-Buying a Used Car

This year, more than 16 million Americans will buy a used
car. If that's what you are planning, this guide may help you.

It explains your protections under the FTC's Used Car Rule and offers some
shopping suggestions, even if you are not buying from a used
car dealer.

Before you begin looking at used cars, think about what
car models and options you want and how much you are able or
willing to spend. You can learn about car models, options, and
prices by reading newspaper ads, both display and classified.
Also, your local library and book stores have magazines that
discuss and compare car models, options, and costs, as well as
provide information about frequency-of-repair records, safety
tests, and mileage. The U.S. Department of Transportation Auto
Safety Hotline (800-424-9393) will tell you if a car model has
ever been recalled and send you information about that recall.


Before You Look For a Used Car, Consider


Costs. Remember, the real cost of a car includes more than
the purchase price: it includes loan terms, such as interest
rates and the length of the loan. If you plan to finance the
car, you need to know how much money you can put down and how
much you can pay monthly. Dealers and lending institutions
offer a variety of interest rates and payment schedules, so you
will want to shop for terms. If, for example, you need low
monthly payments, consider making a large down payment or
getting financing that will stretch your payments over five
years, rather than the usual three. Of course, this longer
payment period means paying more interest and a higher total
cost.

Reliability. You can learn how reliable a model is by
checking in publications for the frequency-of-repair records.
Find out what models have repair facilities in a location
convenient to you and if parts are readily available at the
repair facility.

Dealer Reputation. Find out from experienced people whose
opinions you respect which dealers in your area have good
reputations for sales and service. You may wish to call your
local consumer protection office and the Better Business Bureau
to find out if they have any complaints against particular
dealers.


If You Buy a Used Car From a Dealer


If you go to a dealer for a used car, look for a "Buyers
Guide" sticker on the window of each car. The Buyers Guide,
required by the Federal Trade Commission's Used Car Rule, gives
you important information and suggestions to consider. The
Buyers Guide tells you:

* Whether the vehicle comes with a warranty and, if
so, what specific protection the dealer will provide;

* Whether the vehicle comes with no warranty ("as
is") or with implied warranties only;

* That you should ask to have the car inspected by
an independent mechanic before you buy;

* That you should get all promises in writing; and

* What some of the major problems are that may occur in any
car.

The Used Car Rule requires dealers to post the Buyers
Guide on all used vehicles, including automobiles, light-duty
vans, and light-duty trucks. "Demonstrator" cars also must have
Buyers Guides. But Buyers Guides do not have to be posted on
motorcycles and most recreational vehicles. Individuals selling
fewer than six cars a year are not required to post Buyers
Guides.

Whenever you purchase a used car from a dealer, you should
receive the original or an identical copy of the Buyers Guide
that appeared in the window of the vehicle you bought. The
Buyers Guide must reflect any changes in warranty coverage that
you may have negotiated with the dealer. It also becomes a part
of your sales contract and overrides any contrary provisions
that may be in that contract.

As you read this brochure, you can refer to the Buyers
Guide, shown on pages 6 through 8.


"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.


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, "30 days or 1,000 miles, whichever occurs first";
and

* 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.


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.


Spanish Language Sales


If you buy a used car and the sales talk is conducted in
Spanish, you are entitled to see and keep a Spanish-language
version of the Buyers Guide.


If You Buy a Used Car From a Private Party


Many cars are available privately, such as through
classified ads in a newspaper. If you are shopping for a car
from an individual, you should understand several differences
between sales made by individuals and by dealers.

* Private sellers generally are not covered by the Used Car
Rule and therefore, do not have to use the Buyers Guide.
However, you still can follow the Guide's suggestions. For
example, you can refer to the list of potential problems
displayed on the back of the Buyers Guide shown in this
brochure. In addition, ask the seller whether you may have
the vehicle inspected by your own mechanic and whether you
may take it on a test drive.

* Private sales usually are not covered by the "implied
warranties" of state law. So, a private sale probably will
be on an "as is" basis, unless your contract with the
seller specifically provides otherwise. If you have a
written contract, the seller must live up to the promises
stated in the contract.


"An independent inspection lets you find out about the
mechanical condition of the vehicle before you buy it."


Depending on its age, the car also may be covered by a
manufacturer's warranty or a separately purchased service
contract. However, warranties and service contracts may
not be transferable, or there may be limitations or costs
for a transfer. Before you purchase the car, ask the
seller to let you examine any warranty or service contract
on the vehicle.

* Many states require that dealers, but not individuals,
ensure that their vehicles will pass state inspection or
carry a minimum warranty before they offer them for sale.
Ask your state's attorney general's office or a local
consumer protection office about the requirements on
individuals and on dealers in your state.


Before You Buy Any Used Car


If you are interested in a particular car, ask the dealer
or owner if you can take it on a test drive. Try to drive the
car under many different conditions, such as on hills,
highways, and in stop-and-go traffic.

You also may want to ask the dealer or owner whether the
car has ever been in an accident. Find out as much as you can
about the car's prior history and maintenance record. Getting
an independent inspection by an experienced mechanic is a good
idea before purchasing any used car.

Be prepared to negotiate. Many dealers and individuals are
willing to bargain on price and/or on warranty coverage.


If You Have Problems


If something goes wrong with your car and you think that
it is covered by a warranty (either express or implied) or a
service contract, refer to the terms of the warranty or
contract for instructions on how to get service. If a dispute
arises concerning the problem, there are several steps you can
take.


Try To Work It Out With The Dealer


First, try to resolve the problem with the salesperson or,
if necessary, speak with the owner of the dealership. Many
problems can be resolved at this level. However, if you believe
that you are entitled to service, but the dealer disagrees, you
can take other steps.

If your warranty is backed by a car manufacturer and you
have a dispute about either service or coverage, contact the
local representative of the manufacturer. This local or "zone"
representative has the authority to adjust and make decisions
about warranty service and repairs to satisfy customers.

Some manufacturers also are willing to repair certain
problems in specific models free of charge, even if the
manufacturer's warranty does not cover the problem. Ask the
manufacturer's zone representative or the service department of
a franchised dealership that sells your car model whether there
is such a policy.


Other Approaches You Can Try


If you cannot get satisfaction from the dealer or from a
manufacturer's zone representative, contact the Better Business
Bureau or a state agency, such as the office of the attorney
general, the department of motor vehicles, or a consumer
protection office. Many states also have county and city
offices that intervene or mediate on behalf of individual
consumers to resolve complaints.

You also might consider using a dispute resolution
organization to arbitrate your disagreement if you and the
dealer are willing. Under the terms of many warranties, this
may be a required first step before you can sue the dealer or
manufacturer. Check your warranty to see if this is the case.
If you bought your car from a franchised dealer, you may be
able to seek mediation through the Automotive Consumer Action
Program (AUTOCAP), a dispute resolution program coordinated
nationally by the National Automobile Dealers Association and
sponsored through state and local dealer associations in many
cities. Check with the dealer association in your area to see
if they operate a mediation program.

If none of these steps is successful, you can consider
going to small claims court, where you can resolve disputes
involving small amounts of money for a low cost, often without
an attorney. The clerk of your local small claims court can
tell you how to file a suit and what the dollar limit is in
your state.

The Magnuson-Moss Warranty Act also may be helpful. Under
this federal law, you can sue based on breach of express
warranties, implied warranties, or a service contract. If
successful, consumers can recover reasonable attorney's fees
and other court costs. A lawyer can advise you if this law
applies to your situation.


For Further Help


If you want additional information about warranties or
service contracts or about new car leasing or buying, send for
these free FTC brochures:

* Warranties

* Service Contracts

* Car Ads: Low-Interest Loans and Other Offers

* New Car Buying Guide

* A Consumer Guide to Vehicle Leasing

Write: Public Reference, Federal Trade Commission,
Washington, DC 20580.

If you have additional questions about the Used Car Rule,
contact the Federal Trade Commission Office nearest you.


Federal Trade Commission Headquarters


6th & Pennsylvania Avenue, N.W.
Washington, DC 20580
(202) 326-2222
TDD: (202) 326-2502


Federal Trade Commission Regional Offices


1718 Peachtree Street, N.W.
Atlanta, Georgia 30367
(404) 347-4836

10 Causeway Street
Boston, Massachusetts 02222
(617) 565-7240

55 East Monroe Street
Chicago, Illinois 60603
(312) 353-4423

668 Euclid Avenue
Cleveland, Ohio 44114
(216) 522-4207

100 N. Central Expressway
Dallas, Texas 75201
(214) 767-5501

1405 Curtis Street
Denver, Colorado 80202
(303) 844-2271

11000 Wilshire Boulevard
Los Angeles, California 90024
(213) 209-7575

150 William Street
New York, New York 10038
(212) 264-1207

901 Market Street
San Francisco, California 94103
(415) 744-7920

915 Second Avenue
Seattle, Washington 98174
(206) 553-4656