Buying a Used Car From a Dealer

Whether you’re 16 or 60, buying a used car can be an exciting experience. But it can also be a big financial commitment, with some industry reports estimating that the average price of a used car is close to $28,000. The more you know going in to the dealer, the better you'll feel driving out. For example, dealers have to put a Buyer’s Guide on every used car. You’re also entitled to a Buyer’s Guide if you buy a used car online. The Guide will tell you if a car has a warranty, or is being sold “as is.” You’ll also want to get a vehicle history report and get the facts about independent inspections, payment options, and what to do if you have a problem after the deal is done.

Do Some Homework

Before you start shopping for a used car from an auto dealer in person or online, do some homework. It may save you serious money. Consider the kind of car you need, how you’ll use it, and your budget. Don’t forget other costs like registration, insurance, gas, and maintenance. Research models, options, repair records, safety tests, and mileage.

Once you have a car (or cars) in mind, ask for the out-the-door prices in writing from dealers before you visit. Use those quotes to

confirm that advertised prices, discounts, rebates, etc. are actually being applied

confirm that the vehicle is actually on the lot

spot add-ons and other charges that the dealer may try to introduce at the last minute

Then, find out about the dealer before you visit. Contact your state and local consumer protection agencies to find out if any unresolved complaints are on file about a particular dealer. Also check out a dealer’s reputation by searching online for the company’s name with words like “scam,” “review,” or “complaint.”

Dealer Sales and the Buyers Guide

Dealers have to display a Buyers Guide in every used car they offer for sale. They also have to give it to buyers after the sale. This includes light-duty vans and trucks, demonstrators, and program cars. Demonstrators are new cars that haven’t been owned, leased, or used as rentals, but have been driven by dealer staff. Program cars are low-mileage, current-model-year vehicles returned from short-term leases or rentals. Dealers don’t have to display a Buyers Guide on motorcycles and most recreational vehicles.

The Buyers Guide tells you

the major mechanical and electrical systems on the car, including some of the major problems to look out for

whether the car is being sold “as is” or with a warranty

what percentage of the repair costs a dealer will pay under the warranty

to get all promises in writing

to ask to have the car inspected by an independent mechanic before you buy

to get a vehicle history report and to visit ftc.gov/usedcars for information on how to get a report, how to check for safety recalls, and other topics

to ask for a Spanish Buyers Guide if the sale is conducted in Spanish

the dealer’s contact information, including the contact for complaints

to remember: spoken promises are difficult to enforce

Dealers in Maine and Wisconsin display their own version of the Buyers Guide.

Be Aware of Add-ons

Add-ons are optional products and services offered by the dealer, like gap insurance, Vehicle Identification Number (VIN) etching, and rustproofing. Often, add-ons can cost thousands of dollars and are mentioned only at the end of an already difficult and time-consuming day at the dealership. Other times, dealers may try to include these and other add-ons in your deal without ever discussing them with you, and without your knowledge or approval. You can usually buy the vehicle you want without any add-ons, and you can buy most add-ons from independent retailers. If you want an add-on from the dealer, be sure that you ask how much you’re paying for each add-on and what you’ll get, and get answers in writing.

Get an Independent Inspection Before You Buy

A vehicle history report is not a substitute for an independent vehicle inspection. A vehicle history report may list accidents and flood damage, but typically it will not list mechanical problems. That’s why it’s always a good idea to pay for an independent mechanic to conduct a mechanical inspection of a used car. A mechanical inspection is a good idea even if the car has been “certified” and inspected by the dealer, and is being sold with a warranty or service contract. You’ll have to pay the inspection fee, but it can help you avoid paying for a car with major problems.

A mechanical inspection is different from a safety inspection. Safety inspections usually only focus on things that make a car unsafe to drive.

If the dealer won’t let you take the car off the lot, maybe because of insurance restrictions, you may be able to find a mobile inspection service that will go to the dealer. If that’s not an option, ask the dealer to bring the car for inspection at a facility you choose. If a dealer won’t allow an independent inspection, consider going to another dealer.

Ask the mechanic for a written report with a cost estimate for all necessary repairs. Be sure the report includes the car’s make, model, and VIN. If you decide to buy from the dealer after seeing the inspection’s results, you can use the estimated repair costs to negotiate the price of the car.

Payment Options

When it comes to paying for a car, you have two choices: pay in full or finance over time.

Financing increases the total cost of the car because you’re also paying for the cost of credit, including interest. Consider how much you can pay as a down payment, the monthly payment, the financing period (such as 60 months), and the annual percentage rate (APR).

Low monthly payment offers may be tempting but often have longer loan periods and higher interest rates, which means they’re much more expensive overall. So make sure you know the total cost with financing — not just the monthly payment amount.

Dealers and other places that offer financing — like banks, credit unions, and finance companies — offer a variety of financing terms. Shop around, compare offers, and negotiate the best deal you can.

If you decide to finance the car, make sure you understand the financing agreement before you sign any documents.

What’s the exact price you're paying for the car?

What is the total sales price with financing — that is, the sum of the monthly payments plus the down payment?

What’s the finance charge (the dollar amount the credit will cost you)?

What’s the APR (which measures the cost of credit as a yearly rate)?

How many payments will you make — and how much is each one?

Return Policies

Before you buy from a dealer, ask about the dealer’s return policy, get it in writing, and read it carefully.

Federal law doesn’t require dealers to give you three days to cancel the deal and return the car.

In some states, dealers must give you the right to cancel. In other states, the right to return the car in a few days for a refund exists only if the dealer chooses to offer this option. Dealers may describe the right to cancel as a “cooling-off” period, a money-back guarantee, or a “no questions asked” return policy. Check with your state attorney general for the rules in your state.

Types of Warranties

The Buyers Guide must show any changes you negotiate in the warranty coverage. It will override anything in your sales contract. So as you negotiate, be sure the dealer makes any changes to the Buyers Guide, as well as in your contract. For example, if the Buyers Guide says the car comes with a warranty and the contract says the car is sold “as is,” the dealer must give you the warranty described in the Guide.

There are several types of warranties. It’s important to know their differences.

As Is - No Dealer Warranty means the dealer won’t pay for any problems or needed repairs. You’re assuming the risk of anything that goes wrong after the sale. There are several things to know about “as is” sales:

When the dealer offers a car “as is,” the box next to the “As Is - No Dealer Warranty” disclosure on the Buyers Guide must be checked.

If the “as is” box is checked, make sure any verbal promises — like promises to repair the car or cancel the sale if you’re not satisfied — are written on the Buyers Guide. Otherwise, you may have a hard time getting the dealer to follow through. To find out what disclosures are required for “as is” sales in your state, contact your state attorney general.

Implied Warranties are unspoken, unwritten promises from a dealer to the buyer. If a used car doesn’t come with a written warranty, it’s still covered by implied warranties — unless it’s an "as is” sale. Here are some common implied warranties:

A “warranty of merchantability” means the dealer promises the car will do what it’s supposed to do: it will run. This promise applies to the basic functions of a car. It doesn’t cover everything that could go wrong. Just because your car breaks down after the sale doesn’t mean it’s automatically covered by the warranty of merchantability. You’ll need to prove that the problem or defect existed at the time of the sale. But the dealer may disagree and refuse to pay for the repairs.

A “warranty of fitness for a particular purpose” applies when you buy a car based on the dealer’s advice that it’s suitable for a particular use. For example, a dealer who suggests you buy a specific vehicle for hauling a trailer is giving an implied warranty that the vehicle can do the job.

If you have problems that aren’t covered by a written warranty, see if there’s protection from one of these implied warranties. Implied warranty coverage can last as long as four years, although the length of the coverage varies from state to state. A lawyer or a state consumer protection office can tell you more about implied warranty coverage in your state.

Full and Limited Warranties

Dealers may offer a full or limited warranty on all or some of a car’s systems or components. Most used car warranties are limited and their coverage varies.

If you have a full warranty, it will include these terms and conditions:

Anyone who owns the car during the warranty period can get warranty service.

Warranty service is free of charge, including removing and reinstalling a covered system, for example, steering, brake, fuel or exhaust systems.

If the dealer can’t fix the car or covered system after a reasonable number of tries, you can choose replacement or a full refund for your car.

To get service under the warranty, you only have to tell the dealer you need it.

There’s no time limit.

If any of these statements doesn’t apply, the warranty is limited.

A full or limited warranty doesn’t have to cover the entire car. The dealer may specify that only certain systems are covered.

Warranty Documents

If you buy a car that comes with a warranty, make sure you get a copy. Review it carefully and know what’s covered. The warranty gives detailed information, like how to get repairs for a covered system or part. It also says who’s responsible for fulfilling the terms of the warranty.

Unexpired Manufacturer's Warranties

If the manufacturer’s warranty still is in effect, the dealer may note that in the “systems covered/duration” section of the Buyers Guide. To make sure you can take advantage of the coverage, ask the dealer for the car’s warranty documents. Verify the information (what’s covered, expiration date/miles, and necessary paperwork) by calling the dealership. Make sure you have the VIN when you call.

Service Contracts

A service contract is a promise to perform (or pay for) certain repairs or services. Sometimes called an “extended warranty,” a service contract is not a warranty. You can buy a service contract anytime. They’re sold by car manufacturers and dealers, and independent companies. Prices and coverage vary widely.

To decide if you need a service contract, consider these questions:

Does the service contract duplicate warranty coverage you already have? Does it begin after your current warranty runs out? If the service contract lasts longer than you expect to own the car, is it transferable, or is a shorter contract available?

Is the car likely to need repairs, and how much are they going to cost? Is the cost of repairs likely to be more than the price of the contract?

Will the service contract cover all parts and systems? Does “bumper to bumper” coverage mean what you think?

Is a deductible is required, and if so, how much and under what terms?

Does the contract cover incidental expenses, like towing and rental car charges while your car is being serviced?

Will repairs and routine maintenance have to be done at the dealer?

Is there a cancellation and refund policy for the service contract? Are there cancellation fees?

Is the dealer or company offering the service contract reputable? Does the dealer sell third-party service contracts?

If you buy a service contract from the dealer within 90 days of buying a used car, the dealer can’t remove implied warranties on the systems covered in the contract. For example, if you buy a car “as is,” the car normally is not covered by implied warranties. But if you buy a service contract covering the engine, you automatically get implied warranties on the engine. These warranties may give you protection beyond the scope of the service contract. Make sure you get written confirmation that your service contract is in effect.

If You Have a Problem

If you have a problem that you think is covered by a warranty or service contract, follow the warranty or contract instructions to get service. If a dispute arises, and you can’t work it out with the dealer, you still have some options:

If your warranty is backed by the car’s manufacturer, contact the dealership. They can decide issues of warranty service and repairs.

Contact your state attorney general. Consumer protection assistant attorneys general deal with issues that range from healthcare to automobiles to privacy.

You might consider using a dispute resolution organization . In fact, under many warranties, using a dispute resolution organization may be a required first step before you can sue the dealer or manufacturer.

File a suit in small claims court. You can resolve disputes involving small amounts of money, often without an attorney. The clerk of your local small claims court can tell you how to file a suit and the dollar limit in your state.

Under the federal Magnuson-Moss Warranty Act, you can sue based on breach of express warranties, implied warranties, or service contracts. If successful, you can recover reasonable attorneys’ fees and court costs. A lawyer can advise you if this law applies.

For More Information

Learn more about buying and owning a car at ftc.gov/cars.

Buying a Used Car Tips (English)

¿Buscas comprar un auto usado?

Buying a Used Car?

The Department of Consumer and Worker Protection (DCWP) created these tips to help you.

Jump to section for:

Before You Go Shopping
At the Dealership
Protect Yourself from Recalled Cars
Used Car Consumer Bill of Rights
Educational Campaign

Before You Go Shopping

Look at your budget and decide how much you can afford up-front and over time. Don't forget about insurance, parking, gas, tolls, and repairs. For help budgeting, you can book a free appointment with a financial counselor by calling 311 or by visiting nyc.gov/TalkMoney.

Check your credit report at annualcreditreport.com and correct any errors.

Get preapproved for a loan. Knowing the rates will help you comparison shop across financial institutions. Using your own bank or credit union gives added protection if something goes wrong.

Research the car's value. Check the National Automobile Dealers Association's (NADA) Guides, Edmunds and Kelley Blue Book to find out the average price of the car you plan to buy and trade in.

Check the dealership's license status and complaint history. All used car dealerships must be licensed by DCWP. You can search for a licensee online at nyc.gov/consumers. You can also call 311 (212-NEW-YORK outside NYC) to learn more about a business' license status or to check a business's complaint history.

At the Dealership

Beware of "bait and switch" advertising. Ads that promise savings, rates that are too good to be true, or cars that aren’t actually available when you get there are illegal. If you feel pressured, walk away.

Examine the car carefully. Get a vehicle history report at vehiclehistory.gov, take a test drive, and have an independent mechanic check the car. If the dealer won’t let you, walk away. Be sure to check the condition of the engine, tire wear and any sign of an accident. Compare the odometer reading to the bill of sale and check the Federal Trade Commission’s (FTC) Buyer’s Guide and NYC Department of Motor Vehicles (DMV) inspection sticker which must be posted on the car.

Beware of fake certified pre-owned automobiles. When shopping for a certified pre-owned automobile, make sure you know the specific criteria for certification, obtain proof that the car you are interested in purchasing meets the criteria, and receive documentation of any promised warranties.

Know your rights. Read Used Car Consumer Bill of Rights, which must be provided to you before you sign a contract. Download a copy in other languages below.

Say no to "add-ons" and options. Paint and fabric protection, rust-proofing, extra security systems, extended warranties, etc. are cheaper when bought separately. Ask for your monthly payments with and without the extra options. Before you sign a contract or pay any money, make sure no extra fees have been added and don’t buy anything you don’t want.

Don’t negotiate based on a monthly payment. Negotiate the best price for the car at the lowest interest rate and for the fewest number of payments. Don't believe dealers who say you must finance through them.

Review the contract carefully.

Never sign a blank, partially blank, or unclear contract. Cross out any empty spaces so they can’t be filled in after you sign.

Never sign a contract if you don’t understand the terms.

Don’t give a dealer any money before you sign the contract, not even a "deposit."

Get the mileage in writing.

Never buy a car "as is."

If a car sale is negotiated in Spanish and will be paid in installments, the contract must also be written in Spanish.

Ask whether the interest rate includes a dealer markup. If so, ask for the interest rate offered by the lender. Although no law prevents the dealer from marking up the interest rate, you may be able to negotiate the amount.

Know about warranties. Under the New York State Lemon Law, used car dealers must provide written warranties on used cars that cost more than $1,500 or that have less than 100,000 miles. The law does not cover motorcycles, motor homes, off-road vehicles, or used cars purchased from an individual. The warranty covers the engine, transmission, drive axle, brakes, radiator, steering and alternator.

Mileage Warranty 0 - 36,000 90 days or 4,000 miles 36,001 - 79,999 60 days or 3,000 miles 80,000 - 100,000 30 days or 1,000 miles

Make sure there is a refund policy posted in the office where sales take place.

Beware of flood-damaged cars. Look for these tell-tale signs:

Trust your sense of smell. Musty or moldy smells may be a sign of water damage. A strong air freshener or cleaning solution smell may be an attempt to cover up mildew. Run the air conditioner so you can check the vents.

Check the carpeting and upholstery for discoloration. Differences in color, especially if they appear to be stains, may indicate water damage. Be aware of used cars with brand-new upholstery.

Examine the exterior for water damage. Check for fogging inside headlamps or taillights and dampness inside the wheel well. Look for a water line in the engine compartment or the trunk.

Inspect under the car. Look for rust and flaking metal.

Hire a mechanic to do a full inspection and request a car history report by going to the Department of Justice’s National Motor Vehicle Title Information System. The report includes federally mandated information on the vehicle's status from junk yards, salvage yards, auto recyclers, insurance carriers, and most state motor vehicle departments.

File a complaint with DCWP about used car dealerships that try to sell flood-damaged vehicles. File a complaint online or call 311.

Before you sign:

“Have I shopped around enough? Is this the best car and offer that I can get?”

“What is the total amount that I am going to be paying for my car over the life of the loan?”

“Do I understand all the terms of the financing agreement?”

“How much extra am I paying on financing as opposed to buying the car outright?"

Get copies of all paperwork. Don’t leave without copies of everything that you signed always keep them. Also keep receipts for any repairs.

File a complaint. If you have a problem with a dealership, file a complaint with DCWP at nyc.gov/consumers or by contacting 311.

Protect Yourself from Recalled Cars

Visit the National Highway Traffic Safety Administration (NHTSA) website at nhtsa.gov/recalls to check if the car you own or plan to buy has been recalled or has any safety complaints. For more information on recalls, download the federal government’s guide, Motor Vehicle Defects and Safety Recalls: What Every Vehicle Owner Should Know.

Check if the used car you are buying has any unrepaired safety defects. Ask the dealer for the vehicle identification number (VIN) and contact an authorized dealership to ask if safety recall repairs have been made. You can search nhtsa.gov/recalls by VIN to learn if a specific vehicle needs to be repaired as part of a recall.

Before you buy a used car, ask the dealership what their policy is for selling vehicles that have been recalled. Even if the dealer tells you they won’t sell a recalled car, you should do your own research.

Get the used car you are buying inspected by an independent mechanic. Do not buy a car if the dealer will not let you have it inspected or if the dealer tries to sell you a car “as is.” Many safety defects will not be identified during a standard inspection so you should also check for recalls.

Notify the manufacturer that you are the new owner when you buy a used car or if your contact information changes. If you are the original purchaser or registered owner, the manufacturer will contact you directly if your vehicle is recalled. You can also subscribe for email alerts at nhtsa.gov/recalls for future safety recalls.

Have safety-related defects repaired immediately. If you bought a used car that was recalled for a safety defect but was not repaired when you bought it, you have the right to request that the dealer repair the car or pay for the repairs. If you are buying a used car that has been recalled and the dealership won’t repair it prior to sale, file a complaint with DCWP. If you are the original owner of a recalled car, contact the manufacturer immediately to have the defect repaired; the manufacturer will repair the car free of charge if the vehicle is less than 10 years old and the repair is made by an authorized dealer.

Don’t wait for a recall letter if your car shows signs of a problem; take it to the dealer or a mechanic. You should also file a complaint with NHTSA at nhtsa.gov/recalls or by calling 888-327-4236.

Used Car Consumer Bill of Rights

Download the Used Car Consumer Bill of Rights in:

Educational Campaign

Learn about DCWP's public awareness campaign to help consumers avoid predatory lending in the used car industry.