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.

When it comes to selling new and used cars, warranty sales are not as high as you might think they would be. Most car buyers are happy to take the warranty that is included in the initial purchase because the thought of paying more for an extended warranty on a new car doesn’t seem logical at the time. If customers are better able to see how an extended warranty can keep them safe in the long run and reduce the amount of money they have to pay out of pocket, later on, they may be more willing to put out the money for an extended warranty on day one.

It’s Not Just an Upsell

One of the best ways to get your customers to stop and listen to you about the extended warranty is to remind them that it is not just part of the spiel. In other words, you are not just trying to make more money off them: the warranty can actually help save them money over the life of their vehicle. What’s more, should they choose to trade-in or sell their car down the road, an extended warranty that is still active can add value to their bottom line.

Offer a Variety of Warranties

There are several types of warranties that are available on new and used car sales. Many customers think that a warranty will cover the entire car, but that is not true. It is your job to make sure they understand that there are a number of warranties that they can pick and choose to increase the longevity of their car’s value. Such warranties include vehicle service contracts which can be implemented for year-to-year upgrade and service, tire and wheel warranties, asset protection programs, interior and exterior warranty protection programs and more. Be sure to go through each option that your dealership offers, whether the car is new or used, to maximize the likelihood of increasing warranty sales.

Recognize Trigger Events

There are many opportunities beyond the initial sale of the car to sell a customer an extended warranty. For example, if a customer comes into your shop with a problem, you can offer them a warranty service for future issues. When customers are frustrated with their vehicles, they are more likely to see the value of protection, versus when there is nothing wrong with their vehicle, and they view the warranty as an added expense. Another example would be if a tire wears down before it is supposed to: you can use the opportunity to sell an extended warranty on the new set of tires you offer the customer. Again, they are more likely to see the value in putting out more money now to save themselves the trouble later.

Whether you sell new or used cars, trucks, or SUVs, the importance of a warranty sale cannot be understated. It is beneficial to both you, as the salesperson, and the customer. Making the warranty sale part of the original purchase is a great starting point but be sure to keep an eye out for additional opportunities to speak to your customers in the future so you can sell them a warranty and increase your bottom line.

Upselling a warranty on a new or used car is a great way to increase profits and help protect your customer’s investment over the years. However, knowing how to properly offer a warranty product to a customer can make all the difference in your sales. Many new and used car salespeople make common mistakes when it comes to providing a warranty to a customer, but here is how you can avoid these pitfalls and keep your numbers high.

Don’t Keep Up with New Information

There are a number of warranty products on the market, and each one offers a different option, upsell, price, feature, and more. It’s important that you become familiar with warranty features initially, but it’s also important that you continue to educate yourself – and your staff, if applicable – to stay current on what’s happening with warranties. You may make the mistake of misquoting a feature or coverage benefit, price, or even warranty length if you haven’t confirmed this information in a while. More than anything, it just looks terrible on you and your business when you are selling incorrect information to your customers. Avoid making this mistake by staying current and make it a priority a few times a month to make sure you know what is going on.

Don’t Offer Customers Too Many Options

One of the easiest ways to lose a warranty upsell is to confuse your customer with too many options. While it might seem like the best approach to offer as many options as possible in the hopes that the customer will buy something from you. The best method is to offer select warranty packages that are suited to the customer’s needs. The only way to do this effectively is the be familiar with the warranty options, and to suggest warranties based on the kind of vehicle they buy from you, the amount of driving they plan to do, and what the intended use of the vehicle may be. In doing this, you are providing a tailored service to your customer, and avoiding the common mistake of overwhelming them with too many options. Too many choices typically equal one thing: the avoidance of making a decision. So, make it easy for them to make a decision.

Don’t Follow Compliance Rules

Whether you sell new or used cars, compliance is an essential part of any warranty sale. If a dealership is in violation of compliance rules related to warranties, it can cost the dealer, as well as the customer, hundreds or thousands of dollars in fines and surcharges due to a lack of knowledge. The most straightforward ways to avoid this common mistake is to remain apprised to the updated information related to compliance, don’t oversell warranties pertaining to certain aspects of vehicle maintenance, and don’t apply elements of the warranty to features that are not included. Sounds simple, but this is a mistake many warranty sellers make.

Selling warranties can be a great way to increase revenue while offering a valuable service to your customer. Don’t underestimate the chances to make mistakes when it comes to warranty sales, and always do your homework before bringing a customer into a contract to avoid common errors that dealers make. That way, you’ll always be acting in the best interest of your dealership and your customer, and that’s just good business.