PART 1
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 Guidethat 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 you read this brochure, you can refer to the Buyers
Guide, shown on pages 6 through 8.
"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.
