOT, but there is still a legal need for them to be roadworthy for use on public highways. People expect to have to restore older vehicles and will pay a premium for the rarity of owning a classic car.
You need to protect consumers, but you also need to protect yourself when selling cars. Here are a few tips that you can follow to stay safe:
- Meet the buyer in person wherever possible.
- Never pay anyone up-front for the costs of transporting a car. If they are serious about buying it, they will pay for before they transport the vehicle.
- Do not respond to any emails with requests to enter sensitive information, such as bank details.
- Ensure funds have cleared and are available in your bank account, or cash has been validated as genuine, before handing over the car and paperwork.
- If you intend to provide vehicle finance, you need authorisation by the FCA and the appropriate paperwork completed with your finance provider. The customer agreement will generally be with the finance provider. Still, this contract can also be cancelled if the customer returns the vehicle within an initial ‘cooling-off’ period (typically 14 days). Make sure this agreement is completed successfully before handing over the car.
- If allowing test drives, accompany the driver where safe to do so. If it is not possible to do this, make sure you have run through the appropriate checks, including a scan of their driving licence. Take a refundable deposit if possible.
- Finally, ensure you have accompanied (or unaccompanied) demonstration insurance cover on your motor trade policy.
When selling a car, the following documents are required:
- V5C registration certificate
- Service history
- Receipts for vehicle repairs and servicing
- MOT certificate
- Your contract of sale, and any financial documents
After the sale
After selling a vehicle, you will need to send the tear-off part of the V5C document with the buyer’s details to the DVLA. If you do not do this, you will remain legally responsible for the vehicle, including parking and speeding offences committed!
As any car sale from a dealer is subject to a legal contract, the buyer can still reasonably refuse the vehicle or insist on repairs within a limited time after purchase (usually 30 days).
Wear and tear issues are generally not covered under any form of warranty, but serious problems that affect the vehicle (such as faulty brakes, power steering or chassis issues) will be.
Ensuring the vehicle is correctly advertised should ensure your sale goes through successfully and your customer is happy – the perfect outcome!