# Can I sue the finance company for a faulty car if they didn't sell it to me directly?

- Jurisdiction: Australia
- Practice area: Consumer Law
- Published: 2026-11-02
- Last updated: 2026-11-02
- Canonical: https://lawasked.com/au/consumer-law/can-i-sue-finance-company-faulty-car-if

## Question

I am living in Victoria and I am feeling quite stuck regarding a car purchase I made last month. On 12 October, I went to a local dealership in Melbourne to look at a second-hand SUV. I negotiated the entire price and deal with the dealer, and they arranged for a third-party finance company to handle my loan. I never actually spoke to the finance company or saw them in person; they just provided the credit so I could drive the car away. The total cost was $22,000, and my monthly repayments are quite high. Unfortunately, about two weeks ago, the engine completely failed due to a major manufacturing fault that was present at the time of sale. I have already spoken to the dealership, but they are being very difficult and claiming that because I have a finance agreement, I need to take it up with the bank instead. I tried calling the finance company, but they told me they aren't responsible for the mechanical quality of the vehicle and that I have to deal with the dealer myself. I am confused about who is actually responsible for my financial loss. If the car is a lemon, can I legally demand that the finance company pays me back for the faulty goods, or am I strictly limited to suing the dealership?

## Summary

No, you likely cannot sue the finance company for the engine fault. Because you negotiated the deal with the dealer and the finance company did not take possession of the car, this is a non-linked credit contract, meaning the finance company is not liable for the mechanical quality of the goods [cite:au-competition-consumer-2010-sch2-sec287].

## Analysis

Based on the details provided, your situation involves a 'non-linked credit contract.' This is a type of loan where the person providing the credit (the finance company) is not closely connected to the person selling the goods (the dealership) [1]. 

Under the law, specifically Section 287, the finance company is protected from being held responsible for the quality of the car you bought. The Act states that if a consumer "suffers loss or damage as a result of a failure to comply with a guarantee... in relation to a supply to which the contract relates, the credit provider... is not under any liability to the consumer for the amount of the loss or damage" [1]. This means that because the engine failure is a breach of consumer guarantees regarding the quality of the SUV, the finance company is not legally required to pay you back for that loss. 

Your situation meets the criteria for a non-linked contract because: 
1. You negotiated the price and deal directly with the dealership [1]. 
2. The finance company is not a 'linked' provider (they are a third party) [1]. 
3. The finance company did not take physical possession of the SUV before it was delivered to you [1]. 

While the dealership is trying to deflect you, the law actually supports your right to pursue them. The statute clarifies that the lack of liability for the finance company "does not prevent the consumer from recovering that amount by action against the supplier of the goods or services to which the contract relates" [1]. Therefore, your legal path for the $22,000 value and the engine repair lies with the dealership, not the bank. 

Note that state, provincial or local laws in Victoria may add further consumer protection rules, so you should check Victorian consumer affairs guidelines.

## Statutory citations

- Competition and Consumer Act 2010 (Schedule 2 ACL), Schedule 2, Section 287 - Liability of suppliers and credit providers relating to non ‑ linked credit contracts [in force] (https://www.legislation.gov.au/C2004A00109/latest/text)
  > If a consumer who is a party to a non ‑ linked credit contract suffers loss or damage as a result of a failure to comply with a guarantee... the credit provider who is a party to the contract is not under any liability to the consumer for the amount of the loss or damage.
- Competition and Consumer Act 2010 (Schedule 2 ACL), Schedule 2, Section 287 - Liability of suppliers and credit providers relating to non ‑ linked credit contracts [in force] (https://www.legislation.gov.au/C2004A00109/latest/text)
  > Subsection (1) does not prevent the consumer from recovering that amount by action against the supplier of the goods or services to which the contract relates.

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