Buying a Used Car - Part IV

Service Contracts

Like a warranty, a used car service contract provides repair and/or maintenance for a specific period. But warranties are included in the price of a product, while service contracts cost extra and are sold separately. To decide if you need a service contract, consider whether:

the service contract duplicates warranty coverage or offers protection that begins after the warranty runs out. Does the service contract extend beyond the time you expect to own the used car? If so, is the service contract transferable or is a shorter contract available?
the vehicle is likely to need repairs and their potential costs. You can determine the value of a service contract by figuring whether the cost of repairs is likely to exceed the price of the contract.
the service contract covers all parts and systems. Check out all claims carefully. For example, "bumper to bumper" coverage may not mean what you think.
a deductible is required and, if so, the amount and terms.
the contract covers incidental expenses, such as towing and rental car charges while your used car is being serviced.
repairs and routine maintenance, such as oil changes, have to be done at the dealer.
there's a cancellation and refund policy for the service contract and, whether there are cancellation fees.
the used car 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 used car dealers sell third-party service contracts.

The dealer must check the appropriate box on the Buyers Guide if a service contract is offered, except in states where service contracts are regulated by insurance laws.

If the Guide doesn't include a service contract reference and you're interested in buying one, ask the salesperson for more information.

If you buy a service contract from the dealer within 90 days of buying a used car, federal law prohibits the dealer from eliminating implied warranties on the systems covered in the contract. For example, if you buy a used car "as is," the car normally is not covered by implied warranties.

But if you buy a service contract covering the engine, you automatically get implied warranties on the engine. These may give you protection beyond the scope of the service contract. Make sure you get written confirmation that your service contract is in effect.

Spoken Promises

The Buyers Guide cautions you not to rely on spoken promises. They are difficult to enforce because there may not be any way for a court to determine with any confidence what was said. Get all promises written into the Guide.

Pre-Purchase Independent Inspection

It's best to have any used car inspected by an independent mechanic before you buy it. For about $100 or less, you'll get a general indication of the mechanical condition of the vehicle.

An inspection is a good idea even if the used car has been "certified" and inspected by the dealer and is being sold with a warranty or service contract.

A mechanical inspection is different from a safety inspection. Safety inspections usually focus on conditions that make a used car unsafe to drive. They are not designed to determine the overall reliability or mechanical condition of a vehicle.

To find a pre-purchase inspection facility, check your Yellow Pages under "Automotive Diagnostic Service" or ask friends, relatives, and co-workers for referrals. Look for facilities that display certifications like an Automotive Service Excellence (ASE) seal.

Certification indicates that some or all of the technicians meet basic standards of knowledge and competence in specific technical areas. Make sure the certifications are current, but remember that certification alone is no guarantee of good or honest work. Also ask to see current licenses if state or local law requires such facilities to be licensed or registered.

Check with your state Attorney General's office or local consumer protection agency to find out whether there's a record of complaints about particular facilities.

There are no standard operating procedures for pre-purchase inspections. Ask what the inspection includes, how long it takes, and how much it costs. Get this information in writing.

If the used car dealer won't let you take the car off the lot, perhaps because of insurance restrictions, you may be able to find a mobile inspection service that will go to the dealer. If that's not an option, ask the dealer to have the used car inspected at a facility you designate. You will have to pay the inspection fee.

Once the vehicle has been inspected, ask the mechanic for a written report with a cost estimate for all necessary repairs. Be sure the report includes the vehicle's make, model, and VIN. Make sure you understand every item.

If you decide to make a purchase offer to the used car dealer after considering the inspection's results, you can use the estimated repair costs to negotiate the price of the vehicle.

Vehicle Systems

The Buyers Guide lists an auto's 14 major systems and some serious problems that may occur in each. This list may help you and your mechanic evaluate the mechanical condition of the vehicle. The list also may help you compare warranties offered on different cars or by different dealers.

Dealer Identification and Consumer Complaint Information

The back of the Buyers Guide lists the name and address of the dealership. It also gives the name and telephone number of the person you should contact at the dealership if you have problems or complaints after the sale.

Optional Signature Line

The used car dealer may include a buyer's signature line at the bottom of the Buyers Guide. If the line is included, the following statement must be written or printed close to it: "I hereby acknowledge receipt of the Buyers Guide at the closing of this sale."

Your signature means you received the Buyers Guide at closing. It does not mean that the used car dealer complied with the Rule's other requirements, such as posting a Buyers Guide in all the vehicles offered for sale.

Spanish Language Sales

If you buy a used car and the sales discussion is conducted in Spanish, you are entitled to see and keep a Spanish-language version of the Buyers Guide.

Buying a Used Car - Part V.