Tips for Buying a Used Car
Authored By: Northwest Justice Project
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0322EN - This publication provides tips on how to make sure the car you are buying is in good condition, how to buy a car you can afford, whether you should purchase warranties or other add-ons and how to find out about the car’s history.
- What information is in this publication?
- How do I make sure the car I am buying is in good condition?
- How do I make sure I can afford the car I am buying?
- How do I find out the history of the vehicle before I buy it?
- What will the vehicle history tell me?
- What isn't included in the vehicle history?
- Should I buy a vehicle that has "salvage" "rebuilt" or "total loss" branded on the title?
- Should I purchase a warranty or service contract?
- Should I buy a vehicle that is being sold "as-is"?
- What is the Implied Warranty of Merchantability (IWM)?
- Should I ever waive the Implied Warranty?
- What if the car I bought ends up being a lemon?
- Where can I get more information?
- What if I need legal help?
This publication provides tips on:
How to make sure the car you are buying is in good condition
How to buy a car you can afford
Whether you should purchase warranties or other add-ons
How to find out about the car's history
- It is not important how good a car looks. It is important how well it runs. Do not buy a car that will require costly repairs, or one that burns more gas than you can afford to buy. Remember: even if a car does not work, you have to keep making car payments.
Test-drive the car. Drive with the radio off so you can listen for rattles and other noises. Drive it under the same conditions you would in your daily life (on the freeway, in town, on hills).
Have your own mechanic inspect the car. Bring the car to your mechanic BEFORE you sign a contract to purchase the car, or bring your mechanic to the dealership with you. Never rely on the dealer's mechanic or the dealer's "word" that the car is in good working condition.
Do not rely on what the dealer tells you. The dealer's only interest is in selling you a car, not in selling you a car that will last. THE DEALER'S PROMISES ONLY COUNT IF THEY ARE IN THE WRITTEN CONTRACT THAT YOU SIGN.
Get dealer inspections in writing. If the dealer claims to have done a "100-point inspection" (or a 30- or 50-point inspection), ask for a copy. Ask the dealer to date and sign it.
Do not sign a contract without reading it and understanding how much you have to pay. ONCE YOU SIGN THE CONTRACT, IT IS ALMOST IMPOSSIBLE TO CANCEL THE AGREEMENT. Interest payments on a car can DOUBLE the cost of the car. A $10,000 car can cost you $20,000 by the time you finish paying for it.
Do not co-sign for anyone. If you sign a contract as the co-signer, you are responsible for paying for the car exactly as if you were the buyer. If the buyer does not pay the loan on time, it will affect your credit. If your friend/relative does not make the payments and the dealership repossesses the car, they can sue you and garnish your wages.
SHOP FOR A LOAN FROM A BANK OR CREDIT UNION BEFORE YOU GO TO THE DEALERSHIP. If the dealership itself is offering to loan you the money to buy the car, beware. They will nearly always offer you a higher interest rate than you could get at a bank or credit union.
If the dealership is offering to arrange the financing for you with a bank or credit union, also be cautious. It is notillegal for a dealership to secure financing on your behalf from a bank at a given rate, and then offer the financing to you at a higher rate. The dealership pockets the difference, and you lose.
- Lower interest rates mean your monthly payments will be lower.
DO NOT BUY ADD-ONS YOU DO NOT NEED. Dealers often try to upsell customers by selling them service contracts, "gap insurance," undercoating, and so on. Read about and make sure you understand these products before you buy them. Ask yourself whether they are worth the extra cost.
Service contracts, for example, often have little value. They can often cost more if purchased from the dealer.
Gap insurance is also costly and unnecessary unless you will be "upside-down." That means you will owe more than your car is worth, for a long period.
Our section below, "Should I purchase a warranty?" has more information on purchasing a warranty.
Order a vehicle history from a data provider approved by the National Vehicle Title Information System. Make sure to get the title history of the vehicle through a data provider approved by the National Motor Vehicle Title Information System (NMVTIS). Go to www.vehiclehistory.gov, which links to the approved companies. NMVTIS is the only publicly available system in the United States to which all insurance carriers, auto recyclers, junk yards, and salvage yards, must report to regularly under federal law.
Who owned the vehicle, and when. Do you want a car that has had one owner, or a dozen previous owners?
Whether the person selling the car actually owns it. Do not buy a car from someone who does not have the legal right to sell it to you. Even car dealerships have sold cars to which they did not have legal title.
Whether the title is "branded." "Brands" are labels attached to the vehicle by the state's vehicle titling agency. In Washington, that is the Department of Licensing (DoL). Under federal law, all state title agencies must brand vehicles that have suffered certain types of major damage, such as a flood. Check the title for terms such as "junk," "salvage," or "flood."
Not every state reports this data to NMVTIS. Check the NMVTIS website to make sure that each state in which the vehicle was titled takes part in the NMVTIS database. Example: as of April 2013, Washington does report to NMVTIS, but Oregon does not take part in the NMVTIS database.
- Proceed with extreme caution before buying a car with a branded title.
How many miles the car has on it: NMVTIS includes an odometer reading as reported each time someone transferred the title of the vehicle. Read the odometer on the car you want to buy. Is the odometer reading lower or only very slightly higher than the mileage listed on the NMVTIS report? If so, someone may have tampered with the odometer.
The absence of information in a vehicle history report does not mean that the car is in good condition. Anything appearing in a vehicle history besides the NMVTIS information was provided voluntarily. For example, a major repair, a minor repair, or an airbag deployment may not appear in the report. That does not mean it did not happen. The only data the law requires to be reported is:
the current state of the title (examples: WA, OR, CA)
the last date the title was transferred
"brand" history as reported by the state licensing agency (examples: junk, salvage, flood)
Whether the vehicle was so badly damaged that an insurance company declared it a "total loss"
salvage history as reported by law by a junk or salvage yard
Beware of buying these vehicles. Some dealers buy and then resell these vehicles. Though required by law to disclose that a car has been branded, not all dealers comply with the law. Some of these cars may still have serious safety defects even after being repaired. All of these vehicles will have a much lower market value because of the branding. Because of safety concerns and the lower value of these cars, branded vehicles may be more costly to finance and insure.
Generally, a written warranty is a good thing to have. However, many written warranties include a long list of problems they do not cover. Read the warranty very carefully to see what is covered and what is not. Also, be aware that a service contract is not the same thing as a warranty.
- Warranty contracts often list the things that are not covered.
Service Contracts: A service contract is not a warranty. It is more like insurance to cover the cost of repairs the vehicle may need in the future.
Service contracts that you buy through the dealer tend to be very expensive. If you feel you need a service contract, first comparison shop. You may likely find a cheaper service contract elsewhere. You can cancel a service contract for a full refund within 30 days if you have not made any claims. After thirty days, a cancellation fee may apply.
- Service contracts' coverage is limited. Read the fine print closely.
The well-known window sticker you see in used cars is the "FTC Window Display." Many dealers think this sticker is enough to waive any responsibility for the car's quality after they sell it. The FTC's "As Is" sticker is not enough to waive the Implied Warranty of Merchantability.
An implied warranty means that even if the dealer does not promise it in writing, and even if the dealer says that s/he is selling a vehicle "as is," by lawthe dealer is still guaranteeing that the car it is selling "is reasonably fit for and adapted to the purposes for which it was purchased."
- the age and condition of the car at the time you buy it
- the price of the car
- the intended purpose
Example: if you pay $10,000 for a five-year old sedan, you expect it to operate like an average five-year old sedan that costs $10,000. You do not have the right to claim it should win races. You may claim it should operate for more than a week before breaking down.
No. Waiving the implied warranty benefits the dealer, not you. Many dealers have a small box on their sales agreement that the dealer instructs the buyer to sign or initial. It says the buyer waives his/her rights under the IWM.
It is not in fact that easy. In order for you to truly waive or disclaim an IWM:
- You and the seller must explicitly negotiate the waiver; AND
- The waiver must set forth with particularity the qualities and characteristics that are being waived or that are not being warranted.
If your vehicle is defective and you think you might have a claim under the Implied Warranty of Habitability, talk to a lawyer.
- A disclaimer of the implied warranty is invalid if the dealer sells the buyer a service contract.
The lemon law often does not apply to used cars. To be covered, the car must:
still be under the original warranty AND
the car has had a serious safety defect or non-conformity AND
there has been a reasonable number of attempts at repair (two or more for a safety defect, four or more for a nonconformity)
It also covers cars that have been out-of-service for diagnosis or repair for 30 calendar days, with at least 15 of those days falling within the warranty period.
If the lemon law applies, then you have a right to request that the car be replaced or that the car be bought back. The manufacturer has 40 days to comply with such a request.
www.washingtonlawhelp.org has "know your rights" publications and packets with forms and instructions for you to use.
National Consumer Law Center - www.consumerlaw.org
Washington State Attorney general - www.atg.wa.gov
Federal Trade Commission - www.ftc.gov
- Call CLEAR at 1-888-201-1014
This publication provides general information concerning your rights and responsibilities. It is not intended as a substitute for specific legal advice.
This information is current as of July 2013.
© 2013 Northwest Justice Project — 1-888-201-1014
(Permission for copying and distribution granted to the Alliance for Equal Justice and to individuals for non-commercial purposes only.)