Buying a Used Car
From A Dealer
This year, more than
16 million Americans will buy a used car. If that's what you are
planning, this guide may help you.
It explains your
protections under the FTC's Used Car Rule and offers some shopping
suggestions, even if you are not buying from a used car dealer.
Before you begin
looking at used cars, think about what car models and options you want
and how much you are able or willing to spend. You can learn about car
models, options, and prices by reading newspaper ads, both display and
classified. Also, your local library and book stores have magazines
that discuss and compare car models, options, and costs, as well as
provide information about frequency-of-repair records, safety tests,
and mileage. The U.S. Department of Transportation Auto Safety Hotline
(800-424-9393) will tell you if a car model has ever been recalled and
send you information about that recall.
Before You Look For a
Used Car, Consider:
Costs
Remember, the real cost of a
car includes more than the purchase price: it includes loan terms, such as
interest rates and the length of the loan. If you plan to finance the car,
you need to know how much money you can put down and how much you can pay
monthly. Dealers and lending institutions offer a variety of interest rates
and payment schedules, so you will want to shop for terms. If, for example,
you need low monthly payments, consider making a large down payment or
getting financing that will stretch your payments over five years, rather
than the usual three. Of course, this longer payment period means paying
more interest and a higher total cost.
Reliability
You can learn how reliable a
model is by checking in publications for the frequency-of-repair records.
Find out what models have repair facilities in a location convenient to you
and if parts are readily available at the repair facility.
Dealer Reputation
Find out from experienced
people whose opinions you respect which dealers in your area have good
reputations for sales and service. You may wish to call your local consumer
protection office and the Better Business Bureau to find out if they have
any complaints against particular dealers.
When you go to a dealer for a
used car, look for a "Buyers Guide" sticker on the window of each
car. The Buyers Guide, required by the Federal Trade Commission's Used Car
Rule, gives you important information and suggestions to consider. The Buyers
Guide tells you:
-
Whether the vehicle comes
with a warranty and, if so, what specific protection the dealer will
provide
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Whether the vehicle comes
with no warranty ("as is") or with implied warranties only
-
That you should ask to
have the car inspected by an independent mechanic before you buy
-
That you should get all
promises in writing
-
What some of the major
problems are that may occur in any car.
The Used Car Rule requires
dealers to post the Buyers Guide on all used vehicles, including automobiles,
light-duty vans, and light-duty trucks. "Demonstrator" cars also
must have Buyers Guides. But Buyers Guides do not have to be posted on
motorcycles and most recreational vehicles. Individuals selling fewer than six
cars a year are not required to post Buyers Guides.
Whenever you purchase a used
car from a dealer, you should receive the original or an identical copy of the
Buyers Guide that appeared in the window of the vehicle you bought. The Buyers
Guide must reflect any changes in warranty coverage that you may have
negotiated with the dealer. It also becomes a part of your sales contract and
overrides any contrary provisions that may be in that contract.
"As Is--No
Warranty"
About one-half of all
used cars sold by dealers come "as is," which means there is
no express or implied warranty. If you buy a car "as is" and
have problems with it, you must pay for any repairs yourself. When the
dealer offers a vehicle for sale "as is," the box next to the
"As Is--No Warranty" disclosure on the Buyers Guide will be
checked. If this box is checked but the dealer makes oral promises to
repair the vehicle, have the dealer put those promises in writing on the
Buyers Guide.
Some states
(Connecticut, Kansas, Maine, Maryland, Massachusetts, Minnesota,
Mississippi, New York, Rhode Island, Vermont, West Virginia and the
District of Columbia) do not permit "as is" sales for most or
all used motor vehicles.
"Implied Warranties
Only"
Implied warranties exist
under all state laws and come with almost every purchase from a used car
dealer, unless the dealer tells you in writing that implied warranties
do not apply. Usually, dealers use the words "as is" or
"with all faults" to disclaim implied warranties. Most states
require the use of specific words.
"If the dealer
makes oral promises, have the dealer put those promises in
writing."
The "warranty of
merchantability" is the most common type of implied warranty. This
means that the seller promises that the product will do what it is
supposed to do. For example, a car will run, a toaster will toast.
Another type of implied
warranty is the "warranty of fitness for a particular
purpose." This applies when you buy a vehicle on the dealer's
advice that it is suitable for a particular use. For example, a dealer
who suggests that you buy a specific vehicle for hauling a trailer
warrants, in effect, that the vehicle will be suitable for hauling a
trailer. If you buy a vehicle with a written warranty, but problems
arise that the warranty does not cover, you may still be protected by
implied warranties. Any limitation on the duration of implied warranties
must appear on the written warranty. In those states that do not permit
"as is" sales by dealers, or if the dealer offers a vehicle
with only implied warranties, a disclosure entitled "Implied
Warranties Only" will be printed on the Buyers Guide in place of
the "As Is" disclosure. The box next to this disclosure would
be checked if the dealer chooses to sell the car with implied warranties
and no written warranty.
Dealer Warranties
When dealers offer a
written warranty on a used vehicle, they must fill in the warranty
portion of the Buyers Guide. Because the terms and conditions of written
warranties can vary widely, you may find it useful to compare warranty
terms on cars or negotiate warranty coverage. Dealers may offer a full
or limited warranty on all or some of the systems or components of the
vehicle. A "full" warranty provides the following terms and
conditions:
-
Warranty service
will be provided to anyone who owns the vehicle during the warranty
period when a problem is reported.
-
Warranty service
will be provided free of charge, including such costs as returning
the vehicle or removing and reinstalling a system covered by the
warranty, when necessary.
-
At your choice, the
dealer will provide either a replacement or a full refund if the
dealer is unable, after a reasonable number of tries, to repair the
vehicle or a system covered by the warranty.
-
Warranty service is
provided without requiring you to perform any reasonable duty as a
precondition for receiving service, except notifying the dealer that
service is needed.
-
No limit is placed
on the duration of implied warranties.
If any one of the above
statements is not true, then the warranty is "limited." A
"full" or "limited" warranty need not cover the
entire vehicle. The dealer may specify only certain systems for coverage
under a warranty. Most used car warranties are "limited,"
which usually means you will have to pay some of the repair costs. By
giving a "limited" warranty, the dealer is telling you that
there are some costs or responsibilities that the dealer will not assume
for systems covered by the warranty.
If the dealer offers a
full or limited warranty, the dealer must provide the following
information in the "Warranty" section of the Buyers Guide:
-
The percentage of
the repair cost that the dealer will pay. For example, "the
dealer will pay 100% of the labor and 100% of the parts...."
-
The specific parts
and systems, such as the frame, body, or brake system that are
covered by the warranty. The back of the Buyers Guide contains a
list of descriptive names for the major systems of an automobile
where problems may occur
-
The duration of the
warranty for each covered system. For example, "30 days or
1,000 miles, whichever occurs first"
-
Whether a deductible
applies.
Under another federal
law, the Magnuson-Moss Warranty Act, you have a right to see a copy of
the dealer's warranty before a purchase. Examine the warranty carefully
before you buy to see what is covered and what is not. It contains more
detailed information than the Buyers Guide, such as a step-by-step
explanation of hoax to obtain repairs if a covered system or component
malfunctions. Also check who is legally responsible for fulfilling the
terms of the warranty. If a third party is responsible, the best way to
avoid potential problems is to make sure that the third party is
reputable and insured. You can do this by asking the company for the
name of their insurer and then checking its performance record with your
local Better Business Bureau.
Unexpired
Manufacturer's Warranties
If the used vehicle is
still covered by the manufacturer's original warranty, the dealer may
include it in the "systems covered/duration" section of the
Buyers Guide. This does not necessarily mean that the. dealer offers a
warranty in addition to the manufacturer's. In some cases, a
manufacturer's original warranty can be transferred to a second owner
only upon payment of a fee. If you have any questions, ask the dealer to
let you examine any unexpired warranty on the vehicle.
Service Contracts
When you buy a car, you
may be offered a service contract, which you can buy for an extra cost.
In deciding whether you want a service contract, consider:
-
Whether the warranty
that comes with your car already covers the same repairs that you
would get under the service contract or whether the service contract
protection begins after the warranty runs out. Does the service
contract extend longer than the time you expect to own the car? If
so, is the service contract transferable or is a shorter contract
available?
-
Whether the vehicle
is likely to need repairs and their potential costs. The value of a
service contract is determined by whether the cost of repairs is
likely to be greater than the price you pay for the service contract
protection.
-
Whether the service
contract covers all parts and systems of the car. Check out all
claims carefully. Claims that coverage is "bumper to
bumper" may not be entirely accurate.
-
Whether there is a
deductible required, and, if so, consider the amount and terms of
the deductible.
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Whether the contract
covers incidental expenses, such as towing and the costs of a rental
car while your car is being serviced.
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Whether repairs and
routine maintenance, such as oil changes, can be performed at
locations other than the dealership from which you purchased the
contract.
-
Whether there is a
cancellation and refund policy for the service contract, and what
the costs are if you cancel.
-
Whether the dealer
or company offering the service contract is reputable. Read the
contract carefully to determine who is legally responsible for
fulfilling the terms of the contract. Some dealers sell service
contracts that are backed by a third party. If a third party is
responsible, you may wish to ask if the company is insured and to
check the company's performance with your local Better Business
Bureau.
If a service contract is
offered, the dealer must mark the box provided on the Buyers Guide,
except in those states that regulate service contracts under their
insurance laws. If the Buyers Guide does not include a reference to a
service contract, and you are interested, ask the salesperson whether
one is available.
When you purchase a
service contract from the dealer within 90 days of buying the vehicle,
federal law prohibits the dealer from disclaiming implied warranties on
the systems covered in that service contract. For example, if you buy a
car "as is," the car normally will not be covered by implied
warranties.
But if you buy a service
contract covering the engine, you automatically get implied warranties
on the engine, which may give you protection beyond the scope of the
service contract.
Make sure you receive a
written confirmation that your service contract is in effect.
Spoken Promises
The Buyers Guide warns
consumers not to rely on spoken promises. Oral promises are difficult,
if not impossible, to enforce. Make sure all promises you want are
written into the Buyers Guide and keep it.
Pre-Purchase
Independent Inspection
The Buyers Guide also
suggests you ask the dealer whether you may have the vehicle inspected
by your own mechanic. Some dealers will let you take the car off the lot
to get an independent inspection. Others may have reasons, such as
insurance restrictions, for denying this request. In such a case, the
dealer may permit you to bring an independent mechanic to the used car
on the lot. A dealer who refuses to allow any independent inspection may
be telling you something about the condition of the car. Remember, a
good-looking car, or a car that comes with a warranty, does not
necessarily run well. An independent inspection lets you find out about
the mechanical condition of the vehicle before you buy it. Although an
inspection fee by a mechanic may seem high, when you compare it to the
price of the car, it can be worth the cost.
Vehicle Systems
The Buyers Guide
includes a list of the 14 major systems of an automobile and some of the
major problems that may occur in these systems. You may find this list
helpful to evaluate the mechanical condition of the vehicle. The list
also may be useful when comparing warranties offered on different cars
or by different dealers.
Dealer Identification
and Consumer Complaint Information
On the back of the
Buyers Guide, you will find the name and address of the dealership. In
the space below that, you will find the name and telephone number of the
person at the dealership to contact if you have any complaints after the
sale.
Spanish Language Sales
If you buy a used car
and the sales talk is conducted in Spanish, you are entitled to see and
keep a Spanish-language version of the Buyers Guide
Before You Buy Any
Used Car
If you are interested in
a particular car, ask the dealer or owner if you can take it on a test
drive. Try to drive the car under many different conditions, such as on
hills, highways, and in stop-and-go traffic. You also may want to ask
the dealer or owner whether the car has ever been in an accident. Find
out as much as you can about the car's prior history and maintenance
record. Getting an independent inspection by an experienced mechanic is
a good idea before purchasing any used car. Be prepared to negotiate.
Many dealers and individuals are willing to bargain on price and/or on
warranty coverage.
If You Have Problems
If something goes wrong
with your car and you think that it is covered by a warranty (either
express or implied) or a service contract, refer to the terms of the
warranty or contract for instructions on how to get service. If a
dispute arises concerning the problem, there are several steps you can
take.
Try To Work It Out
With The Dealer
First, try to resolve
the problem with the salesperson or, if necessary, speak with the
owner of the dealership. Many problems can be resolved at this level.
However, if you believe that you are entitled to service, but the
dealer disagrees, you can take other steps. If your warranty is backed
by a car manufacturer and you have a dispute about either service or
coverage, contact the local representative of the manufacturer. This
local or "zone" representative has the authority to adjust
and make decisions about warranty service and repairs to satisfy
customers.
Some manufacturers
also are willing to repair certain problems in specific models free of
charge, even if the manufacturer's warranty does not cover the
problem. Ask the manufacturer's zone representative or the service
department of a franchised dealership that sells your car model
whether there is such a policy.
Other Approaches You
Can Try
If you cannot get
satisfaction from the dealer or from a manufacturer's zone
representative, contact the Better Business Bureau or a state agency,
such as the office of the attorney general, the department of motor
vehicles, or a consumer protection office. Many states also have
county and city offices that intervene or mediate on behalf of
individual consumers to resolve complaints.
You also might
consider using a dispute resolution organization to arbitrate your
disagreement if you and the dealer are willing. Under the terms of
many warranties, this may be a required first step before you can sue
the dealer or manufacturer. Check your warranty to see if this is the
case.
If you bought your car
from a franchised dealer, you may be able to seek mediation through
the Automotive Consumer Action Program, a dispute resolution program
coordinated nationally by the National Automobile Dealers Association
and sponsored through state and local dealer associations in many
cities. Check with the dealer association in your area to see if they
operate a mediation program.
If none of these steps
is successful, you can consider going to small claims court, where you
can resolve disputes involving small amounts of money for a low cost,
often without an attorney. The clerk of your local small claims court
can tell you how to file a suit and what the dollar limit is in your
state.
The Magnuson-Moss
Warranty Act also may be helpful. Under this federal law, you can sue
based on breach of express warranties, implied warranties, or a service
contract. If successful, consumers can recover reasonable attorney's
fees and other court costs. A lawyer can advise you if this law applies
to your situation.
For Further Help
If you want additional
information about warranties or service contracts or about new car
leasing or buying, send for these free FTC brochures:
Write:
Public Reference
Federal Trade Commission
Washington, DC 20580.
If you have additional
questions about the Used Car Rule, contact the Federal Trade Commission
Office nearest you.
Federal Trade Commission
Headquarters
6th & Pennsylvania
Avenue, N.W.
Washington, DC 20580
(202) 326-2222
TDD: (202) 326-2502
Federal Trade Commission
Regional Offices
1718 Peachtree Street,
N.W.
Atlanta, Georgia 30367
(404) 347-4836
10 Causeway Street
Boston, Massachusetts 02222
(617) 565-7240
55 East Monroe Street
Chicago, Illinois 60603
(312) 353-4423
668 Euclid Avenue
Cleveland, Ohio 44114
(216) 522-4207
100 N. Central Expressway
Dallas, Texas 75201
(214) 767-5501
1405 Curtis Street
Denver, Colorado 80202
(303) 844-2271
11000 Wilshire Boulevard
Los Angeles, California 90024
(213) 209-7575
150 William Street
New York, New York 10038
(212) 264-1207
901 Market Street
San Francisco, California 94103
(415) 744-7920
915 Second Avenue
Seattle, Washington 98174
(206) 553-4656
