Buying a Used Car: Warranty Tips

As Is — No Warranty
When the dealer offers a vehicle "as is," the box next to the "As Is — No Warranty" disclosure on the buyer's 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 buyer's guide. Otherwise, you may have a hard time getting the dealer to make good on his word. Some states, including Connecticut, Kansas, Maine, Maryland, Massachusetts, Minnesota, Mississippi, New Jersey, New York, Rhode Island, Vermont, West Virginia and the District of Columbia, don't allow "as is" sales for many used vehicles.

Three states — Louisiana, New Hampshire, and Washington — require different disclosures than those on the buyer's guide. 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 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 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 in effect is promising that the vehicle will be suitable for that purpose.

With a written warranty that doesn't cover your problems, you 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 auto-matically. 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 buyer's 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 buyer's guide if the dealer decides to sell a vehicle with implied warranties and no written warranty. A copy of the buyer's guide with the "Implied Warranties Only" disclosure is on page 13.

Dealers who offer a written warranty must complete the warranty section of the buyer's guide. Because terms and conditions vary, it may be useful to compare and 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 such costs as removing and reinstalling a covered system.

• You have the choice of a replacement or a full refund if, after a reasonable number of tries, the dealer cannot repair the vehicle or a covered system.

• You only have to tell the dealer that warranty service is needed in order 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 the dealer 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 buyer's guide lists the major systems where 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, and 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, call to verify the information, and check out the third-party company with your local Better Business Bureau. It's not foolproof, but it is prudent. Make sure you receive a copy of the dealer's warranty document if you buy a car with a warranty.

Unexpired Manufacturer's Warranties
If the manufacturer's warranty still is in effect, the dealer may include it 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, necessary paperwork) by calling the manufacturer's zone office. Make sure you have the Vehicle Identification Number (VIN) when you call.

Service Contracts
Like a warranty, a service contract provides repair and/or maintenance for a specific period. Warranties are included in the price of a product, however, service contracts cost extra. To decide if you need a service contract, consider whether:

• the service contract duplicates warranty coverage or offers protection that begins after the warranty runs out. Does the service contract extend beyond the time you expect to own the car? If so, is the service contract transferable or is a shorter contract available?

• the vehicle is likely to need repairs and their potential costs. You can determine the value of a service contract by figuring whether the cost of repairs will exceed the contract price.

• the service contract covers all parts and systems. Check out all claims carefully. For example, "bumper-to-bumper" coverage may not mean what you think.

• a deductible is required and, if so, the amount and terms.

• the contract covers incidental expenses, such as towing and rental-car charges while your car is being serviced.

• repairs and routine maintenance, such as oil changes, have to be done at the dealer.

• there's a cancellation and refund policy for the service contract and, whether there are cancellation fees.

• the dealer or company offering the service contract is reputable. Read the contract carefully to determine who is legally responsible for fulfilling the terms of the contract. Some dealers sell third-party service contracts.

The dealer must check the appropriate box on the buyer's guide if a service contract is offered, except in states where service contracts are regulated by insurance laws. If the guide doesn't include a service contract reference and you're interested in buying one, ask the salesperson for information.

If you buy a service contract from the dealer within 90 days of buying a used vehicle, federal law prohibits the dealer from eliminating 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 may give you protection beyond the scope of the service contract. Make sure you get written confirmation that your service contract is in effect.

(Source: www.ftc.gov)