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Used Car Warranties

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Used car warranties can be quite different than new car warranties.  Not every used car comes with a standard warranty, even if you’re buying it at a car dealership.  If you’re thinking about buying a used car, then this article can help you to become a more informed consumer.

In this publication, we’re going to first talk about buying used cars, and what you can expect when buying a car from a dealership or an individual.  Next, we’ll get into the details of car warranties, including a discussion on manufacturer’s warranties.  Finally, we’ll discuss a topic that should be of interest to anyone buying a used car: implied warranties and extended warranties.

Buying a Used Car

  Additional Resources

In our previous article on Buying Used Cars, we talked about researching your used car purchase.  For example, we discussed where you can find information on quality ratings.  We also told you how to find car safety ratings, as well as how to figure out the value of a used car.  Once you’ve narrowed your decision to several makes and models of cars, you also need to figure out where to shop for used cars.

Used Car Values

In our used car buying article, we also talked about Kelley Blue Book values, and how they can vary depending on where the car was bought or sold.  This variability occurs because there is an assumed safety factor when you buy from a car dealership.  In other words, dealerships can demand a slightly higher price, or premium, from a buyer because there is an assumed level of recourse with a dealership.

If you purchase a used car from an individual, then you’re assuming virtually all of the risk if the car does not perform as expected.  It is more difficult to get a warranty, or guarantee, from an individual.  This is true regardless of what the individual promised when they sold you the car.

If you buy a used car from a reputable dealership, and have a subsequent problem with the car, then you’d hope the dealership would cover the cost of the repair under some kind of warranty.  At least that is the hope.

Used Car Return Policies

The Federal Trade Commission agrees that most customers think they are getting a warranty when they buy a used car from a dealership.  In fact, there are certain requirements, or consumer protections, the FTC has put forth concerning the sales of used cars and the warranties they need to carry.

There is also a misconception that dealers are required to give used car buyers the right to cancel the purchase and return the car.  There is no law that requires a dealer to take a car back once it is sold.  Reputable dealerships, the ones that will stand behind the cars that they sell, often grant buyers the right to return a car within a few days and for specific reasons.  Before buying a used car from a dealership, ask them about their return policy, and make sure you get the policy in writing.

Used Car Buying Guides

Any dealership that sells more than six used cars annually is required by law to post their Buyers Guide in every car offered for sale.  The buyers guide is required to provide guidance on the following items:

  • If the car is being sold “as is,” or the car is covered by a warranty.
  • The amount the dealership will pay for repairs covered by warranties.
  • The guide will tell the buyer that spoken promises are difficult to enforce, and that all negotiated items should be in writing.
  • The guide will remind the buyer they have the right to have the automobile inspected by an independent mechanic before the vehicle is purchased.
  • The buyer of the car is entitled to, and should, take the buyers guide as a reference document after the car is purchased.
  • Warn the buyer about major mechanical failures that can happen when purchasing a used car.

If you buy a used car, and negotiate different terms than those posted in the car’s original buying guide, then make sure you get a copy of the buying guide that reflects the changes that were made during those negotiations.

Used Car Warranty

At this point, we’re going to discuss the types of used car warranties you might encounter in the marketplace.  This includes some special types of warranties such as “as is,” implied, and extended warranties.  The important point to remember here is that even if a used car does not carry a warranty, you might still be protected.

“As Is” Used Car Warranties

The first used car warranty we’re going to discuss is an “as is” warranty, which is essentially no warranty on the car at all.  If a dealer is offering a used car with this type of arrangement, then the check box on the buyers guide will indicate this understanding.  If you negotiate a different arrangement, or a promise is made beyond “as is,” then make sure you get the offer in writing.

Even if you buy a car “as is” from a dealer, you have some protections under the law.  This includes what are called implied warranties.

Implied Warranties

All dealerships selling used cars are expected to sell vehicles that have met reasonable quality standards.  This is sometimes referred to as an implied warranty.  However, in certain states, the “as is” language can be used to eliminate most implied warranties.   On the other hand, Kansas, Maine, Maryland, Massachusetts, Mississippi, Vermont, West Virginia, and the District of Columbia, do not permit “as is” sales.

Warranties of Merchantability

The most common form of an implied warranty is that of merchantability.  Essentially, this means if you bought a car to drive, then the car should be able to provide this function.  In this example, if you bought a used car, then you should be able to drive it home and to work the next day.

The difficult part with implied warranties is the buyer might have to prove the defect existed in the automobile before they purchased it.  Certainly if the car experiences a serious mechanical failure at a much later date, an implied warranty will not apply.  Basically, this kind of warranty states:  You are buying a used car, and this car is in good running condition today.

Manufacturer’s Warranties

If the car is still covered under the original manufacturer’s warranty, then this should be indicated on the buyers guide along with the expected date of expiration.  If you are buying a used car with a manufacture’s warranty, then make sure you get a copy of the warranty documents and understand what parts of the car are covered.

Extended Warranties

If the dealership offers a service contract on the vehicle, then you are really purchasing an extended warranty.  The service contract, or extended warranty, should detail exactly what is covered and for how long the coverage will be in effect.  Once again, the buyers guide will indicate if a service contract is being offered on the car, and the terms and conditions of the contract.

Extended warranties are frequently found on used luxury cars, which are often sold as certified pre-owned vehicles.  These certified pre-owned programs gained popularity as “gently-used” leased cars became available as used cars.  Since these vehicles are returned to the dealership and sold as pre-owned, the automobile manufacturers will often extend the car’s warranty past the original expiration date.  This is done to build confidence in buyers.

Some of the better pre-owned warranties include those of Acura, Honda, Nissan, Infinity, Ford, Dodge, and Jeep.  These manufacturers extend the original warranties for up to seven years and 100,000 miles.  Less generous are the extended warranties from Buick, Chevrolet, GMC, Land Rover, and Mazda.

The cars in this last group provide coverage for 12 months or 12,000 miles.  All of the car manufacturers mentioned above will provide roadside assistance on their certified pre-owned vehicles as long as the extended warranty is in-effect.

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