Posted on January 22, 2018.
Used-car dealers avoid paying GST and providing warranty by advertising cars as their own
Some second-hand car dealers are posing as direct sellers to sell their cars in a bid to avoid their warranty obligations under the “lemon law” and to avoid paying the goods and services tax.
In these cases, the second-hand car dealers or their salesmen advertise the cars online as theirs, without telling prospective buyers upfront that they are in fact car dealers or that they are selling the cars on behalf of owners – what the industry calls “consignment cars”.
Second-hand car dealers resort to these tricks because it is easier to sell these cars and they earn more from the sales, said an industry source that tipped The Straits Times off to the practice.
“Buyers are more trusting when they buy cars from direct sellers and they won’t ‘low ball’ them, so as not to offend them,” the source said, referring to how some prospective buyers offer low prices.
“These dealers also earn more money, at least one or two thousands dollars more, because they don’t provide warranty,” he added.
Under the Consumer Protection (Fair Trading) Act introduced in 2012, or what is commonly called the “lemon law”, second-hand car dealers are required to provide a six-month warranty to cover the cars they sell. But direct transactions between buyers and sellers are not covered by the law.