EveryBody's Guide to the Law

the dealerships that sell new and “preowned” vehicles and “Honest Bob’s Used Car Lot.” In
some states, “used-car dealers” include banks or insurance companies that sell repossessed or
damaged cars, rental agencies that sell their used cars, and auctioneers. Some states define a
dealer as one who has an established place of business and sells a certain number of cars each
year.
Federal law requires used-car dealers to place a window sticker on every used car indicating
whether any warranties come with the car. If the car is sold “as is”—without a warranty of any
kind—that fact must be shown clearly on the sticker. If a warranty is given, the dealer must
state whether it is a full or a limited warranty, the system(s) covered, the length of the warranty,
and what percent of the costs of labor and parts the dealer will pay. Before buying a used
car with a limited warranty, carefully read all of the warranty information on the window
sticker to see just how limited the warranty really is. Some warranties are so limited they really
don’t cover a thing.
New York has a used-car “lemon law” that applies to dealers. The dealer cannot disclaim
this law, nor can the consumer waive his or her rights under it. This warranty covers certain
parts: the engine, transmission, drive axle, brakes, radiator, steering, alternator, generator, and
starter or ignition system (excluding the battery). The warranty applies only to cars that are
sold for more than $1,500, or leases where the dealer and lessee (the person leasing the car)
agree that the car’s value is more than $1,500.
If the car has 18,000 miles or fewer on it, the buyer may be protected by New York’s newcar
lemon law. If the used car has more than 18,000 miles and up to 36,000 miles on it, the
warranty must be provided for at least 90 days or 4,000 miles, whichever comes first. If the used
car has more than 36,000 miles but fewer than 80,000 miles, the warranty must be for the first
of 60 days or 3,000 miles. For used cars having at least 80,000 miles but fewer than 100,000
miles, the warranty protects the buyer for the earlier of 30 days or 1,000 miles. Cars having
over 100,000 miles are not covered by the used-car lemon law.
Under New York’s used-car lemon law, if the dealer cannot fix the same problem after three
or more attempts, or if the car is out of service for a total of fifteen days during the warranty
period, the dealer must refund the purchase price, sales tax, and fees, less a reasonable
allowance for any damages not attributable to normal wear and tear. If you leased the car, the
dealer must refund all of the payments you have made on the car and cancel all future payments.
If the contract calls for arbitration in the case of disputes, the dealer may refuse to
refund the purchase price (or lease payments) until after you have won the arbitration. Of
course, if you lose the arbitration, you are stuck with the car and paying the balance of the
purchase price or lease payments.
Many dealers offer an optional used-car warranty. Before buying such a warranty, read it carefully
to see what it covers and for how long. You may find that only a few things are covered—
the things least likely to fail. Some dealers charge exorbitant amounts of money for extremely
limited warranties. Before buying the car and the extended warranty, you should go to another
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