Used Car Warranties - Know the differences!
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 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 vehicle "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 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 car will run is an example of a
warranty of merchantability. This promise applies to the
basic functions of a 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 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.
Warranty of Fitness for a Particular Purpose
A warranty of fitness for a particular purpose applies
when you buy a vehicle based on the dealer's advice that
it is suitable for a particular use. For example, a
dealer who suggests you buy a specific vehicle for
hauling a trailer in effect is promising that the
vehicle will be suitable for that purpose.
If you have a written warranty that doesn't cover your
problems, you still may have coverage through implied
warranties. That's because when a dealer sells a vehicle
with a written warranty or service contract, implied
warranties are included automatically. The dealer can't
delete this protection. Any limit on an implied
warranty's time must be included on the written
warranty.
In states that
don't allow "as is" sales, an
"Implied Warranties Only" disclosure is printed on the
Buyers Guide in place
of the "As Is" disclosure. The box beside this
disclosure will be checked if the dealer decides to sell
the car with no written warranty.
In states that
do allow "as is" sales, the
"Implied Warranties Only" disclosure should appear on
the Buyers Guide if the dealer decides to sell a vehicle
with implied warranties and no written warranty. A copy
of the
Buyers Guide with the
"Implied Warranties Only" disclosure is available.
Dealers who offer a written warranty must complete the
warranty section of the Buyers Guide. Because terms and
conditions vary, it may be useful to compare and
negotiate coverage.
Dealers may offer a full or limited warranty on all or
some of a vehicle's systems or components. Most used car
warranties are limited and their coverage varies. A full
warranty includes the following terms and conditions.
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Anyone who owns the
vehicle during the warranty period is entitled to
warranty service.
-
Warranty service will be
provided free of charge, including such costs as
removing and reinstalling a covered system.
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You have the choice of a
replacement or a full refund if, after a reasonable
number of tries, the dealer cannot repair the
vehicle or a covered system.
-
You only have to tell
the dealer that warranty service is needed in order
to get it, unless the dealer can prove that it is
reasonable to require you to do more.
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Implied warranties have
no time limits.
If any of these statements doesn't apply, the warranty
is limited.
A full or limited warranty doesn't have to cover the
entire vehicle. The dealer may specify that only certain
systems are covered. Some parts or systems may be
covered by a full warranty; others by a limited
warranty.
The dealer must check the appropriate box on the Buyers
Guide to indicate whether the warranty is full or
limited and the dealer must include the following
information in the "Warranty" section:
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the percentage of the
repair cost that the dealer will pay. For example,
"the dealer will pay 100 percent of the labor and
100 percent 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 lists the major systems where
problems may occur;
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the warranty term for
each covered system. For example, "30 days or 1,000
miles, whichever comes first"; and
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whether there's a
deductible and, if so, how much.
You have the right to see
a copy of the dealer's warranty before you buy. Review
it carefully to determine what is covered. The warranty
gives detailed information, such as how to get repairs
for a covered system or part. It also tells who is
legally responsible for fulfilling the terms of the
warranty. If it's a third party, investigate their
reputation and whether they're insured. Find out the
name of the insurer, and call to verify the information.
Then check out the third-party company with your local
Better Business Bureau.
That's not foolproof, but it is prudent. Make sure you
receive a copy of the dealer's warranty document if you
buy a car that is offered with a warranty.
Unexpired Manufacturer's
Warranties
If the manufacturer's
warranty still is in effect, the dealer may include it
in the "systems covered/duration" section of the
Buyers Guide. To make
sure you can take advantage of the coverage, ask the
dealer for the car's warranty documents. Verify the
information (what's covered, expiration date/miles,
necessary paperwork) by calling the manufacturer's zone
office. Make sure you have the Vehicle Identification
Number (VIN) when you call.
Service Contracts
Like a warranty, a 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 car? If so, is the service contract
transferable or is a shorter contract available?
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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.
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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.
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the contract covers
incidental expenses, such as towing and rental car
charges while your car is being serviced.
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repairs and routine
maintenance, such as oil changes, have to be done at
the dealer.
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there's a cancellation
and refund policy for the service contract and,
whether there are cancellation fees.
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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 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 vehicle, federal law prohibits the
dealer from eliminating implied warranties on the
systems covered in the contract. For example, if you buy
a 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 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 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 the price. Get this
information in writing.
If the 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 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 dealer after considering the inspection's results,
you can use the estimated repair costs to negotiate the
price of the vehicle.
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