Used Car Warranties

Buying and owning an automobile for most all of us, is a life-long experience. The purchase cost, especially for a new car, may be second only to a home purchase or college tuition in size. Buying a used car is fraught with it’s own set of hidden pitfalls. And whether new or used, auto ownership will involve maintenance & repair questions, warranty issues, and eventually  questions about trade-in value.

This is our third in a series on purchasing owning and automobile. Click on the articles below to view the first two. Content for all articles is taken from the FTC Consumer Information web site, Buying and Owning a Car.  Future articles will cover Service ContractsRenting a Car, Repair & Maintenance, and Purchase vs. Lease.

Warranties

When you buy a used car from a dealer, get the original or a copy of the final Buyers Guide that was posted in the vehicle. 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 — Connecticut, Hawaii, Kansas, Maine, Maryland, Massachusetts, Minnesota, Mississippi, New Jersey, New Mexico, New York, Rhode Island, Vermont, West Virginia, and the District of Columbia — don’t allow “as is” sales for many used vehicles.

Louisiana, New Hampshire, and Washington require different disclosures from those on the Buyers Guide to create a valid “as is” sale. 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 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.

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 to 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:

  • Anyone who owns the vehicle during the warranty period is entitled to warranty service.
  • Warranty service will be provided free of charge, including removing and reinstalling a covered system.
  • You have the choice of a replacement or a full refund if the dealer can’t repair the vehicle or covered system after a reasonable number of tries.
  • You only have to tell the dealer that warranty service is needed 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, 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 must include the following information in the “Warranty” section:

  • 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 in which problems may occur;
  • the warranty term for each covered system. For example, “30 days or 1,000 miles, whichever comes first”; and
  • 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. Look up reviews online. Then check out the third-party company with your consumer protection agency. Make sure you get 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 note that 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, and necessary paperwork) by calling the manufacturer’s zone office. Make sure you have the VIN when you call.

If You Have Problems

If you have a problem that you think is covered by a warranty or service contract, follow the instructions to get service. If a dispute arises, try to work it out with the dealer. Talk with the salesperson or, if necessary, the owner of the dealership. Many problems can be resolved at this level. However, if you believe you’re entitled to service, but the dealer disagrees, you have some options:

  • If your warranty is backed by a car manufacturer, contact the local representative of the manufacturer. The local or zone representative is authorized to adjust and decide issues of warranty service and repairs to satisfy customers. Some manufacturers also are willing to repair certain problems in specific models for free, even if the manufacturer’s warranty does not cover the problem. Ask the manufacturer’s zone representative or the service department of a franchised dealership that sells your car model whether there is such a policy.
  • Contact your state Attorney General or the American Association of Motor Vehicle Administrators. You also might consider using a dispute resolution organization if you and the dealer are willing. Under the terms of many warranties, this may be a required first step before you can sue the dealer or manufacturer. Check your warranty to see if this is the case. If you bought your car from a franchised dealer, you may be able to seek mediation through the Automotive Consumer Action Program (AUTOCAP), a dispute resolution program coordinated nationally by the National Automobile Dealers Association and sponsored through state and local dealer associations in many cities. Check with the dealer association in your area to see if they operate a mediation program.

If none of these steps is successful, small claims court is an option. Here, you can resolve disputes involving small amounts of money, often without an attorney. The clerk of your local small claims court can tell you how to file a suit and the dollar limit in your state.

The Magnuson-Moss Warranty Act also may be helpful. Under this federal law, you can sue based on breach of express warranties, implied warranties, or service contracts. If successful, consumers can recover reasonable attorneys’ fees and other court costs. A lawyer can advise you if this law applies.

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