Dealer Used Car Sales and Warranties

Buying a used vehicle can offer more value to car buyers who do not want to spend more on a new vehicle. However, warranties for used vehicles may be limited or unavailable, making it crucial to research the vehicle's history, condition, and potential cost of repairs before purchasing.

This guide will help you understand sales practices and warranty options in the pre-owned vehicle market. Learn more about consumer protections and types of warranties, including:

• How to read and interpret the Federal Trade Commission's (FTC) Buyers Guide
• What it means to buy a vehicle “as is"
• Differences between an implied warranty, warranty of fitness, extended warranty, and other warranties
• Lemon laws and used vehicles with manufacturer warranties

Read on to learn more about getting a good deal on a quality used car. 

Where To Buy a Used Vehicle

Various outlets sell used cars:

• Franchise and independent dealers
• Rental car companies and leasing companies
• Used car dealerships and superstores
• Private sellers
• Online and app-based platforms

Ask your network for recommendations for used car sales. Research reviews and unresolved complaints about a car seller with your state's consumer protection agency and the Better Business Bureau (BBB).

Some used car dealers attract customers in several ways. They can offer:

• Straightforward pricing
• Factory-certified pre-owned vehicles
• Better warranties

Consider the dealer's reputation when you evaluate these ads.

Dealers are not required by law to give used or new vehicle buyers a three-day right to cancel. This federal cooling-off period does not apply to automotive purchases due to how quickly vehicles depreciate.

The right to return the car for a refund exists only if the dealer grants this privilege to buyers. Dealers may phrase the right to cancel as a cooling-off period, a money-back guarantee, or a "no questions asked" return policy. Before you purchase from a dealer, ask about the dealer's return policy and get it in writing.

The Federal Trade Commission's Buyers Guide

The FTC's Used Car Rule requires dealers to post a Buyers Guide on every used car they offer for sale. This includes:

• Light-duty trucks and vans
• Demonstrators (unsold motor vehicles used for test drives)
• Program cars (low-mileage, current-model-year vehicles returned from short-term leases or rentals)

Dealers do not have to post Buyers Guides on motorcycles and most recreational vehicles. Those who sell less than six cars a year don't have to post a Buyers Guide. This is the case for most private sellers.

The Buyers Guide must disclose:

• 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 guarantees are difficult to enforce and 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 to look out for
• Your right to ask for a car inspection by an independent mechanic before you buy

When you buy a used car from a dealer, get the original Buyers Guide posted on 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 sale is as is, the dealer must give you the warranty described in the Guide.

No Vehicle Warranty, or Buying As Is

When the dealer offers a vehicle as is, they must check the box next to the "As Is - No Warranty" disclosure on the Buyers Guide. If the dealer checks this box but promises to repair the vehicle or cancel the sale if you're unsatisfied, make sure the dealer includes this in writing on the Buyers Guide. Otherwise, you may have difficulty getting the dealer to follow through on the guarantee.

Some states don't allow as-is sales for many used vehicles. These states include:

• Connecticut
• Kansas
• Maine
• Maryland
• Massachusetts
• Minnesota
• Mississippi
• New Jersey
• New York
• Rhode Island
• Vermont
• West Virginia
• The District of Columbia

Louisiana, New Hampshire, and Washington require disclosures different from those on the Buyers Guide.

If the dealer fails to provide proper state disclosures, the sale is not as is. To learn what disclosures your state requires for as-is sales, contact your state attorney general's office.

Implied Warranty of Merchantability

The most common type of implied warranty is the warranty of merchantability. This warranty means the seller promises the product offered for sale will do what it's expected to. An example of a warranty of merchantability is that a car will start, run, and be drivable. This promise applies to the basic functions of a car and does not cover every mechanical issue that could happen.

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 purchase. A problem that occurs after the sale may result from a defect that existed at the time of the 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 will work for a particular use. For example, a dealer who suggests you buy a specific vehicle for hauling a trailer is essentially promising the vehicle will be suitable for that purpose.

If your written warranty doesn't cover your vehicle's issue, you still may have coverage through implied warranties. When a dealer sells a vehicle with a written warranty or service contract, implied warranties are automatically included. The dealer can't delete this protection. The written warranty must include any limit on an implied warranty's time.

In states that don't allow as-is sales, the Buyers Guide prints an "Implied Warranties Only" disclosure in place of the "As Is" disclosure. The dealer must check the box beside this disclosure if they sell the car without a written warranty.

In states that do allow as-is sales, the "Implied Warranties Only" disclosure should appear on the Buyers Guide if the dealer sells a vehicle with implied warranties and no written warranty.

Dealers who offer a written warranty must complete the warranty section of the Buyers Guide. Because terms and conditions vary, comparing and negotiating coverage may be helpful.

Full Warranties vs Limited Warranties

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:

• Anyone who owns the vehicle during the warranty period can use the warranty service
• The dealer will provide warranty service free of charge, including costs for removing and reinstalling a covered system
• You have the option of a replacement or a full refund if the dealer cannot repair the vehicle or a covered system after a reasonable number of attempts
• You only have to tell the dealer that you need warranty service to get it, unless the dealer can prove that it is reasonable to require you to do more
• Implied warranties have no time limits

If any of these statements don't apply, you have a limited warranty.

A full or limited warranty doesn't have to cover the entire vehicle. The dealer may specify that the warranty only covers certain systems or parts. A full warranty may cover some parts or systems, while a limited warranty covers others.

The dealer must check the appropriate box on the Buyers Guide to indicate whether the warranty is full or limited. They also must include the following information in the "Warranty" section:

• The percentage of the repair cost that the dealer will pay
• The specific parts and systems—such as the frame, body, or brake system—the warranty covers. The back of the Buyers Guide lists the major systems where problems may occur.
• The vehicle warranty term for each covered system. For example, "30 days or 1,000 miles, whichever comes first"
• 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 it covers. 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 warranty terms. Get a copy of the dealer's warranty document for your records.

If it's a third party, investigate their reputation and whether they're insured. Find out the insurer's name and verify the information. Check out the third-party company with your local BBB.

Unexpired Original Manufacturer's Warranties

If the manufacturer's warranty is still in effect, the dealer may include it in the "Systems Covered" and “Duration" sections of the Buyers Guide.

To ensure you can take advantage of the coverage, ask the dealer for the car's warranty documents. Call the manufacturer's zone office to verify the information, including:

• What the warranty covers
• Expiration date and mileage
• All necessary paperwork

Have the Vehicle Identification Number (VIN) ready when you call.

Used Car Extended Warranties

When buying a used vehicle, the dealer will likely offer you an extended warranty for an additional cost. Extended warranties are optional add-ons that function more like a service or maintenance contract than an actual warranty.

Extended warranties can be expensive. If you're financing your vehicle, the lender will factor in the service contract to your loan, making your monthly payment higher. Weigh the coverage cost against potential benefits. Research your vehicle's reliability and average cost of repairs to see if an extended warranty is worth the price.

Both authorized dealers and third-party companies sell extended warranties and service contracts. If you purchase from a third-party provider, research customer reviews and its BBB listing first.

Used Car Lemon Laws

In general, lemon laws apply to new cars under their original manufacturer warranty. Some states' lemon laws also protect used vehicles with time left of their original warranty.

The details vary by jurisdiction, but most states define a lemon as a vehicle with a substantial defect that remains unresolved after a reasonable number of repair attempts. Each state's lemon statute defines what type of defect is substantial and how many repair attempts are reasonable. Check your state law to see specifics on what its lemon law covers.

The Magnuson-Moss Warranty Act is a federal law that protects most consumer purchases with a written warranty. This includes vehicles. Although it doesn't solely apply to motor vehicles, it is recognized as the federal lemon law.

Consumers who purchase a lemon are entitled to legal remedies, including a replacement vehicle or a refund of the full purchase price, including taxes, registration, and other incurred costs (like attorney fees or rental car costs).

If a dealer repurchases a vehicle as part of a lemon law claim, they can resell the lemon vehicle. However, they must disclose its lemon status and post a sticker on the vehicle identifying it as a lemon buyback.

If your used car is still under its manufacturer warranty and you suspect it may have a significant defect, be sure to report this to the dealership as soon as possible. There are precise deadlines, mileage, and time limits for consumers to report potential mechanical defects or nonconformities.

If the dealership is uncooperative, some states offer arbitration programs to help consumers and dealers mediate lemon claims. If arbitration is unsuccessful, you may want to contact a lemon law attorney for next steps.

Working With an Attorney for Your Warranty Issue

Buying a used car always comes with some risk. Still, the law entitles used car buyers to fair and truthful sales practices. Most used car transactions go smoothly, but there are situations where you may want professional legal advice:

• A salesperson wasn't truthful about the vehicle's history
• Your used vehicle may qualify as a lemon
• You're having trouble getting a repair completed under your used vehicle's warranty

A consumer protection attorney can help you understand your legal rights and options with used car warranties. Contact a local attorney to learn more.