Navigating the used car market can be tricky. Understanding your rights and the information available to you is crucial for making an informed decision. One of the most important tools for used car buyers is the Buyer’s Guide, and a buyer’s guide must be present on most used vehicles offered for sale by dealers. This guide provides essential warranty and purchase information, helping you avoid potential pitfalls.
Understanding the FTC’s Used Car Rule
The Federal Trade Commission’s (FTC) Used Car Rule protects consumers by requiring most used car dealers to display a Buyer’s Guide on the vehicles they offer for sale. This rule applies to dealers selling or offering for sale more than five used vehicles in a 12-month period. Notably, banks and financial institutions are exempt, as are businesses selling to employees or lessors selling to lessees.
This rule is effective in all states except Maine and Wisconsin, which have similar regulations. It also extends to the District of Columbia, Puerto Rico, Guam, the U.S. Virgin Islands, and American Samoa.
Image: An example of the Used Car Buyer’s Guide provided by the FTC, emphasizing the key information it contains.
Key Requirements of the Used Car Rule: What a Buyer’s Guide Must Include
The Used Car Rule mandates that a buyer’s guide must be displayed on or in a used vehicle for sale. This includes vehicles offered through consignment, power of attorney, or other agreements. The rule also extends to public auctions (but not those closed to consumers).
Any vehicle driven for purposes beyond moving or test driving is considered “used” under this rule, encompassing light-duty vans, trucks, demonstrators, and program cars with specific weight and area specifications. Exceptions include motorcycles, vehicles sold for scrap (with proper documentation), and agricultural equipment.
What Information Must a Buyer’s Guide Include?
A buyer’s guide must contain specific information to help buyers make informed decisions. These critical elements are:
- Vehicle Information: Make, model, model year, and VIN (Vehicle Identification Number).
- Mechanical and Electrical Systems: Disclosure of major mechanical and electrical systems and common problems to look for.
- Warranty Information: Whether the vehicle is sold “as is” or with a warranty, and the percentage of repair costs the dealer will cover.
Image: A closer look at the warranty information section of the Buyer’s Guide, illustrating the required disclosures about warranty coverage.
- Important Reminders: That oral promises are difficult to enforce, to get all promises in writing, and to have the car inspected by an independent mechanic before buying.
- Resources: Encouragement to obtain a vehicle history report and visit ftc.gov/usedcars for safety recall information.
- Language Assistance: Information about requesting a Spanish Buyer’s Guide if the sale is conducted in Spanish.
- Retention: A reminder to keep the Buyer’s Guide for future reference.
Proper Display of the Buyer’s Guide
A buyer’s guide must be displayed prominently and conspicuously on the vehicle. It should be in plain view with both sides visible. Acceptable locations include hanging it from the rear-view mirror, side-view mirror, attaching it to a side window, or placing it under a windshield wiper. Keeping it in the glove compartment, trunk, or under the seat is not considered conspicuous. The guide may be removed for a test drive but must be replaced immediately afterward.
Completing the Buyer’s Guide: Dealer Responsibilities
Dealers must accurately complete specific sections of the buyer’s guide must:
- Vehicle Information: Fill in the make, model, year, and VIN.
- Dealer Information: Include the dealership’s name and address, as well as contact information for addressing complaints.
- Warranty Information: Indicate whether the vehicle is sold “As Is,” with “Implied Warranties Only,” or with an express warranty.
Image: An example of how a dealer would fill out the dealer information section of the Buyer’s Guide, highlighting contact details.
- “As Is” Sales: Use the “As Is-No Dealer Warranty” version if state law allows and the dealer offers no warranty.
- Implied Warranties: In states limiting the elimination of implied warranties, use the “Implied Warranties Only” version if no written warranty is offered.
- Express Warranties: If an express warranty is offered, check the “Warranty” box and complete the warranty section.
Understanding Warranty Types: Full vs. Limited
If offering a warranty, a buyer’s guide must also distinguish between a “full” and “limited” warranty. A “full” warranty meets specific criteria:
- Service is provided to anyone owning the vehicle during the warranty period.
- Service is free of charge, even for removing and reinstalling covered systems.
- The consumer can choose a replacement or refund if repairs are unsuccessful after a reasonable number of attempts.
- The consumer’s only action is to provide notice that service is needed.
- Implied warranties are not limited in length.
If any of these conditions aren’t met, the warranty is “limited.”
Disclosing Costs and Covered Systems
The buyer’s guide must specify the percentage of parts and labor costs covered by the warranty. If a deductible applies, it should be noted with an asterisk and explained in the “systems covered/duration” section.
Each covered system and its warranty length must be clearly stated. Avoid using vague terms like “drive train” or “power train.”
Manufacturer’s Warranty
If the manufacturer’s warranty still applies, this should be disclosed by checking the appropriate box on the buyer’s guide must. If the consumer must pay for coverage under the manufacturer’s warranty, it’s considered a service contract, not a warranty.
Negotiated Warranty Changes
Any negotiated changes to the warranty must be reflected on the buyer’s guide must. This includes crossing out incorrect information and writing in the correct details.
Service Contracts
If offering a service contract, check the “Service Contract” box. However, if your state regulates service contracts as insurance, this isn’t necessary.
What the Buyer Receives at the Sale
At the time of sale, the buyer must receive the original or a copy of the vehicle’s buyer’s guide must, accurately reflecting all final changes. If a signature line is used, ensure the buyer signs the guide reflecting these changes.
Additionally, if a written warranty is offered or the manufacturer’s warranty still applies, the dealer must comply with the Magnuson-Moss Warranty Act and other FTC rules, including the Warranty Disclosure Rule.
The Buyer’s Guide vs. Written Warranty
The information on the buyer’s guide must is not sufficient to meet the requirements of the Warranty Disclosure Rule. Therefore, the written warranty and the buyer’s guide must be separate documents. The FTC’s Rule on Pre-Sale Availability of Written Warranty Terms requires that written warranties be displayed near the vehicle or made available upon request before purchase.
Split-Cost Warranties
For split-cost warranties (where the dealer pays less than 100% of the repair cost), the buyer’s guide must disclose:
- The percentage of the total repair cost the dealer will pay.
- The percentage of the total repair cost the buyer must pay.
- How the total cost of the repair will be determined.
- If a deductible applies, the amount and circumstances under which it must be paid.
Dealers offering split-cost warranties can require buyers to return to the dealer for repairs, but an estimate of the total repair cost should be provided before work begins.
Obtaining Copies of the Buyer’s Guide
The buyer’s guide must is available for download from the FTC’s Business Center, business-form companies, or trade associations. Dealers can also generate them on a computer, but the wording, type style, type sizes, and format specified in the Rule must be followed. No other wording or symbols are allowed on the guide. It must be printed in 100% black ink on white paper of specific dimensions.
Compliance Checklist
- Complete a buyer’s guide must for each used vehicle offered for sale.
- Post the buyer’s guide must prominently and conspicuously on each vehicle.
- Include the required disclosure language if using a signature line.
- Include the required disclosure in your sales contract.
- Give the vehicle’s buyer’s guide must (or a copy) to the purchaser at the time of sale, accurately stating the final warranty coverage.
- Use the Spanish language buyer’s guide must if the sale is in Spanish.
- Prepare a warranty document that complies with federal law if offering a written warranty.
Consequences of Non-Compliance
Dealers violating the Used Car Rule may face penalties of up to $53,088 per violation in FTC enforcement actions. Many states have similar laws, allowing state and local law enforcement to ensure compliance.
Additional Resources
For more information about the Used Car Rule, contact the FTC for a free copy of the Rule or staff compliance guidelines.
Conclusion
Understanding what a buyer’s guide must include and how it protects you is essential when purchasing a used car. By knowing your rights and using the buyer’s guide must as a valuable tool, you can make a more informed decision and avoid potential problems. Always review the guide carefully, ask questions, and consider having the vehicle inspected by a trusted mechanic before finalizing the purchase.
