Whether new or old, the car you purchase from any dealer comes with certain guarantees built into the purchase. Most of these deal with consumer rights for auto financing and are mandated under federal law and governed by the Federal Trade Commission (FTC). There are also a few state guidelines that hold auto dealers accountable as well, but these may vary in wording depending on your state.
The Lemon Laws
These laws were given this name as the buying experience left a sour taste in a person’s mouth. Unfortunately they mainly deal with automobiles bought from car lots and not through private sale. But when they do apply the refund of money or replacement of the vehicle is required. You have a specific number of repairs or an amount of time which must pass before the car is deemed a lemon according to your state.
While we’re on the subject of time limitations – lets take a look at the amount of time you have to return a car if you just don’t like it. Yes, this is possible. The bankers and auto dealers don’t like the paperwork but its better than defaulting because you just returned the car. Actually I did that once when the bank messed up the loan and I stopped paying them. A few years later it cleared from my records.
Anyhow, you basically have 30 days to try it out after you buy the car. If you decide to return the car within that time, you may be able to cancel the entire contract. This works well if you realize you cannot afford the payments or found a similar quality car for less cost. The flip side of this coin is when the dealer states the automobile comes back with too many miles on it to return. Again, depending on the state, you have up to somewhere between 12,000 to 18,000 miles before this is applicable. Don’t let them fool you on this; if you fall within the mileage range, and the 30 days, you can fight it.
Truth in Lending and a Paper Trail
A whole slew of paper is transferred between buyer and seller for a reason. Laws. Both consumer credit law and truth in lending law require a paper trail and written notices. Make sure to get, and read, everything. Here’s a few things to look for:
- Co-signers must receive a written notice concerning their liability in regards to the financial part of the agreement. The auto dealer will usually want the co-signers to come with you so the notice is handed to them.
- Watch for provisions that give away rights such as assigning income, waivers of exemption, confessions of judgement or handing over security interest in any household property. These are illegal in all 50 states.
- A written outline of the terms for financing must accompany any financial contract or obligation. Read this for information regarding the annual percentage rate (APR), due dates, monthly payments, charges for late payments and any other charges assessed. A total of all charges should also be listed somewhere.
Equal Opportunity Under the Law
Everyone has heard of the Equal Opportunity Laws. Well automobile financing has those too. Know your rights when buying a car here too. The basic premise of discriminatory practice due to age, nationality, gender, religion, marital status, income level or past employment applies.
- You cannot be charged higher interest rates by the lender.
- You cannot be charged different rates by the auto dealer.
- You cannot be limited on the amount financed.
- You cannot be forced to pay higher downpayments.
The problem here is proving it. Most dealers won’t discriminate but none will come out and tell you it doesn’t happen. Shop around and see what is what. Ask friends and neighbors. Find out information online before going into the showroom. Know what to expect.
So, what are your rights when buying a car? Honestly, none if you allow the dealer to take them. Knowledge and understanding are the customers key defense against any salesperson. And yes I know that sounds adversarial, but when you can only afford so much, make sure you stick to your guns.
References you might want to look into.