Understanding Your Rights When Buying a Used Car: The Used Car Lemon Law

Buying a Used Car can be a smart financial decision, offering a more affordable route to vehicle ownership than purchasing a brand-new model. However, with the excitement of a new purchase can also come uncertainty about potential mechanical issues. It’s essential for consumers to understand their rights and protections, especially when it comes to warranties on used cars. Fortunately, laws are in place to safeguard buyers, such as the “Used Car Lemon Law,” designed to ensure you’re not left stranded with a vehicle that’s more trouble than it’s worth.

What Exactly is a “Used Car” Under the Lemon Law?

The definition of a “used car” under these consumer protection laws is specific. It’s not just any car that’s been driven before. Legally, a used car, for the purposes of warranty and consumer rights, is generally defined as a vehicle that has been purchased, leased, or transferred after it has already been driven for more than 18,000 miles or is older than two years from its original delivery date – whichever comes first. This excludes motor homes and off-road vehicles, focusing on standard passenger vehicles.

It’s also important to understand who is considered a “dealer” under this law. A dealer isn’t just anyone selling a used car. It refers to individuals or businesses that sell, lease, or offer for sale or lease, three or more used vehicles within a twelve-month period. This definition generally excludes private sales between individuals and focuses on those in the business of selling cars. Certain entities like banks (except for leases), businesses selling to employees, public utilities at auction (with “as is” disclosure), lease buyouts by lessees or family, and government entities are also typically excluded from the “dealer” definition under these laws.

Used Car Warranties: What You Should Expect From a Dealer

When you buy a used car from a dealer, you’re not just getting a vehicle; you’re also entitled to a written warranty. This warranty is not an optional extra – it’s a mandatory protection that dealers must provide at no additional cost to you. The duration of this warranty depends on the mileage of the used car at the time of purchase:

Vehicles with 36,000 miles or less: Must come with a minimum warranty of 90 days or 4,000 miles, whichever comes first. This provides substantial coverage for newer used cars.
Vehicles with over 36,000 miles but less than 80,000 miles: The minimum warranty is 60 days or 3,000 miles, whichever comes first. This still offers a reasonable period of protection for mid-mileage used cars.
Vehicles with 80,000 miles up to 100,000 miles: The warranty period is at least 30 days or 1,000 miles, whichever comes first. Even for higher mileage used cars, there’s a short-term warranty to cover immediate issues.

This written warranty legally obligates the dealer (or their agent) to repair, or at their discretion, reimburse you for the reasonable cost of repairing any failure of a “covered part.” These “covered parts” are specifically defined to include the most critical components of a used car:

Engine: This includes all lubricated parts, the water pump, fuel pump, manifolds, engine block, cylinder head, rotary engine housings, and flywheel – essentially the core components that make your used car run.
Transmission: The transmission case, internal parts, and the torque converter are covered, ensuring the system that shifts gears is protected.
Drive Axle: Both front and rear drive axle housings and internal parts, axle shafts, propeller shafts, and universal joints are included, covering the parts that transfer power to the wheels.
Brakes: Essential for safety, covered brake components include the master cylinder, vacuum assist booster, wheel cylinders, hydraulic lines and fittings, and disc brake calipers.
Radiator: The radiator, crucial for engine cooling, is also on the list.
Steering: The steering gear housing and all internal parts, power steering pump, valve body, piston, and rack are covered, ensuring you maintain control of your used car.
Alternator, Generator, Starter, Ignition System: Excluding the battery, these electrical components essential for starting and running your used car are also protected.

It’s important to note that if a covered part fails within the warranty period, the dealer is obligated to perform the repair or provide reimbursement, even if the warranty period expires after you notify them of the issue, as long as you reported the problem within the specified warranty timeframe.

Situations Where a Used Car Warranty Might Not Apply

While the used car warranty offers significant protection, there are specific exclusions that consumers should be aware of. Dealers are legally permitted to include language in the warranty that excludes coverage under certain circumstances. These typically include:

Lack of Maintenance: Failures of covered parts due to a lack of customary maintenance, like oil changes or fluid checks, are generally not covered. It’s important to keep up with regular maintenance on your used car.
External Damage: Damage caused by collisions, abuse, negligence, theft, vandalism, fire, or natural disasters (windstorm, lightning, road hazards, etc.) are usually excluded. These are often events covered by car insurance, not the used car warranty.
Odometer Tampering or Altered Parts: If the odometer has been tampered with, making it impossible to determine the vehicle’s actual mileage, or if covered parts have been altered in a way that caused the failure, the warranty may be voided.
Routine Maintenance: The warranty doesn’t cover maintenance services and parts used for such services, like seals, gaskets, oil, or grease, unless these are required as part of repairing a covered part. This distinguishes between wear-and-tear maintenance and unexpected repairs.
Motor Tune-Ups: Standard motor tune-ups are not covered under the warranty.
Racing or Competition: Failures resulting from racing or other forms of competition are excluded, as these activities put excessive strain on a vehicle.
Towing: Damage caused by towing a trailer or another vehicle is not covered unless the used car is specifically equipped for towing as recommended by the manufacturer.
Commercial Use: If the used car is used to carry passengers for hire (like a taxi or rideshare vehicle) or rented to someone other than the consumer, the warranty may not apply.
Normal Wear on Valves and Rings: Repairs to valves and/or rings to correct low compression or oil consumption that are considered normal wear and tear are typically not covered.
Property Damage and Consequential Losses: To the extent permitted by law, the warranty may exclude coverage for property damage arising from the failure of a covered part, as well as losses like loss of vehicle use, time, inconvenience, commercial loss, or consequential damages.

Understanding these exclusions is crucial to having realistic expectations about what the used car warranty covers and what it doesn’t.

What Recourse Do You Have If a Dealer Doesn’t Honor the Warranty?

If your used car experiences a malfunction or defect of a covered part within the warranty period, and the dealer fails to adequately address it after a reasonable period, the law provides you with significant recourse. If the issue “substantially impairs the value” of the used car to you, the consumer, the dealer is legally obligated to take the vehicle back.

In such cases, the dealer must refund you the full purchase price of the used car, or in the case of a lease, all payments you’ve made under the lease contract. This refund must also include sales tax and any compensating use tax. The dealer is allowed to deduct a “reasonable allowance” for any damage to the vehicle that isn’t due to normal wear and tear, and adjustments can be made for any modifications that either increased or decreased the market value of the vehicle. For leases, all further payments you owe under the lease contract must be cancelled.

To determine the refund amount, the original purchase price (or total lease payments made) is considered to be the actual cash difference you paid, plus the wholesale value of any vehicle you traded in (if the dealer chooses not to return your trade-in). This trade-in value is typically determined using guides like the National Auto Dealers Association Used Car Guide.

It’s important to note that a dealer is considered to have had a “reasonable opportunity” to repair a malfunction if either:

The same issue has been subject to repair attempts three or more times by the dealer or their agent within the warranty period, and the problem persists.
Your used car is out of service for repairs due to malfunctions or defects for a cumulative total of 15 or more days during the warranty period. This period doesn’t include delays due to parts unavailability, provided the dealer is diligently trying to obtain the necessary parts. However, if the vehicle is out of service for a cumulative total of 45 days, even if parts delays contribute, you are still entitled to a refund or replacement.

As an alternative to a refund, the dealer may offer to replace your used car with a comparably priced vehicle, with price adjustments as agreed upon. You are not obligated to accept a replacement and can choose the refund option instead.

Dealers can raise affirmative defenses against claims if:

The malfunction or defect doesn’t “substantially impair” the value of the used car.
The problem is a result of abuse, neglect, or unreasonable modifications you made to the vehicle.

Your Used Car Lemon Law Bill of Rights

To ensure consumers are fully aware of their protections when buying a used car, the law mandates that dealers provide a “Used Car Lemon Law Bill of Rights” notice. This notice summarizes your key rights in clear, understandable language. Here are some of the crucial rights outlined in this bill:

Warranty Requirement: If you purchase a used car for more than $1,500 from a dealer selling three or more used cars a year, you are legally entitled to a written warranty.
New Car Lemon Law Potential: If your used car has 18,000 miles or less, you might even be protected under the more comprehensive “new car lemon law.”
Warranty Durations: Specific minimum warranty periods apply based on mileage at the time of purchase (90 days/4,000 miles, 60 days/3,000 miles, 30 days/1,000 miles, depending on mileage brackets). Cars with over 100,000 miles are generally not covered by this mandatory warranty.
Covered Components: Key components like the engine, transmission, drive axle, brakes, radiator, steering, alternator, generator, starter, and ignition system (excluding the battery) are covered under the warranty.
Right to Refund or Replacement: If the same issue persists after three or more repair attempts, or if your used car is out of service for 15 or more days for repairs, you are entitled to return the car and receive a refund or a replacement vehicle.
No Waiver of Rights: Dealers cannot legally make you waive any of your rights under the Used Car Lemon Law.
Limited Refusal to Refund: A dealer can refuse a refund only if the problem is minor and doesn’t substantially impair the car’s value, or if the issue is due to your abuse, neglect, or modifications.
Arbitration Option: If a dealer has an arbitration procedure, they may require you to use it before pursuing other legal remedies. However, you also have the option to seek independent arbitration.
Legal Recourse: If a dealer fails to honor your rights, you can pursue legal remedies and may be entitled to attorney’s fees if you win your case.
Time Limit for Action: You generally have four years from the original delivery date of the used car to the first consumer to bring an action under this law.

This “Bill of Rights” is a powerful tool for consumers, ensuring transparency and outlining the protections afforded to used car buyers.

Key Takeaways for Used Car Buyers

When you’re in the market for a used car, remember these crucial points to protect yourself:

Demand Your Warranty: If you’re buying from a dealer and the vehicle qualifies, ensure you receive the written warranty. It’s your legal right.
Understand the Coverage: Familiarize yourself with the covered parts and the exclusions of the warranty.
Keep Records: Maintain detailed records of all maintenance and repair attempts. This documentation is crucial if you need to make a claim under the Lemon Law.
Know Your Rights: Be aware of your “Used Car Lemon Law Bill of Rights.” Don’t hesitate to assert your rights if you encounter problems covered by the warranty.
Act Promptly: If you experience issues, notify the dealer within the warranty period. Time is of the essence.

Conclusion: Be an Informed Used Car Buyer

Buying a used car doesn’t have to be a risky endeavor. By understanding your rights under the Used Car Lemon Law and being a proactive and informed consumer, you can navigate the used car market with confidence. Knowing your warranty protections and what to do if problems arise is your best defense against ending up with a lemon. Take the time to understand these laws, and you’ll be well-equipped to make a smart and secure used car purchase.