Used Car Purchases: What to do When Your Car Does Not Work Properly
Authored By: Northwest Justice Project
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What can you do if your used car breaks down or needs costly repairs soon after you bought it from a car dealer? This publication talks about some state and federal laws that may help. If you want to do more research, we list some of these laws at the end of this publication.
- You cannot return a used car and cancel the sale simply because you have changed your mind. The law has no "cooling off" period after you buy a car. Once you sign the contract, the car is yours.
The car dealer did not offer any warranties (guarantees) on my used car. Does this mean that my car is not covered by any warranties even if it develops major problems soon after I bought it?
No. Every used car sold by a dealer in Washington has an "implied warranty of merchantability."
It is a warranty that gives you the right to expect that your car will be:
fit for ordinary driving purposes for a reasonable time
reasonably safe and without substantial defects
of the average quality of similar cars sold under similar conditions by other sellers in the same price range. (That means you do not expect an older car sold for $1,000 to have the same qualities as a newer car sold for $10,000.)
The implied warranty does NOT cover problems that you should have noticed when you looked at the car (example: a bald tire) or took it for a test drive.
No. What is acceptable quality for one used car may not be for the next. You should take into account factors like:
the price you paid for the car
the car's age
the car's mileage
the kinds of problems you are having
when these problems took place
At the end of this publication, we give some examples of when courts have ruled that problems were covered by an implied warranty.
A sticker on the car said the car was being sold "as is," and the sales contract seems to say I waived (gave up) all warranties. Have I given up my right to an implied warranty of merchantability?
No. Even if the car was sold "as is," the implied warranty of merchantability is given up only if two conditions are met:
- You and the dealer must have expressly negotiated the waiver and reached an agreement that your car does not come with an implied warranty;
- The dealer must give you a written statement of the particular characteristics or parts of the car that are not warranted.
Because dealers rarely meet both conditions, most used cars have an implied warranty of merchantability.
No. The implied warranty is not waived if the dealer sold you a service contract within 90 days after you bought the car. Service contracts often are not worth the money. If you cannot use your contract to get needed repairs done, you can try to claim that those same repairs should be covered by an implied warranty.
This publication does not address how to get repairs done or pursue claims based on a service contract.
You can ask the car dealer to repair your car or pay to have it repaired. If the dealer will not make all repairs for free, think about compromising. A compromise solution will be faster, and maybe better, than the other choices.
Any agreement you reach with the dealer should:
be in writing
say who will do the repairs
say what the repairs will be
say what your cost will be, if there is a cost to you
Be careful, however, about bringing the car in if you owe the dealer money (on a down payment or on your monthly payments). Some dealers may refuse to return a car unless these payments are made.
You can ask the dealer (and your lender if you applied for your loan at the car dealer's business) to cancel the contract, take back the car, and refund your money. But dealers (and lenders) usually do not agree to cancel a sale.
It depends on who the lender is.
If you applied for your car loan at the car dealer's place of business, the lender is in the same position as the dealer. Under federal law the lender is liable (responsible) for any claims or defenses that you have against the dealer. This law also applies when the loan papers have been given to another lender and when the lender is someone with whom the car dealer regularly does business.
If you got the money to buy the car from your bank or credit union, neither the bank nor credit union is liable for any claims you have against the car dealer.
- You can ask for help from the Attorney General's Office (contact info is at the end of this publication). If you file a complaint, they may be able to mediate your dispute with the car dealer.
- You can also contact your local Better Business Bureau, find out if a mediation service is offered by your local city or municipality, or try a local Dispute Resolution Center. Our Mediation publication has more information about using mediation as an alternative to going to court.
You can sue in court to try to recover the cost of your damages. Your "damages" are the difference in the value of the car you got and its value as warranted. Repair costs are often used as another way to measure damages. The court you will file in will depend on the amount of damages you are looking for.
Damages under and up to $4,000: You can sue in Small Claims Court for up to $4000. Small Claims Court is informal. Lawyers are generally not allowed. Our Small Claims Court publication has more information about how to use that court.
Damages of more than $4,000: If you are suing for more than $4000, you must sue in District Court or Superior Court. You will probably need to hire a lawyer. If your damages are slightly more than $4000, it probably makes sense to take the loss and sue for $4000 in Small Claims Court.
Sales agreements and loan agreements often have an arbitration clause. This clause may require you to take any disputes you have with the car or lender to arbitration instead of going to court. Arbitrators are people who are selected to hear both sides and come to a decision. The hearings take place in private settings. They are less formal than court hearings.
Decisions made by arbitrators are legally binding. If you lose at your arbitration hearing, you will not be able to start a lawsuit over the same dispute.
Arbitration fees vary, but are much higher than small claims court fees. You must understand your responsibility for filing fees and the cost of the arbitrator. Some arbitration clauses give the winning side (the "prevailing party") reasonable attorney's fees. If your case goes to arbitration and you lose, you may have to pay these costs.
Arbitration clauses are not always enough to keep someone from filing a case in court. Courts have refused to uphold arbitration clauses that are very one-sided or unfair. If you want your dispute resolved in court instead of arbitration, you will have to convince the court that your clause is invalid.
The state laws on arbitration are here: Chap. 7.04A RCW.
You cannot sue in Small Claims Court to get the car dealer to make specific repairs.
You can try to get this order in other courts. But courts do not often grant this, it would take time, and you would need a lawyer to help you.
Send a timely notice that revokes your acceptance of the used car sale. You must send the notice within a reasonable time of when you discovered or should have discovered the problems with the car.
If you paid cash for the car, send the notice to the dealer. If you borrowed money to buy the car and applied for your car loan at the dealer's place of business, also send the notice to the lender. Keep a copy of the notice.
Offer to return the car in exchange for a refund of the money you have paid and a cancellation of the contract (and loan agreement).
If the dealer (or lender) is not willing to cancel, you will have to take your case to court (or to arbitration, if that is what your sales contract or loan agreement says). You will have to convince the judge or arbitrator that you rightfully revoked acceptance of the sale and that the contract should be cancelled. Going to court or arbitration is usually hard if you do not have an attorney. It is hard to get a contract cancelled. Note: The dealer and lender will probably have lawyers.
You cannot sue to cancel the contract in Small Claims Court.
First read the "How do I Prepare for Trial?" section in our Small Claims Court publication. It has practical suggestions and tips to use as you get your case ready.
Important papers and documents you should bring to court include:
your sales agreement
pictures of the car's condition
repair bills or written damage estimates
any letters you have sent the dealer or lender about the problems you have had with the car.
any document you think you might need. (You can always decide not to use a document you have brought to court, but you cannot have the court consider anything you have left at home.)
Contact mechanics who have looked at your car and would be able to support your case. Ask them to appear at the trial. You may need expert testimony about the value of your car for the court to determine the appropriate amount of damages.
If I have paid to have repairs done, can I deduct the cost from my car payments instead of going to court?
Yes, but this "self-help" strategy is risky. We do not recommend it. You must be able to hold the lender liable for any claims you have against your car dealer (as explained above) and you must give written notice that you will deduct the cost of repairs from your payments. As soon as you give this notice, expect a strong response from your lender.
- If your car loan gives your lender a security interest in the car (most car loans do), your lender may try to
repossess the car
- sue to get it back
as soon as you miss a payment.
- If your loan gives your lender the right to say the whole loan is due if you miss a payment (most car loans do), the lender might accelerate the loan by considering the entire amount you borrowed due.
- If the lender starts a lawsuit or files for arbitration, you are gambling that a court or arbitrator will agree that the implied warranty of merchantability applies to your case and with your calculation of damages. If the court or arbitrator rules against you, not only do you lose the car, you also may end up owing money on the loan, the lender's costs, and attorney's fees.
What should I know about the risk of repossession if I deduct the cost of repairs from my car payments?
Repossession is a serious threat no matter the reason that you have missed some of your car payments. Your lender does not need court permission to repossess your car and does not have to notify you that a repossession is about to take place.
Once the car is repossessed, you must sue to try to get it back. This means you must convince a court that you were entitled to stop making payments. (You cannot sue for the return of the car in Small Claims Court.)
The repossession will be lawful if it does not "breach the peace." Your lender cannot threaten you with bodily harm or break into a locked garage.
- It is not a breach of the peace if you are not there or do not object before the repossession takes place.
It does breach the peace (the repo person cannot take your car) if you are there and you object to the seizure before it takes place. You can object to the seizure by politely and firmly telling the repo person "Do not take my car." Do not shout.
Repossessions often take place during the night, with cars being towed away while parked on the street or even a driveway.
If you have withheld payment, do not turn your car over to the car dealer - or anyone else the lender would know - for repairs. Do not leave your car where the lender can expect to find it. Leave as little personal property as possible in the car.
Your lender will sell the car, usually for much less than what the car is worth, and apply the sale price to what you owe. The lender can charge you for the costs of repossessing your vehicle and getting it ready for sale. It can also sue you for the amount it claims is the difference between what you still owe on the loan and the sale price of the car.
You could turn the car in voluntarily to the lender in return for a written agreement that says you do not owe anything else on the loan. If you are already behind on your payments, do not bring the car with you to your lender's place of business before you have a written agreement for its voluntary return.
Your lender may agree to this proposal (but often will not) because:
it saves the time and cost of repossessing the car,
it might not be entitled to receive more from you if your car had serious defects, or
you do not have the types of income and property the lender can lawfully take even if it wins.
To learn what types of income and property you can protect, see our Debtor's Rights in a Lawsuit publication.
You may have strong feelings about how your case should be resolved. At the same time, you must carefully look at the risks of taking certain actions (such as withholding car payments or canceling the contract) before taking them. Do not take these steps unless you are also ready to justify them before a judge or arbitrator.
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 the date of its printing, June 2012.
©2012 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.)
esto v. Russ Dunmire Oldsmobile, Inc. 16 Wn.App. 39 (1976) (overheating and starting problems three hours after sale/car not drivable due to internal engine damage); Faulkingham v. Seacoast Subaru, Inc., 577 A.2d 772 (1977) (car needed to be repaired six times during the first two weeks); Ismael v. Goodman Toyota, 417 S.E.2nd 290 (1992) (car returned for repairs six times in six months and driven only 700 miles before it was said to not repairable).
 RCW 48.110.075(e)(iv).
 16 C.F.R. § 433. Your loan papers should say the following, in bold face type: "Any holder of this consumer credit contract is subject to all claims and defenses which the debtor could assert against the seller of good or services obtained pursuant hereto or with the proceeds hereof. Recovery hereunder by the debtor shall not exceed amounts paid by the debtor hereunder." Under state law, this provision is part of your loan agreement whether or not it is in the written agreement. RCW 62A.9A-403(d) and 62A.9A-404. See also RCW 63.14.020 and RCW 63.14.150.
 RCW 62A.2-714(2).
 RCW 62A.2-608.
 16 C.F.R. § 433
 RCW 62A.2-607(4).
 RCW 62A.2-717.
 RCW 62A.9A-609 (b)(2).