Newspapers, bulletin boards, and classified listing websites are often awash with advertisements for used cars. While buying a used car from an individual is a viable alternative to buying from a used car dealership, you should do so with caution. That’s because used cars purchased from individuals are often not subject to the same protections as those purchased from a dealership. Below, you’ll find explanations of the key legal differences between buying from a licensed dealership and buying from a private party.
The Used Car Rule
Private sellers generally are generally not covered by the Used Car Rule and don't have to use the Buyers Guide (discussed in Buying a Used Car: Dealer Sales). However, you can use the Guide's list of an auto's major systems as a shopping tool. You also can ask the seller if you can have the vehicle inspected by your mechanic before committing to a sale.
State Law Implied Warranties
Private sales usually are not covered by the "implied warranties" of state law. That means a private sale probably will be on an "as is" basis, unless your purchase agreement with the seller specifically states otherwise. If you have a written contract, the seller must live up to the promises stated in the contract. The car also may be covered by a manufacturer's warranty or a separately purchased service contract. However, warranties and service contracts may not be transferable, and other limits or costs may apply. Before you buy the car, ask to review its warranty or service contract.
State Inspection Rules
Many states do not require individuals to ensure that their vehicles will pass state inspection or carry a minimum warranty before they offer them for sale. Ask your state Attorney General's office or local consumer protection agency about the requirements in your state.