Whetheryoure 16 or 60, buying a used car can be an exciting experience. But it can also be a big financial commitment, with some industry reports estimating that the average price of a used car is close to $28,000. The more you know going in to the dealer, the better you'll feel driving out. For example, dealers have to put a Buyers Guide on every used car. Youre also entitled to a Buyers Guide if you buy a used car online. The Guide will tell you if a car has a warranty, or is being sold as is. Youll also want to get a vehicle history report and get the facts about independent inspections, payment options, and what to do if you have a problem after the deal is done.
- Do Your Homework
- Dealer Sales and the Buyers Guide
- Be Aware of Add-ons
- Get an Independent Inspection Before You Buy
- Payment Options
- Return Policies
- Types of Warranties
- Service Contracts
- If You Have a Problem
- For More Information
Do Your Homework
Before you start shopping for a used car from an auto dealer, do some homework. It may save you serious money. Consider the kind of car you need, how youll use it, and your budget. Dont forget other costs like registration, insurance, gas, and maintenance. Research models, options, repair records, safety tests, and mileage.
Once you have a car (or cars) in mind, ask for the out-the-door prices in writing from dealers before you visit. Use those quotes to
- confirm that advertised prices, discounts, rebates, etc. are actually being applied
- confirm that the vehicle is actually on the lot
- spot add-ons and other charges that the dealer may try to introduce at the last minute
Then, find out about the dealer before you visit. Contact your state and local consumer protection agencies to find out if any unresolved complaints are on file about a particular dealer. You also can check out a dealers reputation by searching online for the companys name with words like scam, review, or complaint.
Dealer Sales and the Buyers Guide
Dealers have to display a Buyers Guide in every used car they offer for sale. They also have to give it to buyers after the sale. This includes light-duty vans and trucks, demonstrators, and program cars. Demonstrators are new cars that havent been owned, leased, or used as rentals, but have been driven by dealer staff. Program cars are low-mileage, current-model-year vehicles returned from short-term leases or rentals. Dealers dont have to display a Buyers Guide on motorcycles and most recreational vehicles.
The Buyers Guide tells you
- the major mechanical and electrical systems on the car, including some of the major problems you should look out for
- whether the car is being sold as is or with a warranty
- what percentage of the repair costs a dealer will pay under the warranty
- to get all promises in writing
- to ask to have the car inspected by an independent mechanic before you buy
- to get a vehicle history report and to visitftc.gov/usedcarsfor information on how to get a report, how to check for safety recalls, and other topics
- to ask for a Spanish Buyers Guide if the sale is conducted in Spanish
- the dealers contact information, including the contact for complaints
- to remember: spoken promises are difficult to enforce
Dealers in Maine and Wisconsin display their own version of the Buyers Guide.
Be Aware of Add-ons
Add-ons are optional products and services offered by the dealer, like gap insurance, Vehicle Identification Number (VIN) etching, rustproofing. Often, add-ons can cost thousands of dollars and are mentioned only at the end of an already difficult and time-consuming day at the dealership. Other times, dealers may try to include these and other add-ons in your deal without ever discussing them with you, and without your knowledge or approval. So you want to be sure that you ask questions, get answers in writing, know what youre paying for, and what youll get.
Get an Independent Inspection Before You Buy
A vehicle history report is not a substitute for an independent vehicle inspection. A vehicle history report may list accidents and flood damage, but typically it will not list mechanical problems. Thats why its always a good idea to pay for an independent mechanic to conduct a mechanical inspection of a used car. A mechanical 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. Youll have to pay the inspection fee, but it can help you avoid paying for a car with major problems.
A mechanical inspection is different from a safety inspection. Safety inspections usually only focus on things that make a car unsafe to drive.
If the dealer wont let you take the car off the lot, maybe because of insurance restrictions, you may be able to find a mobile inspection service that will go to the dealer. If thats not an option, ask the dealer to bring the car for inspection at a facility you choose. If a dealer wont allow an independent inspection, consider going to another dealer.
Ask the mechanic for a written report with a cost estimate for all necessary repairs. Be sure the report includes the cars make, model, and VIN. If you decide to buy from the dealer after seeing the inspections results, you can use the estimated repair costs to negotiate the price of the car.
When it comes to paying for a car, you have two choices: pay in full or finance over time.
Financing increases the total cost of the car because youre also paying for the cost of credit, including interest. Consider how much you can pay as a down payment, the monthly payment, the financing period (such as 60 months), and the annual percentage rate (APR).
Low monthly payment offers may be tempting but often have longer loan periods and higher interest rates, which means theyre much more expensive overall.
Dealers and other places that offer financing like banks, credit unions, and finance companies offer a variety of financing terms. Shop around, compare offers, and negotiate the best deal you can.
If you decide to finance the car, make sure you understand the financing agreement before you sign any documents.
- Whats the exact price you're paying for the car?
- What is the total sales price with financing that is, the sum of the monthly payments plus the down payment?
- Whats the finance charge (the dollar amount the credit will cost you)?
- Whats the APR (which measures the cost of credit as a yearly rate)?
- How many payments will you make and how much is each one?
Before you buy from a dealer, ask about the dealers return policy, get it in writing, and read it carefully.
- Federal law doesnt require dealers to give you three days to cancel the deal and return the car.
- In some states, dealers must give you the right to cancel. In other states, the right to return the car in a few days for a refund exists only if the dealer chooses to offer this option. Dealers may describe the right to cancel as a cooling-off period, a money-back guarantee, or a no questions asked return policy. Check with your state attorney general for the rules in your state.
Types of Warranties
The Buyers Guide must show any changes you negotiate in the warranty coverage. It will override anything in your sales contract. So as you negotiate, be sure the dealer makes any changes to the Buyers Guide, as well as in your contract. 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.
There are several types of warranties. Its important to know their differences.
As Is - No Dealer Warranty means the dealer wont pay for any problems or needed repairs. Youre assuming the risk of anything that goes wrong after the sale. There are several things to know about as is sales:
- When the dealer offers a car as is, the box next to the As Is - No Dealer Warranty disclosure on the Buyers Guide must be checked.
- If the as is box is checked, make sure any verbal promises like promises to repair the car or cancel the sale if youre not satisfied are written on the Buyers Guide. Otherwise, you may have a hard time getting the dealer to follow through. To find out what disclosures are required for as is sales in your state, contact your state attorney general.
Implied Warranties are unspoken, unwritten promises from a dealer to the buyer. If a used car doesnt come with a written warranty, its still covered by implied warranties unless its an "as is sale. Here are some common implied warranties:
- A warranty of merchantability means the dealer promises the car will do what its supposed to do: it will run. This promise applies to the basic functions of a car. It doesnt cover everything that could go wrong. Just because your car breaks down after the sale doesnt mean its automatically covered by the warranty of merchantability. Youll need to prove that the problem or defect existed at the time of the sale and the dealer may disagree and refuse to pay for the repairs.
- A warranty of fitness for a particular purpose applies when you buy a car based on the dealers advice that its suitable for a particular use. For example, a dealer who suggests you buy a specific vehicle for hauling a trailer is giving an implied warranty that the vehicle can do the job.
If you have problems that arent covered by a written warranty, see if theres protection from one of these implied warranties. Implied warranty coverage can last as long as four years, although the length of the coverage varies from state to state. A lawyer or a state consumer protection office can tell you more about implied warranty coverage in your state.
Full and Limited Warranties
Dealers may offer a full or limited warranty on all or some of a cars systems or components. Most used car warranties are limited and their coverage varies.
If you have a full warranty, it will include these terms and conditions:
- Anyone who owns the car during the warranty period can get warranty service.
- Warranty service is free of charge, including removing and reinstalling a covered system, for example, steering, brake, fuel or exhaust systems.
- If the dealer cant fix the car or covered system after a reasonable number of tries, you can choose replacement or a full refund for your car.
- To get service under the warranty, you only have to tell the dealer you need it.
- Theres no time limit.
If any of these statements doesnt apply, the warranty is limited.
A full or limited warranty doesnt have to cover the entire car. The dealer may specify that only certain systems are covered.
If you buy a car that comes with a warranty, make sure you get a copy. Review it carefully and know whats covered. The warranty gives detailed information, like how to get repairs for a covered system or part. It also says whos responsible for fulfilling the terms of the warranty.
Unexpired Manufacturer's Warranties
If the manufacturers 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 cars warranty documents. Verify the information (whats covered, expiration date/miles, and necessary paperwork) by calling the dealership. Make sure you have the VIN when you call.
A service contractis a promise to perform (or pay for) certain repairs or services. Sometimes called an extended warranty, a service contract is not a warranty. You can buy a service contract anytime. Theyre sold by car manufacturers and dealers, and independent companies. Prices and coverage vary widely.
To decide if you need a service contract, consider these questions:
- Does the service contract duplicate warranty coverage you already have? Does it begin after your current warranty runs out? If the service contract lasts longer than you expect to own the car, is it transferable, or is a shorter contract available?
- Is the car likely to need repairs, and how much are they going to cost? Is the cost of repairs likely to be more than the price of the contract?
- Will the service contract cover all parts and systems? Does bumper to bumper coverage mean what you think?
- Is a deductible is required, and if so, how much and under what terms?
- Does the contract cover incidental expenses, like towing and rental car charges while your car is being serviced?
- Will repairs and routine maintenance have to be done at the dealer?
- Is there a cancellation and refund policy for the service contract? Are there cancellation fees?
- Is the dealer or company offering the service contract reputable? Does the dealer sell third-party service contracts?
If you buy a service contract from the dealer within 90 days of buying a used car, the dealer cant remove 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 warranties may give you protection beyond the scope of the service contract. Make sure you get written confirmation that your service contract is in effect.
If You Have a Problem
If you have a problem that you think is covered by a warranty or service contract, follow the warranty or contract instructions to get service. If a dispute arises, and you cant work it out with the dealer, you still have some options:
- If your warranty is backed by the cars manufacturer, contact the dealership. They can decide issues of warranty service and repairs.
- Contact yourstate attorney general. Consumer protection assistant attorneys general deal with issues that range from healthcare to automobiles to privacy.
- You might consider using a dispute resolution organization. In fact, under many warranties, using a dispute resolution organization may be a required first step before you can sue the dealer or manufacturer. 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 theNational Automobile Dealers Associationand 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.
- File a suit in small claims court. 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.
- Under the federal Magnuson-Moss Warranty Act, you can sue based on breach of express warranties, implied warranties, or service contracts. If successful, you can recover reasonable attorneys fees and court costs. A lawyer can advise you if this law applies.
For More Information
Learn more about buying and owning a car at ftc.gov/cars.Search Termsbuyingcarcar financingservice contractwarrantyTopicsShopping and DonatingBuying and Owning a CarMay 2021