Buying a Used Car… Part Two

In Part One, you learned what to look for when searching for a vehicle and what to look for when dealing with used car dealers. You also learned about the different terminologies associated with used cars. In Part Two, you will learn more that entails in the Buyer's Guide. You will know what each section means and what to look for...

Dealer Warranties

When dealers offer a written warranty on a used vehicle, they must fill in the warranty portion of the Buyers Guide. Because the terms and conditions of written warranties can vary widely, you may find it useful to compare warranty terms on cars or negotiate warranty coverage. Dealers may offer a full or limited warranty on all or some of the systems or components of the vehicle. A "full" warranty provides the following terms and conditions:

Warranty service will be provided to anyone who owns the vehicle during the warranty period when a problem is reported.
Warranty service will be provided free of charge, including such costs as returning the vehicle or removing and reinstalling a system covered by the warranty, when necessary.
At your choice, the dealer will provide either a replacement or a full refund if the dealer is unable, after a reasonable number of tries, to repair the vehicle or a system covered by the warranty.
Warranty service is provided without requiring you to perform any reasonable duty as a precondition for receiving service, except notifying the dealer that service is needed.
No limit is placed on the duration of implied warranties.

If any one of the above statements is not true, then the warranty is "limited." A "full" or "limited" warranty need not cover the entire vehicle. The dealer may specify only certain systems for coverage under a warranty. Most used car warranties are "limited," which usually means you will have to pay some of the repair costs. By giving a "limited" warranty, the dealer is telling you that there are some costs or responsibilities that the dealer will not assume for systems covered by the warranty. If the dealer offers a full or limited warranty, the dealer must provide the following information in the "Warranty" section of the Buyers Guide:

The percentage of the repair cost that the dealer will pay. For example, "the dealer will pay 100% of the labor and 100% 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 contains a list of descriptive names for the major systems of an automobile where problems may occur.
The duration of the warranty for each covered system. For example, it will say "30 days or 1,000 miles, whichever occurs first.
Whether a deductible applies.

Under another federal law, the Magnuson-Moss Warranty Act, you have a right to see a copy of the dealer's warranty before a purchase. Examine the warranty carefully before you buy to see what is covered and what is not. It contains more detailed information than the Buyers Guide, such as a step-by-step explanation of hoax to obtain repairs if a covered system or component malfunctions. Also check who is legally responsible for fulfilling the terms of the warranty. If a third party is responsible, the best way to avoid potential problems is to make sure that the third party is reputable and insured. You can do this by asking the company for the name of their insurer and then checking its performance record with your local Better Business Bureau.

Unexpired Manufacturer's Warranties

If the used vehicle is still covered by the manufacturer's original warranty, the dealer may include it in the "systems covered/duration" section of the Buyers Guide. This does not necessarily mean that the dealer offers a warranty in addition to the manufacturers. In some cases, a manufacturer's original warranty can be transferred to a second owner only upon payment of a fee. If you have any questions, ask the dealer to let you examine any unexpired warranty on the vehicle.

Service Contracts

When you buy a car, you may be offered a service contract, which you can buy for an extra cost. In deciding whether you want a service contract, consider:

Whether the warranty that comes with your car already covers the same repairs that you would get under the service contract or whether the service contract protection begins after the warranty runs out. Does the service contract extend longer than the time you expect to own the car? If so, is the service contract transferable or is a shorter contract available?
Whether the vehicle is likely to need repairs and their potential costs. The value of a service contract is determined by whether the cost of repairs is likely to be greater than the price you pay for the service contract protection.
Whether the service contract covers all parts and systems of the car. Check out all claims carefully. Claims that coverage is "bumper to bumper" may not be entirely accurate.
Whether there is a deductible required, and, if so, consider the amount and terms of the deductible.
Whether the contract covers incidental expenses, such as towing and the costs of a rental car while your car is being serviced.
Whether repairs and routine maintenance, such as oil changes, can be performed at locations other than the dealership from which you purchased the contract.
Whether there is a cancellation and refund policy for the service contract, and what the costs are if you cancel.
Whether 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 service contracts that are backed by a third party. If a third party is responsible, you may wish to ask if the company is insured and to check the company's performance with your local Better Business Bureau.

If a service contract is offered, the dealer must mark the box provided on the Buyers Guide, except in those states that regulate service contracts under their insurance laws. If the Buyers Guide does not include a reference to a service contract, and you are interested, ask the salesperson whether one is available. When you purchase a service contract from the dealer within 90 days of buying the vehicle, federal law prohibits the dealer from disclaiming implied warranties on the systems covered in that service contract. For example, if you buy a car "as is," the car normally will not be covered by implied warranties. But if you buy a service contract covering the engine, you automatically get implied warranties on the engine, which may give you protection beyond the scope of the service contract. Make sure you receive a written confirmation that your service contract is in effect.

Spoken Promises

The Buyers Guide warns consumers not to rely on spoken promises. Oral promises are difficult, if not impossible, to enforce. Make sure all promises you want are written into the Buyers Guide and keep it.

Pre-Purchase Independent Inspection

The Buyers Guide also suggests you ask the dealer whether you may have the vehicle inspected by your own mechanic. Some dealers will let you take the car off the lot to get an independent inspection. Others may have reasons, such as insurance restrictions, for denying this request. In such a case, the dealer may permit you to bring an independent mechanic to the used car on the lot. A dealer who refuses to allow any independent inspection may be telling you something about the condition of the car.

Remember, a good-looking car, or a car that comes with a warranty, does not necessarily run well. An independent inspection lets you find out about the mechanical condition of the vehicle before you buy it. Although an inspection fee by a mechanic may seem high, when you compare it to the price of the car, it can be worth the cost.

Vehicle Systems

The Buyers Guide includes a list of the 14 major systems of an automobile and some of the major problems that may occur in these systems. You may find this list helpful to evaluate the mechanical condition of the vehicle. The list also may be useful when comparing warranties offered on different cars or by different dealers.

Dealer Identification and Consumer Complaint Information

On the back of the Buyers Guide, you will find the name and address of the dealership. In the space below that, you will find the name and telephone number of the person at the dealership to contact if you have any complaints after the sale.