Buying a Used Car - Part II

The Federal Trade Commission's (FTC) Used Car Rule requires dealers to post a Buyers Guide in every used car they offer for sale. This includes light-duty vans, light-duty trucks, demonstrators, and program cars.

Demonstrators are new cars that have not been owned, leased, or used as rentals, but have been driven by dealer staff.

Program cars are low-mileage, current-model-year vehicles returned from short-term leases or rentals.

Buyers Guides do not have to be posted on motorcycles and most recreational vehicles. Anyone who sells less than six cars a year doesn't have to post a Buyers Guide.

The Buyers Guide must tell you:

whether the vehicle is being sold "as is" or with a warranty;
what percentage of the repair costs a dealer will pay under the warranty;
that spoken promises are difficult to enforce;
to get all promises in writing;
to keep the Buyers Guide for reference after the sale;
the major mechanical and electrical systems on the car, including some of the major problems you should look out for; and
to ask to have the car inspected by an independent mechanic before you buy.

When you buy a used car from a dealer, get the original Buyers Guide that was posted in the vehicle, or a copy. The Guide must reflect any negotiated changes in warranty coverage. It also becomes part of your sales contract and overrides any contrary provisions.

For example, if the Buyers Guide says the used car comes with a warranty and the contract says the car is sold "as is", the dealer must give you the warranty described in the Guide.

As Is - No Warranty

When the dealer offers a used car "as is," the box next to the "As Is - No Warranty" disclosure on the Buyers Guide must be checked. If the box is checked but the dealer promises to repair the vehicle or cancel the sale if you're not satisfied, make sure the promise is written on the Buyers Guide.

Otherwise, you may have a hard time getting the dealer to make good on his word. Some states, including Connecticut, Kansas, Maine, Maryland, Massachusetts, Minnesota, Mississippi, New Jersey, New York, Rhode Island, Vermont, West Virginia and the District of Columbia, don't allow "as is" sales for many used vehicles.

Three states - Louisiana, New Hampshire, and Washington - require different disclosures than those on the Buyers Guide. If the dealer fails to provide proper state disclosures, the used car sale is not "as is." To find out what disclosures are required for "as is" sales in your state, contact your state Attorney General.

Implied Warranties

State laws hold dealers responsible if cars they sell don't meet reasonable quality standards. These obligations are called implied warranties - unspoken, unwritten promises from the seller to the buyer. However, dealers in most states can use the words "as is" or "with all faults" in a written notice to buyers to eliminate implied warranties. There is no specified time period for implied warranties.

Warranty of Merchantability

The most common type of implied warranty is the warranty of merchantability: The seller promises that the product offered for sale will do what it's supposed to. That a used car will run is an example of a warranty of merchantability. This promise applies to the basic functions of a used car. It does not cover everything that could go wrong.

Breakdowns and other problems after the sale don't prove the seller breached the warranty of merchantability. A breach occurs only if the buyer can prove that a defect existed at the time of sale.

A problem that occurs after the used car sale may be the result of a defect that existed at the time of sale or not. As a result, a dealer's liability is judged case-by-case.

Buying a Used Car - Part III.

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