Vehicle warranties, service contracts, and sales
By Capt. Michael McMillan, 27th Special Operations Wing Judge Advocate
/ Published March 02, 2015
CANNON AIR FORCE BASE, N.M. -- When purchasing a vehicle, it is important to consider the seller’s representations regarding the vehicle and the potential cost of future repairs to the vehicle. There are several issues to consider, including whether the seller is offering a warranty, whether the seller is offering a service contract and if a state “lemon law” applies to the vehicle purchase.
In many car sales, the seller will offer a warranty on the vehicle. A warranty is a promise made by the manufacturer or seller of the vehicle regarding the performance of the vehicle, and a warranty is included in the price of the vehicle. Warranties provide specific obligations of the seller or manufacturer if the vehicle fails to perform according to the standards listed in the warranty. The manufacturer or seller may promise to make any required repairs free-of-charge to the purchaser, or it may be limited to providing the required parts and the purchaser may still be required to pay the labor costs of the repair. Be sure to read the warranty thoroughly to understand the promises made by the manufacturer or seller and the breakdown of costs if something is wrong with the vehicle.
Many vehicle sellers offer service contracts, also called extended warranties, in which the purchaser can pay an extra amount and the seller agrees to pay the cost of some repairs. When considering whether to pay for a service contract, consider whether the vehicle will likely need the repairs covered in the contract, whether the service contract covers the types of repairs that may be needed, if the issues covered by the service contract are already covered in another warranty, and whether the cost of the service contract is worth the extra cost. Additionally, be sure to review the service contract carefully to determine how much of the cost of the repair that the seller actually agrees to pay; sometimes service contracts require the purchaser to pay certain portions of the repair costs. Note that service contracts are different from warranties because warranties are included in the price of the vehicle and service contracts have an additional fee.
Many states have “lemon laws” designed to protect purchasers of defective vehicles. Most states’ lemon laws only cover new vehicles and do not apply to purchases of used vehicles. These laws usually establish the procedure for purchasers to get the manufacturer or seller to repair the vehicle, and if repair is not possible, some lemon laws require the manufacturer or seller to provide a new, replacement vehicle to the purchaser. Generally, the state where the sale is made is the state whose lemon law applies to the vehicle.
In many sales of used vehicles, the contract will state that the purchaser is taking the vehicle “as is.” This means the seller is making no representations regarding the quality or performance of the vehicle. Be extremely careful when purchasing a vehicle “as is.” In effect, this means that if the vehicle has a problem, the purchaser will probably have to pay the entire cost of the repair without any payments from the seller or the manufacturer.
Some used car salespersons will verbally tell the purchaser that a used vehicle is in good condition, but will include provisions in the sales contract that state the purchaser is taking the vehicle “as is” and that the seller is making no representations regarding the vehicle. If this happens, it would be extremely difficult for the purchaser to prove that the seller actually did make promises regarding the vehicle, and the purchaser will probably be stuck with the cost of repairing the vehicle.
At the base legal office, an attorney can help you review a vehicle purchase contract before you buy the vehicle or an attorney can discuss your options if you bought a defective vehicle. If you want advice regarding a vehicle purchase, please contact our office at 575-784-2211 to schedule an appointment with an attorney.
You can also take advantage of our walk-in legal assistance hours, which are the first and third Thursday of the month from 4:30 p.m. to 8 p.m., and the second and fourth Thursday of the month from 1 p.m. to 3 p.m.