On the other hand, the recent revision to the Used Car Buyer’s Guide should make the correct disclosures much simpler. So don’t spend a lot of time overthinking the final production.
Just to recap, the Federal Trade Commission approved changes to the Used Car Rule this past November. Those revisions, seven altogether, went into effect Jan. 27. However, the amended rule lets dealers use their remaining buyer’s guide stock until Jan. 27, 2018.
It is important to note that the new revision does not mean any dealer requirements under the Used Car Rule have changed. A dealer still must give the consumer a buyer’s guide. If the deal is negotiated in Spanish, the dealer must provide a Spanish translation. “Implied warranty states” remains “implied warranty states.” The disclosure on the buyer’s guide continues to override any contrary provision on any other document.
Now, the reason the old form doesn’t work is because the Used Car Buyer’s Guide was implemented before electric windows, airbags, balance of factory warranties and certified pre-owned warranties. The original intent was to provide the consumer with a disclosure of the warranty the dealer was providing.
But over time, as airbags and certified pre-owned (CPO) programs gained traction in the industry, the feds never made it a requirement to disclose the manufacturers’ warranties. However, many dealers chose to do so to enhance the value of the vehicle in the consumer’s mind.
The government decided to provide some optional language a dealer should use to disclose the balance of the factory warranty or a CPO. They developed “safe harbor” language and instructions on how to check the right box and leave certain lines blank and a paragraph to use if the dealer chose to disclose a manufacturer’s warranty.
It was a kluged system. They were trying to take a form that was designed to disclose a dealer warranty and make it a form to disclose a manufacturer’s warranty if the dealer chose to do so. Problem was, few dealers got it right.
The new form does a nice job of separating a dealer’s warranty from the optional manufacturer’s warranty disclosure. Take each of these sections separately for the purposes of determining your disclosure:
If you offer a limited warranty — a powertrain warranty for three months or 3,000 miles, for example — you must disclose that warranty and check the “Dealer Warranty” box and the “Limited Warranty” box. You then enter the percentage of parts and labor covered by your warranty, the systems covered, and the duration they are covered for.
If you do not offer a limited warranty, check the “As-Is — No Dealer Warranty or Implied Warranties Only” box, depending on your state law.
Now move on to the “Non-Dealer Warranty” section. If you want to disclose that the balance of factory warranty may still apply, simply check the box next to the “Manufacturer’s Warranty Still Applies” disclosure.
If you wish to disclose a CPO warranty, check the box next to the “Manufacturer’s Used Vehicle Warranty Applies” disclosure.
If you offer a service contract for sale on this vehicle, check the box next to the “Service Contract” disclosure.
That’s it for the front of the form. The only change to the back is you must now disclose the email address of the contact in the event of questions.
Here are a few key points to bear in mind as you develop and implement the new Used Car Buyer’s Guide:
- The Used Car Rule did not change; only the form has been revised.
- The only required warranty disclosure for a dealer is one that the dealer is providing.
- While it likely enhances the value of a used vehicle in the consumer’s mind, disclosing any manufacturer warranty is optional.
Finally, don’t overthink it. Good luck and good selling!
Gil Van Over is the executive director of Automotive Compliance Education (ACE) and the founder and president of gvo3 & Associates. Email him at [email protected]