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Tips For Buying a Used Car

A disclosure document that gives consumers important purchasing and warranty information, the Buyers Guide tells consumers:

  • whether the vehicle is being sold “as is” or with a warranty;
  • what percentage of the repair costs a dealer will pay under warranty;
  • that oral promises are difficult to enforce;
  • 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, as well as some of the major problems that consumers should look out for; and
  • to ask to have the car inspected by an independent mechanic before they buy.

If you conduct a used car transaction in Spanish, you must post a Spanish language Buyers Guide on the vehicle before you offer it for sale.

The Buyers Guide must be posted prominently and conspicuously on or in a vehicle when a car is available for sale, and in such a way that both sides are readable. That means you can hang the Guide from the rear-view mirror inside the car or on a side-view mirror outside the car. The Guide also can be attached to a side window. A Guide in a glove compartment, trunk or under the seat is
not conspicuous.

You may remove the Guide for a test drive, but you must replace it as soon as the test drive is over.

Vehicle Information

At the top of the Guide, fill in the vehicle make, model, model year, and vehicle identification number (VIN). Write in a dealer stock number if you wish.

Dealer Information

On the back of the Guide, fill in the name and address of your dealership and the name and telephone number of the person the consumer should contact with complaints. You may use a rubber stamp or preprint your Guide with this information.

Optional Signature Line

You may include a signature line on the Guide and you may ask the buyer to sign to acknowledge that he or she has received the Guide. If you opt for a signature line, you must include a disclosure near it that says: “I hereby acknowledge receipt of the Buyers Guide at the closing of this sale.” This language can be preprinted on the form. The signature line and the required disclosure must appear in the space provided for the name of the individual to be contacted in the event of complaints after the sale.

Warranty Information

The Buyers Guide has two versions: One says “As Is-No Warranty;” the other says

“Implied Warranties Only.”

As Is-No Warranty. If state law allows it, and you choose not to offer a warranty- written or implied-you must use the “As Is” version and check the box next to the heading “As Is-No Warranty” on the Guide.

Implied Warranties Only. In states that limit or prohibit the elimination of implied warranties, you must use the “Implied Warranties Only” version and check the box next to the “Implied Warranties Only” heading if you don’t offer a written warranty. (See the example.)

Warranty. If you offer the vehicle with an express warranty, you must check the box next to the heading “Warranty” and complete that section of the Guide. Warranties required by state law must be disclosed in this section. Your state Attorney General can tell
you about state warranty requirements.

State Law. In some states, use of the “As Is-No Warranty” Buyers Guide may be legally sufficient to eliminate implied warranties. In other states “as is” sales are allowed only if specific action is taken or certain language is used. For example, some states may require you to eliminate implied warranties by using special language and/or a document other than the Guide.

If you’re not sure which version of the Buyers Guide you should use or if you have questions about state requirements, contact the FTC or your state Attorney General.

Is the Warranty “Full” or “Limited”?

For a warranty to be considered “full”:

Warranty service must be provided to anyone who owns the vehicle during the warranty period.

Warranty service must be provided free of charge when necessary, even for services like removing and reinstalling a system covered by the warranty.

The consumer must be able to choose either a replacement or a refund if the vehicle can’t be repaired after a reasonable number of tries.

The consumer is not required to take any action to receive service, except to give notice that service is needed. Service must be rendered after notice unless the warrantor can demonstrate that it is reasonable to require consumers to do more than give notice.

The length of implied warranties must not be limited.

The warranty is considered “limited” if any of these conditions don’t apply.

What Percentage of Costs Does the Warranty Cover?

Fill in the percentage of parts and labor costs covered by the warranty in the spaces provided. If a deductible applies, put an asterisk next to the number and explain the deductible in the “systems covered/duration” section. For example, “*A $50 deductible applies to each repair visit.”

What systems are covered? For How Long?

There’s one column to list the systems covered, and another to list the length of the warranty for each system. In the left hand
column, you must specify each system that’s covered by the warranty. The Rule prohibits the use of shorthand phrases such as “drive
train” or “power train” because it’s not always clear what specific components are included.

In the right hand column, you must state the length of the warranty for each system. If all systems are covered for the same length of time, you may state the duration once.

What if the Manufacturer’s Warranty Still Applies?

If the manufacturer’s warranty hasn’t expired, disclose this fact by checking the “Warranty” box and including this disclosure in the “systems covered/duration” section: “MANUFACTURER’S WARRANTY STILL APPLIES. The manufacturer’s original warranty has not expired on the vehicle. Consult the manufacturer’s warranty booklet for details as to warranty coverage, service location, etc.”

If the consumer must pay to get coverage under the manufacturer’s warranty, you may not check the “Warranty” box. Such coverage is considered a service contract. However, you may check the “warranty” box if you pay for coverage from the manufacturer and the consumer doesn’t have to pay anything more than the price of the vehicle to get the coverage. If you provide a warranty in addition
to the unexpired manufacturer’s warranty, explain the terms of your warranty on the Buyers Guide. (Sample Warranty)

Where Should Negotiated Warranty Changes Be Included?

If you and the consumer negotiate changes in the warranty, the Buyers Guide must reflect the changes. For example, if you offer to cover 50 percent of the cost of parts and labor for certain repairs, but agree to cover 100 percent of the cost of parts and labor after negotiating with the customer, you must cross out the “50 percent” disclosure and write in “100 percent.” Similarly, if you first offer the vehicle “as is” but then agree to provide a warranty, you must cross out the “As Is-No Warranty” disclosure and complete the “Warranty” section of the Buyers Guide properly.

What About Service Contracts?

If you offer a service contract for repairs, check the box next to the words “Service Contract.” However, if your state regulates service contracts as the “business of insurance,” you don’t have to check this box. Check with your Attorney General or state insurance commissioner to find out if your state regulates service contracts.

What Do I Have to Give the Buyer at the Sale?

You must give the buyer the original or a copy of the vehicle’s Buyers Guide at the sale. The Guide must reflect all final changes. (Completed samples of the Buyers Guide)

If you offer a written warranty or if the manufacturer’s warranty still applies, you also must comply with the Magnuson-Moss Warranty Act and other FTC Rules, including the “Warranty Disclosure Rule.” The Warranty Act prohibits you from eliminating implied
warranties when you provide a written warranty. It also requires you to identify your warranty as either “full” or “limited.” The Warranty Disclosure Rule requires your warranty to be clear and easy to read, and to include certain information about the coverage
of the warranty.

The warranty information you provide on the Buyers Guide is not sufficient to meet federal disclosure requirements for written warranties. Therefore, your written warranty and the Buyers Guide should be two separate documents. Another federal Rule-the FTC’s Rule on Pre-Sale Availability of Written Warranty Terms-requires that you make written warranties available to consumers before they buy.

Two publications are available to help you comply with these and other federal regulations on warranties: A Businessperson’s Guide to Federal Warranty Law and A Legal Supplement to Federal Warranty Law. Both are available from the FTC. Write to: Consumer Response Center, Federal Trade Commission, Washington, D.C. 20580, or call toll-free: 1-877-FTC-HELP (382-4357); TDD: 202-326-2502.

Where Can I Get Copies of the Guides?

You can get Buyers Guides from business-form companies or trade associations, or generate them yourself on a computer. However, you must use the wording, type style, type sizes, and format specified in the Rule. The Guides must be printed in 100% black ink on
white paper cut to at least 11″ x 7″. You may use colored ink to fill in the blanks.

What If I Don’t Comply?

Dealers who violate the Used Car Rule may be subject to penalties of up to $11,000 per violation in FTC enforcement actions. Many states have laws or regulations that are similar to the Used Car Rule. Some states incorporate the Used Car Rule by reference in their state laws. As a result, state and local law enforcement officials may have the authority to ensure that dealers post Buyers Guides and to fine them or sue them if they do not comply.

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