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Buying a Used Car
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.
If You Buy a Used Car From a Dealer
If 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;
* 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; and * 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. A copy of the Buyers Guide with the "Implied Warranties
Only" disclosure is shown on page 7.
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";
and
* 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.
* Whether the contract covers incidental expenses, such as towing and
the costs of a rental car while your car is being serviced.
* 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.
If You Buy a Used Car From a Private Party
Many cars are available privately, such as through classified ads in
a newspaper. If you are shopping for a car from an individual, you
should understand several differences between sales made by individuals
and by dealers.
* Private sellers generally are not covered by the Used Car Rule and
therefore, do not have to use the Buyers Guide.
However, you still can follow the Guide's suggestions. For example,
you can refer to the list of potential problems displayed on the back of
the Buyers Guide shown in this brochure. In addition, ask the seller
whether you may have the vehicle inspected by your own mechanic and
whether you may take it on a test drive.
* Private sales usually are not covered by the "implied
warranties" of state law. So, a private sale probably will be on an
"as is" basis, unless your contract with the seller
specifically provides otherwise. If you have a written contract, the
seller must live up to the promises stated in the contract.
"An independent inspection lets you find out about the
mechanical condition of the vehicle before you buy it."
Depending on its age, the car also may be covered by a manufacturer's
warranty or a separately purchased service contract. However, warranties
and service contracts may not be transferable, or there may be
limitations or costs for a transfer. Before you purchase the car, ask
the seller to let you examine any warranty or service contract on the
vehicle.
* Many states require that dealers, but not individuals, ensure that
their vehicles will pass state inspection or carry a minimum warranty
before they offer them for sale.
Ask your state's attorney general's office or a local consumer
protection office about the requirements on individuals and on dealers
in your state.
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 (AUTOCAP),
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:
* Warranties
* Service Contracts
* Car Ads: Low-Interest Loans and Other Offers
* New Car Buying Guide
* A Consumer Guide to Vehicle Leasing
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 |
