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Your Used Car May Be Covered by a Warranty – It's the Law

State Law Requires a Warranty on Used Cars Sold by "Buy Here, Pay Here" Dealers

What to Know

  • "Buy here, pay here" used car dealers in California must offer a 30-day / 1,000-mile warranty on all vehicles sold
  • Dealerships that provide most of their own financing / take payments directly from customers are considered "Buy Here, Pay Here"
  • Car buyers who are entitled to a warranty but don't get one should contact California DMV, and may be able to seek legal relief

Used car buyers can feel helpless when their vehicle breaks down, sometimes days or even hours after purchase. What many may not know is a California law requires certain car dealerships to fix all problems that arise within the first few weeks.

A 2013 law passed by the California Legislature updated civil code and instructs a certain subset of used car sellers, known as "buy here, pay here" dealers, to offer a warranty for 30 days or 1,000 miles driven, whichever comes first, on all vehicles they sell. The warranty must cover essential components, such as the engine, transmission, brakes, steering and most electronics. If the dealer is unable to repair problems that arise in the first 1,000 miles or 30 days, it must offer the customer a refund on their purchase.

The law was written to help drivers like Jonathan Frye. He found a 2006 Audi A6 Quattro online and decided it was his dream car.

"I wanted it bad," Frye said. "I went and tried to scrape up everything I could to get it."

Frye drove across the bay from his San Francisco home to Phantom Motors in Hayward to buy the Audi. But problems started as soon as he left the lot -- literally.

"In the process of me going home, the check engine light came on," Frye said.  "On my way home from the dealer."

Frye took the Audi back for repairs the following weekend. After a long wait, he said Phantom Motors told him it was fixed.

"On my way driving home, guess what happened?" Frye said.  "[The check engine light] came back on again. So here we go again. Repeat story. Rewind."

Frye said he took the car back a second time and a third, with the problem resurfacing every time. His dream car had become a four-door nightmare.

Frye told NBC Bay Area he didn't know about the California law that requires "buy here, pay here" dealers to provide all buyers a written warranty.  Consumer attorney Mark Anderson says that's part of the problem.

"A lot of people, I think, don't know they have rights," Anderson said.

Anderson sues car dealers. He says many "buy here, pay here" lots don't tell customers about that warranty.

"Luckily, the law is written with that problem in mind," Anderson said. "The civil code section that applies says even if a car dealer didn't give the person a written warranty, they are deemed to have done so by operational law."

We wanted to see for ourselves whether the law was being followed. NBC Bay Area visited several "buy here, pay here" lots around the Bay Area and checked the Buyers Guides -- the window stickers that provide legally required information about every car sold.

Some dealers we visited did check the warranty box. But others checked "As-is - no dealer warranty."

Anderson says those dealers are breaking the law and stiffing customers.  "They're misrepresenting the fact that there is a warranty," he said.

The California Department of Motor Vehicles is empowered to make sure "buy here, pay here" used car lots offer you that warranty. NBC Bay Area asked the DMV for any records of enforcement action. The agency told us it issued eight warnings to dealers in 2013 and one in 2014 but not a single one since.

Consumer advocate Rosemary Shahan says that is unacceptable. Shahan helped write the warranty law, and she says the DMV needs to do more to protect and inform car buyers.

"The DMV should issue a rule requiring the 'buy here, pay here' dealers to report to the DMV, 'I’m a buy here, pay here dealer', and then publish those names online," Shahan said.

With or without help from regulators, car shoppers should be cautious when buying any used vehicle. Always research cars and dealerships online; ask for a vehicle history report; and get everything in writing. Read the sales agreement carefully before you sign it. Anderson says you should also have a mechanic look under the hood.

"Ask the dealer who's selling it if you can take the car and have it inspected somewhere else," he said. "No one ever does that."

Shahan says consumers who believe they were ripped off by a used car dealer need to speak up. "They should complain to the DMV," she said. "They should complain to their member of the California Legislature and tell them to get on the DMV's case. And they should get some legal advice from an auto fraud attorney."

That's what Frye did. He's suing Phantom Motors, and he's gone back to driving his old Mitsubishi SUV.

"I've had that car for seven years," Frye said. "Guess how many times it's been in the shop? Once, for a tune-up. That's it."

NBC Bay Area invited Phantom Motors to talk with us. Instead, the dealership sent us a written statement, which reads in part:

"For the record, we are committed to providing a transparent, responsible, and mutually beneficial service of car sales to the public, respect, and at all times attempt to comply with, the applicable State of California rules, but, consistent with the pending litigation, and with our attempts to resolve and settle same, cannot, at this time, provide anything further re this specific transaction."

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