Laws Governing the Sale of Used Vehicles

April 25, 2018

FTC Rule

The Federal Trade Commission (FTC) requires dealers who sell at least five previously owned cars a year to post buyer’s guides in the vehicles being sold. This does not apply to dealers in Maine and Wisconsin, because those two states have specific state statutes on the issue. The guide must inform potential buyers whether a warranty exists on the vehicle, and, if so, it must outline the amount the dealer is required to pay for repairs during the warranty period. Other information, such as advising buyers to have the car inspected and to obtain guarantees in writing, is also included in the guide. Dealers who violate the FTC’s rule can be fined up to $16,000 per violation. This law does not apply to the private sale of used cars.

Magnuson Moss Warranty Act

Under the Magnuson Moss Warranty Act, you can receive financial compensation if you purchase a new or used car that turns out to have serious mechanical problems. To qualify, the used car must be covered by an implied or written warranty either through the manufacturer or the dealer. Before you can receive compensation, your car must require repairs for the same problem at least three times.   The problem has caused the value of your vehicle to be less than expected when purchased.  You may need help from an attorney to receive compensation, and the Magnuson Moss Warranty Act provides for free legal assistance to consumers dealing with these situations.

State Lemon Laws

Each state has statutes regarding the sale of used cars. For example, New Jersey requires dealers to provide a warranty for every used car they sell. The duration of the warranty varies from 30 to 90 days or 1,000 to 3,000 miles, depending on the car’s mileage at the time of the sale. In Massachusetts, used-car buyers are protected by both the Lemon and the Lemon Aid laws. Under the Lemon Law, dealers must offer a warranty on cars sold for more than $700 with mileage of less than 125,000. The Lemon Aid Law states that if a purchased used car does not pass inspection within seven days of purchase and the repair estimate is at least one-tenth of the paid price for the vehicle, the contract is dissolved. This law covers sales from dealers and private parties. Also, individuals are required by the Lemon Law in Massachusetts to disclose any known defects the car has; otherwise, the sale is voided. Check with your state’s consumer protection agency or attorney general’s office to determine what laws protect you when buying a used car.

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