SINGAPORE - Contrary to popular belief, most used car dealers welcome the lemon law because they expect it to weed out unscrupulous operators and improve their business.
"Business will be better because the lemon law will force out those fly-by-night dealers," said Raymond Tang, the honorary secretary of the Singapore Vehicle Traders Association.
"A trader who is doing honest business is protected under the lemon law and he will have more business because more people will want to buy from him."
Mr Tang says that initially, the SVTA's more than 390 members were worried about the implementation of the lemon law on Sept 1.
But after the association drew up a pre-purchase inspection checklist, their fears were allayed.
Called the Standard Vehicle Assessment Report, the inspection requires 54 visual, equipment and road test checks to be jointly carried out by the dealer and customer to make the transaction "transparent".
"This checklist protects the trader at the point of sale because we prove to the consumer that what he or she is buying is in good condition and he has accepted it," says Mr Tang. "So if there are any problems later, the consumer has to prove it existed before the purchase."
Under the lemon law, if a product is found to be defective within six months of purchase, the seller is obliged to repair, replace, or refund the price.
Wear and tear is not covered under the law.
"Dishonest traders will not want to take the risk, and consumers will patronise the more honest dealers for peace of mind," declares Mr Tang.
But he clarifies that the lemon law only applies to business-to-consumer or B-to-C transactions. "Some consumers have a misconception that the lemon law also protects consumer-to-consumer sales," says Mr Tang. So if one individual is selling his vehicle to another individual in a private sale, there is no protection under the lemon law. Neither does the law, which is an amendment to the Consumer Protection (Fair Trading) Act, cover a business-to-business sale, for example, between a dealer and a transport company.
But Mr Tang says that if a C-to-C deal involves a finance company because the buyer is taking a loan to purchase the vehicle, then the lemon law is applicable.
As the rightful owner of the car, the finance company is held liable if there are claims.
The bank assumes the same responsibility in a B-to-C transaction if the customer of a used car dealer requires vehicle financing.
"So now, bankers have to open their eyes and choose which dealers they want to work with," said Mr Tang. "This will benefit dealers who are honest."
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