When it comes to used car warranties, there are important rules and laws that must be followed to protect your dealership, as well as the customers to which you sell warranties. As a refresher for used car dealers, there are several things you need to consider when selling warranties to customers.
In the United States of America, as a used car dealer, you need to comply with certain laws about how many used cars you sell during a 12-month period. The law states that if you sell more than five fives in a revolving 12-month period, you need to display buying guides in the windows of your vehicles. Avoiding the follow this rule could cost you hefty fines, up to $16,000 in some cases. Information that must be displayed includes warranty details, if the vehicle is being sold “as is,” or if there is an option to buy a short-term warranty.
In some states, used car dealers are not allowed to sell cars in an “as is” state. This means the car’s information and history must be posted and visible for the public to see. Withholding this information can lead to big fines and issues for used car dealers offering warranties down the road.
For used car dealers, it is essential that information is consistent across the board. For example, if you see a used car with a buying guide in the window that says there is a warranty, and then write into the contract that there is no warranty, a warranty must be provided. The buying guide supersedes the contract. If contracts are changed during the sale, the deal must reflect those changes before the transaction can be finalized. Failure to do so can cause problems for the used car dealer and void the sale.
Knowing the law is an essential part of selling used cars. For example, the Lemon Law, formally known as Magnuson-Moss Act, states that a warranty must be written using specific language, including whether or not the warranty is limited or full. The coverage must be a written document and include the particular information about the car in question. What’s more, dealers are not allowed to deny warranty work done at independent service stations. This violates the laws that currently exist.
In addition to these existing rules, dealers cannot void a warranty where work has been done by an independent service center that used parts not manufactured by the vehicle’s maker. Used car dealerships need to accept all work done for warranty services.
So if you are running a used car dealership, it’s important to know the ins and outs of warranty offerings to avoid unfortunate mistakes that could cost you, and your business, a great deal of money. Familiarize the details associated with offering warranties and be sure to follow the rules, so you don’t get yourself, or your business into unwanted trouble. Acting in the best interest of the customer is the best way to ensure that you are covering all of your bases.