FREQUENTLY ASKED QUESTIONS
Do I have three days to return a car I bought?
There is a general misconception that state or federal laws provide for a “grace” period or “cooling off” period in which a recently purchased automobile can be returned to a dealer for a refund. The confusion comes about because there are such laws that apply to certain other kinds of sales, including door-to-door sales. However, there are no such federal or state laws that apply to the sale of automobiles purchased or leased at a dealer location.
If you are in a situation in which you have decided you do not want a recently purchased car, your only chance of getting out of the deal rests with the willingness of the dealer to accommodate you, which would be rare. Actually, there is another possible way out. If you have serious credit problems and the dealer is not able to find a finance company to accept your loan or lease application, the dealer would be obligated to request that you return your new car. This might take place weeks after you purchased your car.
Can I get my money back on a used car I bought?
Most used cars are sold “as-is” which means any problems that exist when you buy your car, or occur after you buy your car, become your problem, not the seller’s problem. Even if your car breaks down on the way home on the day of the sale, there is nothing you can do. Even if the seller lied to you, you now own the car.
There are no “lemon laws” for used cars, only for brand new cars. There is no “72-hour grace period” in which you would have the right to return your car. You have no guarantees or warranties.
Only if your dealer or seller grants you a guarantee, warranty, or return policy, in writing, do you have some possibility of getting any satisfaction if you have problems. This is why it is so important to get your car inspected by a professional mechanic and get a CarFax vehicle history report BEFORE you buy.
Can I trade my car if I still owe money on it?
Yes, usually. However, you should examine some figures first to decide if trading is a good thing to do in your particular situation.
First, contact your loan company or bank and request your current loan payoff amount.
If the trade-in value of your car is higher than your loan payoff amount, the difference is credit that the dealer can apply to reduce the cost of your new car. It’s like making a down payment. Just be sure the dealer is giving you fair value for your trade-in.
On the other hand, if your loan payoff amount is more than the trade-in value of your car, you are “upside down.” If you trade, the dealer pays off your old loan, gives you credit for the value of your trade-in, and adds (“rolls over”) the difference (“negative equity”) into the cost of your new car. If you only have a small amount of negative equity, it’s not a large problem.
However, if you have a large amount of negative equity, it can significantly increase the cost of your new car, and increase monthly payments. It also means you will be “upside down” again in your new loan. In some cases, a bank or loan company will refuse to loan you the full amount.
Rolling over negative equity is not a good idea. It’s better to continue paying off you your old loan until you are no longer upside down, at which time you’ll have the option to do anything you want.
Do Lemon Laws apply to used cars?
Lemon laws generally do not apply to used cars — only to new cars or, in some cases, almost-new used cars that still have manufacturer’s warranty remaining.
Lemon laws vary by state, so if you have detailed questions regarding your state’s lemon laws, do a Google search for “lemon laws, Florida” or whatever your state might be.
If you have a used car with problems, you probably have little recourse to get the problems resolved. Most used cars are sold “as-is” which means there is no “grace period”, no warranties, and no guarantees. There are no right-of-return laws for used cars — or new cars.
What does “AS-IS” mean when buying a used car?
The term “as-is” is usually associated with buying used cars.
Most used cars are sold “as-is” without any kind of guarantee or warranty. It also means the car can’t be returned after the sale, for any reason.
Lemon laws don’t apply to used cars and there are no “right-of-return” laws that apply. Therefore, used car buyers are wise to get an inspection on any car they are considering buying, as well as to get an AutoCheck or Carfax vehicle history report, which indicates if the vehicle has been wrecked or salvaged.
Used car dealers are required to post a window sticker in each car stating the “as-is” sales condition — or that there is some warranty, which might be the case if the car is relatively new and has remaining manufacturer’s warranty.
My car is being repossessed. What can I do?
Banks and loan companies can repossess (repo) cars when a customer has failed to make one or more payments, or otherwise committed a default as defined in the loan contract. Even if the customer voluntarily returns a car and stops making payments, it is still considered a repossession.
After a car has been repossessed, the customer is usually given no option to make good on payments. It’s too late for that. The only option available to get the car back is to pay cash or find another loan and pay off the old loan. This can be troublesome or impossible if the customer’s credit is bad and/or the old loan was upside down.
The bank or loan company will sell the car at wholesale auction and bill the customer for the difference between that sale price and the remaining loan balance, which could easily be thousands of dollars. Repossession fees and storage charges may also be added.
Repossessions also damage the customer’s credit score. The incident will remain on the customer’s record for seven years and cannot be removed even if the customer has a perfect payment and credit history after the negative incident. This will create a problem for the customer when applying for other loans or credit in the future, for up to seven years.
Where can I find really cheap cars?
Cheap cars can be found in newspaper classified ads, in free “autotrader” magaines at your local supermarket or auto parts store, on supermarket and clubhouse bulletin boards, on consignment lots, on the Interent, and many other places. Here is an article that has more details: Cheap Cars – Where to Find Them
Cheap cars are cheap for a reason. Is it age, mileage, condition, problems, or what? Be sure you know the answer to the question before you buy, especially if the price seems too good to be true.
Are “sign-and-drive” car deals legitimate — or dealer scams?
Most such deals are legitimate and worthwhile. They are special promotional lease deals offered by car companies through their dealers. The deals require no money down, no security deposit, and no first month’s payment, except for official fees required by the county and state in which the customer lives.
How can I lower my car payments?
Unfortunately, there is no quick and easy answer to reducing your car payment amount.
You could consider refinancing, but that rarely makes much of a difference, if any at all. And trading for a less expensive car only works if you are not upside down on your old loan. In fact, trading for a less expensive car in this situation could easily result in higher monthly payments than before.
You could refinance by getting a new loan with a longer term, which would lower your payments. However, you should ask yourself if you want to still be paying on an old used car years from now. Furthermore, you’ll be upside down on your loan for most of the term.
What is the warranty on used cars?
Normally, there is no warranty on used cars. Most used cars are sold “as-is” which means the seller or dealer has no responsibility to fix problems or let you return your car after you’ve signed the papers. This is true even if the seller lies or fails to disclose known problems.
Some late model used cars may have some of the original manufacturer’s warranty remaining. It’s also possible that the orignial owner of a car may have purchased a transferrable extended warranty that still has remaining time left.
Many new-car dealers also sell “certified” used cars. These are cars that are relatively new, are in good condition, have been inspected and repaired, and have a short warranty backed by a new-car manufacturer. Expect to pay a few hundred dollars more for a certified used car than one not certified.
You might want to consider buying an extended warranty on your used car if no other warranties apply.
Can I let someone take over my car payments?
No. First, it violates your loan agreement. Second, the car still belongs to you regardless of who is making the payments. If the other person has an accident and hurts someone, you get sued. If the car is destroyed, it’s your loss. If the other person stops making payments, you may have trouble getting your car back.
The best solution is to legally sell the car to the other person and let them get their own loan. When they get their loan, the bank gives them the money to pay you for your car. You then take the money and pay off your loan and get the car’s title to give to the new owner.
Can I get a car loan?
Yes, assuming you are at least 18 years old and have good credit, and a good income and no excessive debt. If you have no credit, you’ll have to pay cash or get someone to co-sign with you — someone with good credit and a good income. If you have poor credit, you may be able to get a “sub-prime” car loan at a higher interest rate and larger down payment. However, the only way to know for sure is to apply for a pre-approved loan at a bank or credit union.
What should I pay for a car?
Pay what you can afford but if your budget is small you may be limited to older cars with lots of miles. Such cars are more likely to have problems than newer cars that cost more. In other words, buy as much car as you can to help avoid the risk of expensive repairs. Look up the market value of any car you like on Kelley Blue book (kbb.com). Don’t pay more than it’s worth. Any older car should be inspected by a mechanic to find hidden problems before the purchase. If you must buy an old car, you’ll have to spend more time looking before you find a good one.
What is the best car?
That’s a hard one to answer. Honda, Toyota, Nissan, and other Japanese brands have the highest reliaility. British brands such as Jaguar and Land Rover have the lowest. American brands such as Ford, General Motors, and Chrysler are in the middle as are European and Korean brands. However, if it’s used cars that you’re considering, each car is different and you can’t totally rely on brand name when making a decision. Even a Honda can have problems, especially if it hasn’t been properly driven and well maintained.
What is the best first car?
The Honda Civic is the most popular first car with teens. The Civic has many things going for it. It’s relatively inexpensive to buy, inexpensive to insure, is safe, is very reliable, has high gas mileage, is comfortable, has good performance — and there are thousands of after-market customization and performance products for it.
Should I lease or buy a car?
Leasing offers much smaller monthly payments but in exchange, you don’t own the car and must return it at lease-end — or you can choose to buy it at a guaranteed price. Lease is great for many people but not for everyone. Leasing is good is you drive a “normal” number of miles each year — about 15,000 miles or less, and if you take good care of your cars. Don’t lease if you think you might want to end your lease early. It can be very expensive. When you return your car at the end of your lease you may have to pay for any excessive miles or damages. See LeaseGuide.com for much more about car leasing.
How many miles is too much for a used car?
There is no easy answer for that question. Some cars with only 50,000 miles that have been driven hard and not properly maintained are poor buys. Others with over 100,000 miles are in great shape and good for another 100,000 miles. It doesn’t make much difference in car brand or model. The only way to know the difference between these two types of cars is to have a professional mechanic inspect them before you purchase.
My “Check Engine” light is on. What is the problem?
A “check engine” light can be caused by a number of different reasons, some serious, some not. Get an inexpensive OBD Code Reader to determine the problem.