The Buyers Guide tells consumers:
- whether the vehicle is being sold "as is" or with a warranty
- what percentage of the repair costs a dealer will pay under warranty
- that oral promises are difficult to enforce
- to get all promises in writing
- to keep the Buyers Guide for reference after the sale
- the major mechanical and electrical systems on the car, as well as some of the major problems that consumers should look out for; and
- to ask to have the car inspected by an independent mechanic before they buy
If you conduct the sale in a language other than English, you must provide a Buyers Guide in that language.
The FTC requires the Buyers Guide be posted prominently and conspicuously on or in a vehicle while it is available for sale. Both sides must be visible - which means the Buyers Guide must be in plain view, such as on the rear-view mirror or attached to a side window. A guide placed in the glove compartment or trunk is not conspicuous because it is not in plain site.
The Buyers Guide may be removed for a test drive, but must be replaced when the test drive is over.
Fill out the Buyers Guide completely by listing the full vehicle information (make, model, year and VIN). On the back of the Buyers Guide is a place to fill in the name and address of the dealership. Include the name and telephone number of a person the consumer should contact with complaints.
The Buyers Guide may contain an optional signature line for your customer. Above this line you may include a statement "I hereby acknowledge receipt of the Buyers Guide at the closing of this sale". This language can be preprinted on the form.
Always keep a copy of the signed Buyers Guide in your file and provide the ORIGINAL to the buyer.
The Buyers Guide has two options:
If you offer the vehicle with an express warranty, you must check the box next to the heading "warranty" and complete that section of the Guide.
- As-Is No Warranty
A warranty can be "full" or "limited". For a warranty to be considered "full", the warranty service must be provided to anyone who owns the vehicle during the warranty period. The service must be provided free of charge when necessary, even for services like removing and reinstalling a system covered by the warranty. The consumer must be able to choose either a replacement or a refund if the vehicle can't be repaired after a reasonable number of tries. And the consumer is not required to take any action to receive service, except to give notice that service is needed. Service must be rendered after notice unless the warrantor can demonstrate that it is reasonable to require consumers to do more than give notice.
Fill in the percentage of parts and labor costs covered by the warranty in the spaces provided. If a deductible applies to repairs made under the warranty, put an asterisk next to the number and explain the deductible in the "systems covered/duration" section. For example, "A $50 deductible applies to each repair visit."
There is one column to list the systems covered, and another to list the length of the warranty for each system. In the left hand column, you must specify each system that's covered by the warranty. The Rule prohibits the use of shorthand phrases such as "drive train" or "power train" because it's not always clear what specific components are included in the "drive train" or "power train".
In the right hand column, you must state the length of the warranty for each system. If all systems are covered for the same length of time, you may state the duration once.
If the Manufacturer's warranty hasn't expired, you may disclose this fact by checking the "warranty" box and including this disclosure in the "systems covered/duration" section: "Manufacturer's Warranty Still Applies. The manufacturer's original warranty has not expired on the vehicle. Consult the manufacturer's warranty booklet for details as to warranty coverage, service location, etc.". The disclosure must be stated in the exact language quoted above. Using phrases such as "balance of factory warranty" are not sufficient!
If there are negotiated changes to the warranty, be sure to cross out any information that no longer applies, and write in the negotiated changes.
There is a box that can be checked if your dealership is offering Service Contracts. The Buyers Guide is not sufficient to meet the requirements of the Warranty Disclosure Rule. If you are offering a written warranty, you must provide both the warranty and the Buyers Guide.
The FTC requires that you display written warranties in close proximity to the vehicle or to make them available to consumers upon request - BEFORE THEY BUY!.
If you offer a 50/50 warranty or another type of split-cost warranty (those under which the dealer pays less than 100% of the cost for a warranty repair), you should include the following disclosures in your warranty document:
- the percentage of the total repair cost you will pay
- the percentage of the total repair cost the buyer must pay
- how the total cost of the repair will be determined (for example, your warranty might state: "the total cost of a warranty repair will be the retail price ABC Motors charges for the same job". Or: the total cost of a warranty repair will be determined by adding the dealer's cost for parts to the labor cost. Labor will be billed at a rate of _____ per hour for the actual time required to complete the repair".
If your warranty requires buyers to pay a deductible, your warranty document should disclose the deductible amount and the details as to when and under what circumstances the deductible must be paid.
Dealers offering split cost warranties can require that buyers return to the dealer for warranty repairs. If your warranty includes this restriction, however, you should provide an estimate of the total repair cost before work is started. This will allow the buyer to decide whether to approve the repair or have the work done elsewhere.
Dealers who violate the Used Car Rule may be subject to penalties up to $16,000 per violation.
Selling a motor vehicle as-is does not eliminate the compliance with Colorado Safety Standards!
Colorado State Statute states: It is unlawful for any person to drive or move, or for the owner to cause or knowingly permit to be driven or moved on any highway, any vehicle which is in such unsafe condition as to endanger any person, and is not at all times equipped with such lamps and other equipment in proper condition and adjustment.
The statute specifically requires the following equipment meet safety standards pursuant to 42-4-202 through 42-4-239 C.R.S.:
- Lights, lamps and reflectors
- Signal lights
- Head lights
- Suspension system
- Safety items - air bags, seat belts (if these were original equipment for that vehicle)
A motor vehicle dealer's license may be revoked or suspended for selling to a retail customer a motor vehicle which is not equipped or in proper condition and adjustment as required by the statutes mentioned above.
The above information on the FTC Buyers Guide can be found in "A Dealer's Guide to the Used Car Rule" published by the Federal Trade Commission and the National Independent Automobile Dealer's Association. A copy of the complete guide is available at: Dealer's Guide