Buying a Used Car: Legal FAQs
Preparing for Purchase
Dealer vs. Private Seller
In many cases, you can get a better price from a private seller rather than a professional car dealership, since they're not dealing with overhead costs and may not be angling for a huge profit margin. They're also not going to have the additional costs (such as advertising and documentation fees), and in some places aren't subject to the sales tax that dealerships have to charge you. A private sale can seem tempting, especially true if you know the seller. But as we'll cover throughout the article, buying a used car privately can have its own particular set of legal challenges, from financing to inspection to warranties. You don't know if the previous owner is misrepresenting the condition or vehicle history, and it may not be clear if you are purchasing the vehicle on an as-is (take it or leave it) basis. Before you make your purchase, consider the pros and cons of each option thoroughly so that you know what you're facing in each case. If you decide to go to a dealer, search for car complaints from a consumer protection agency and review buyer's guides to help ensure you're doing business with the right dealerships or salesperson.Financing
Depending on whether you buy your car from a private individual, credit union lender, or a dealership, you may be presented with a few options when it comes to paying for it. At a dealership, financing a used car works more or less the same as with a new car, with some key differences to keep in mind: the interest rates, down payment, and timeline of the loan tend to be less consumer-friendly with used cars. Make sure you understand car financing before you commit to monthly payments on a used car. If you're purchasing from a private seller, you'll be more limited, since they typically don't offer financing options like dealerships do. If you don't have the cash in hand to purchase the full price of the car, you'll need to secure your own loan, which you can do through a bank or credit union.Reports & Inspections
Make sure you have an experienced third party inspect the car before you buy it, and that the person is familiar with your state's car inspection laws and any safety recalls. Take the car for a test drive to make sure the car runs smoothly and that everything works as intended. In addition, perform an odometer reading and obtain a vehicle history report by searching the vehicle identification number (VIN). In some places, dealerships are required by law to provide you with a copy of the vehicle history report (VHR) or some other documentation of the car's past. However, it's not a bad idea to make sure that report is accurate and up-to-date by getting your own report. Although it will cost you a fee, a service such as Carfax can be a good idea to ensure that you know exactly what you're getting. With private sales, you'll probably be on your own to pay for your own report with such a service. But again, this can be easily bought and generated by using the car's VIN.Returns
What if you change your mind about a used car you just bought? Can you return it? Well, a lot of this will depend on the circumstances under which you bought the car.Private Sales
If you're buying a used car from, say, a mom who advertises her son's old high school Buick on Facebook Marketplace, things are naturally going to be less formal. In such a case, without any explicit paperwork or agreement, this perhaps rather savvy mother has no obligation to honor a return, since she isn't held to the same standards and consumer protection laws as a dealership. But just because they're not a dealership doesn't mean you can't have a warranty on the car with private sales. Express or implied warranties can still cover a used car purchase from a private seller. Be careful, however, for products that are sold "as is," which in some states, can get the seller out of these warranties. You can also obtain warranty coverage, extended warranties, and other warranties from credible third-party companies or independent mechanics.Dealership Purchases
In many cases, a dealer will offer you more options than a private seller in the form of some sort of limited warranty or return policies. However, there is no requirement for such policies and they are not universal. You should always ask about whether such a policy exists, and then read its terms and conditions carefully. It's also worth inquiring about a service contract for maintenance work that might be needed on the used car. If the dealer doesn't offer a warranty or extended warranty on the car, that might be a red flag. Read more about dealer used car sales and warranties before you get to the dealership.'Cooling-Off Rule' Does Not Apply
Don't be misled if you've heard a phrase like "cooling-off period" thrown around; it probably won't save you. The Federal Trade Commission (FTC) has established what's called a "Cooling-off Rule" that, in certain circumstances, gives buyers time (usually three days) to change their minds about a purchase and return it for a refund. But this rule generally covers sales that happen outside the seller's regular place of business. For example, if a traveling salesman went to a tradeshow where you bought an eccentric new gadget, or if Avon came calling to your front door. Perhaps then, if you regret spending $200 on an electric head-scratcher or ten palettes of eye shadow, you could call on this rule to ease your buyer's remorse. But it's not common to be in this situation when buying a car. You're most likely going to have purchased the car from a permanent establishment. Furthermore, the rule explicitly states that even if you buy a car from a vendor's temporary location, the rule doesn't apply if the vendor has a separate permanent place of business.Duped? Dud?
If you think that the seller (private or dealership) misrepresented the condition of the car to get you to buy it, they may be guilty of fraud. If so, you could have a legal case against them, and you'll want to consult a business lawyer in your area to know your rights. What about "lemon laws"? If you've heard of these, they're state laws meant to protect against the sour taste when you buy a dud vehicle — at least if the vehicle is new. But although each state has its own lemon laws that apply to new cars, they only apply to used cars in some states. Even when they do apply, they tend not to be as robust as with new cars or have certain, often strict, criteria. Consult our list of state lemon laws to know whether they can cover you.Related Resources
- Private Used Car Sales (FindLaw's Learn About the Law)
- Auto Dealer Fraud (FindLaw's Learn About the Law)
- Product Warranties and Returns (FindLaw's Learn About the Law)
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