Used cars, also known as second-hand cars or pre-owned vehicles, are defined as motor vehicles that have had one or more retail owners, including car dealerships, rental car companies, car leasing offices, and private party sales. This is in contrast to new cars, which are described as motor vehicles that have only been sold by an original manufacturer and whose legal titles have never been transferred to a purchaser.
Although buying a used car offers many incentives, such as lower auto insurance rates, a more affordable price tag, and extended warranties, the decision to buy a used vehicle as opposed to a new one comes with many caveats. For one, you may need to spend extra funds to make repairs since used cars are often less reliable than their newer counterparts. Also, due to their unreliable nature, used cars tend to have higher interest rates than new vehicles.
Additionally, if you purchase a used vehicle from a private party as opposed to a dealership, then you may not receive an extended warranty or service plan. Ultimately, the decision of whether to buy a new or used vehicle is up to you, but knowing the laws that apply to used cars sales and doing some research on the subject can help you make the right choice.
Both federal and state laws apply to the sale of used cars. Used car laws were created to not only protect consumers, but also to outline the rights and responsibilities of dealerships in selling used cars.
Some federal laws that apply to the sale of used cars include:
- The Used Car Rule: The Federal Trade Commission (FTC) enacted this rule to discourage used car sellers from omitting significant facts about the condition of a used car and from misrepresenting related warranty information. Specifically, the rule requires car dealers to display a window sticker (i.e., the “Buyer’s Guide”) on any used cars that they offer for sale. This Buyer’s Guide sticker must provide details about the used vehicle, including:
- Whether or not a warranty exists, and if so, all its terms and conditions (e.g., duration of coverage, what the warranty actually covers, and percentage of total costs that a dealer will pay for repairs);
- The make, model, and year of the vehicle; and
- The Vehicle Identification Number (VIN).
- The Magnuson-Moss Warranty Act: This Act is the primary federal law governing consumer product warranties. It prevents car dealers from abusing or manipulating warranty language. The Act also makes it illegal for dealers to deny or void coverage simply for using a company other than the dealer to make repairs, or for having “aftermarket” or recycled car parts installed in a vehicle.
- Uniform Commercial Code (UCC): Although not technically a federal law, it is a model statute adopted by the majority of U.S. states that applies to sale of goods (i.e., Article 2 of UCC). The UCC also provides various conditions about contracts and explains the differences between “express” and “implied” warranties, which is important to understand when purchasing a used vehicle.
Other laws that impact used car sales throughout the U.S. include the Disposal Rule, the Fair Credit Reporting Act, the Red Flags Rule, and general safety standards.
Finally, be sure to review both state and local laws, especially when purchasing a car from a different state. In particular, a consumer should know about regulations for emission requirements, sales tax collection, and temporary registration rules to transport a vehicle to their home state.
California Used Car Laws
Some laws that apply to used car laws in California state include:
- The Song-Beverly Consumer Warranty Act: Similar to the terms of the UCC, this Act requires that dealers who attempt to waive implied warranties must do so with plain and obvious language. This Act also states that any implied warranty waivers must clearly say whether the buyer or seller is responsible for repair costs.
- California Warranty Law: California is one of the only states that does not require used cars to be sold with a warranty. In general, if a dealer states that a used car is to be sold “as is”, then this acts as notice to the buyer that the dealer is not providing any warranties and that the vehicle may have some defects. However, there are two exceptions to this rule.
- The first is if the dealer is a “buy-here-pay-here” dealership. If the purchaser buys directly from the dealership and does not use a bank or other lending company to make the transaction, then the dealership must provide a warranty that lasts either a minimum of 30 days or 1,000 miles (whichever occurs first).
- The second is if the dealer advertises used cars as “certified” pre-owned vehicles. This means that the dealer must supply a 30-day warranty of merchantability, which implies that the vehicle is adequate for consumer use and not defective.
- California Used Car Return Laws: In California, a licensed dealer must offer the purchaser of a used vehicle that costs $40,000 or less, the option to buy a 2-day cancellation policy before they sign any paperwork. This means that the purchaser will either have the option to cancel the transaction for any reason or to return the used car within two days; the only exception being is if the contract gives the buyer more time.
- In addition to the 2-day rule, a dealer may refuse to accept a return or a cancellation if the car does not meet the following conditions under a standard used car return policy:
- It must be free from liens or tickets;
- The buyer must return it in the same condition it was purchased;
- All original paperwork must be available; and
- The odometer on the used car must not display mileage that is greater than what the contract allows.
- If all conditions are met, then the buyer is entitled to receive a full refund from the dealer, including the deposit, sales tax, and registration fees.
What is the California Used Car Lemon Law?
The California Lemon Law provides certain protections for consumers who purchase a defective vehicle that cannot be repaired despite numerous attempts to do so. In such cases, a manufacturer must either replace or repurchase the defective vehicle, so long as it is still under the manufacturer’s new car warranty.
Generally speaking, a consumer is typically entitled to a replacement or refund of their defective used car if it meets the following lemon law requirements:
- The vehicle is purchased from a retailer, not a private individual;
- The warranty on the car is still active (e.g., either the original manufacturer’s warranty or an extended one);
- The used car has a substantial defect;
- Due to this substantial defect, the used car has remained at a repair shop for an excessive amount of time, and
- Despite the reasonable amount of repair attempts, the issues with the used car are still not fixed.
It should be noted that what is considered a “reasonable” number of attempts will depend on what part of the vehicle needed fixing. For instance, if the car’s brakes need repairing, then only one or two attempts may qualify as “reasonable.” On the other hand, if repair work must be done to a less threatening area of the car, then the number of attempts that will be considered reasonable could be as high as four or more.
One final thing to keep in mind about California’s Lemon Laws and their application to used cars is that it can be more difficult to calculate damages for used cars. Oftentimes, the buyer may need to contribute some funds to purchase a new vehicle from the dealer, or they may potentially lose some money if the manufacturer agrees to reimburse them for their defective used car purchase.
What Types of Remedies are Available in a Used Car Lawsuit?
If a consumer prevails against the car dealer or manufacturer in a used car lawsuit, then they may recoup the following remedies:
- Monetary damages to make all necessary repairs to the used vehicle;
- A refund for the cost of the used car (note this may be lower than the original price);
- The dealer or manufacture may be ordered to replace the buyer’s car; and/or
- Punitive damages if the dealer or manufacturer used outrageous tactics to sell the car.
Depending on the facts of a case and state laws, the car dealer or manufacturer may also be held liable in criminal court if a prosecutor decides to press charges for potentially unlawful conduct.
What Defenses Might Be Raised?
Some common defenses that a car dealer or manufacturer may be able to raise in a used car lawsuit include:
- Having an “as is” clause, which is frequently asserted against fraud claims;
- The warranty is expired or the condition of the car does not meet warranty requirements;
- The plaintiff is responsible for the car damage or defect;
- The car was not returned in the condition or by the time required by the return policy;
- The plaintiff did not make enough attempts to repair a specific defect;
- The used car was not covered according to Lemon Law factors; and/or
- Statute of limitations expired.
It should be noted, however, that some defenses do not apply under certain state laws and also that states may provide other defenses within their respective statutes.
Do You Need a Lawyer for Help with California Used Car Laws?
California used car laws are rather specific, which can make the task of interpreting their provisions quite difficult without consulting legal expertise. Therefore, if you have any questions or concerns regarding California used car laws, then you should contact a California attorney for further guidance.
An experienced California attorney will be familiar with the used car laws in your state, can explain what their provisions mean, and can tell you how they affect your issue. Additionally, your attorney can help you file a case, determine what defenses or remedies may be available to you depending on your matter, and can provide representation in court if necessary.