Image by rutlo via FlickrWarranty and Service Contracts
"As Is--No Warranty"
About one-half of all used cars sold by dealers come "as is," which means there is no express or implied warranty. If you buy a car "as is" and have problems with it, you must pay for any repairs yourself. When the dealer offers a vehicle for sale "as is," the box next to the "As Is--No Warranty" disclosure on the Buyers Guide will be checked. If this box is checked but the dealer makes oral promises to repair the vehicle, have the dealer put those promises in writing on the Buyers Guide.
Some states (Connecticut, Kansas, Maine, Maryland, Massachusetts, Minnesota, Mississippi, New York, Rhode Island, Vermont, West Virginia and the District of Columbia) do not permit "as is" sales for most or all used motor vehicles.
"Implied Warranties Only"
Implied warranties exist under all state laws and come with almost every purchase from a used car dealer, unless the dealer tells you in writing that implied warranties do not apply. Usually, dealers use the words "as is" or "with all faults" to disclaim implied warranties. Most states require the use of specific words.
"If the dealer makes oral promises, have the dealer put those promises in writing."
The "warranty of merchantability" is the most common type of implied warranty. This means that the seller promises that the product will do what it is supposed to do. For example, a car will run, a toaster will toast.
Another type of implied warranty is the "warranty of fitness for a particular purpose." This applies when you buy a vehicle on the dealer's advice that it is suitable for a particular use. For example, a dealer who suggests that you buy a specific vehicle for hauling a trailer warrants, in effect, that the vehicle will be suitable for hauling a trailer.
If you buy a vehicle with a written warranty, but problems arise that the warranty does not cover, you may still be protected by implied warranties. Any limitation on the duration of implied warranties must appear on the written warranty.
In those states that do not permit "as is" sales by dealers, or if the dealer offers a vehicle with only implied warranties, a disclosure entitled "Implied Warranties Only" will be printed on the Buyers Guide in place of the "As Is" disclosure. The box next to this disclosure would be checked if the dealer chooses to sell the car with implied warranties and no written warranty. A copy of the Buyers Guide with the "Implied Warranties Only" disclosure is shown on page 7.
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
* 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
* 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
* The duration of the warranty for each covered system. For
example, "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 manufacturer's. 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.
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
* 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
* 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
* 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.
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