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What to Do if You've Been Lied to About Your Used Car

By: Jack NeradPublished June 24, 2021

You have undoubtedly heard the phrase caveat emptor, which is Latin for “let the buyer beware.” It describes a manner of doing business in which the buyer alone is responsible for assessing the quality of the purchase before buying. In other words, without any type of warranty, written or implied, the buyer takes upon himself the risk of product quality or lack thereof. Of course, one frequently encountered lie revolves around the quality of a vehicle being sold. Just as a matter of simple “salesmanship” a used car dealer is unlikely to spell out a car’s faults to you, especially if you fail to ask. You have also likely heard the phrase you are buying “as is.” As a legal reference in the Free Dictionary said, “The term “as is” gives notice to buyers that they are taking a risk on the quality of the goods. The buyer is free to inspect the goods before purchase, but if any hidden defects are discovered after purchase, the buyer has no recourse against the seller. Any implied or express warranties that usually accompany goods for sale are excluded in an “as is” sale.

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Certainly, in light of caveat emptor and a purchase “as is,” it seems like the deck is stacked against you if you believe a used car salesperson has lied to you. You might assume that if you failed to inspect the vehicle properly and ask the right questions and there is a problem with the used car you just purchased it is all on you. But in most states, the dealer is prohibited from intentionally misrepresenting the car or hiding known facts about it from a prospective purchaser. Further, depending upon the jurisdiction, car dealerships might be required by law to disclose all material facts they know about the car. So if it appears that the dealer has not lived up to that obligation or, more materially, has abjectly lied about something in connection to the car or the transaction, you may have the basis for a legal case against the dealership. Put even more simply, you do have rights when you buy a used car. Those rights vary based on the state where the car was purchased and any language in the purchase contract that pertains to disclosures and warranties.

One obvious area of contention between a car buyer and a used car dealer is around the car’s mechanical condition. An unscrupulous used car dealer could knowingly patch a car together so it appears to run well and look good, while in reality, it is unsound and prone to fail sooner rather than later. Check engine lights and other warning lights can be turned off giving the impression that nothing is wrong when the car actually has serious mechanical problems, like issues with the transmission, CV joints, brakes, and steering gear. Some of these issues can simply be annoying and expensive to fix, but others — like brakes and steering that we just mentioned — can turn the vehicle into a serious safety hazard. Taking the vehicle for a thorough test drive and having it inspected by a qualified mechanic are ways to circumvent these pieces of chicanery.

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It is pretty likely that when you buy a used car, you want to avoid a vehicle that has been in a serious accident. While it is quite possible to restore a car to good, safe operating condition after it is involved in an accident, you certainly should want to be informed if the car has an accident in its history. A vehicle can look good sitting at the curb, and it can even seem fine in a cursory test drive, but a car that has been in a serious accident and has not been properly repaired can be both a future money pit and a safety hazard. For instance, if the car’s unibody has been tweaked by a major crash it might not handle as designed and it might be impossible to align properly. If a vehicle has been in an accident so severe that it was “totaled” by the insurance company, it should have a “Salvage” notation attached to its title, but unscrupulous car sellers have techniques to “wash” car titles, ridding them of negatives like “Salvage.”

Just as a car that has been rendered a complete loss in an accident should be labeled as “Salvage,” so too should vehicles that were used in commercial car rental service or as dealer “demonstrators” be labeled as such. That information should be offered to you by the used car dealer before the transaction is consummated. There is nothing inherently wrong with buying a former rental or demonstrator. In fact, depending upon pricing and mileage, they could be major bargains. But if the dealer doesn’t reveal this type of prior service to you when you ask, you could have the basis for recourse if that vehicle has serious mechanical or cosmetic difficulty. It is best to ask about such service prior to negotiating for the vehicle and making the deal. If, after you have asked, the dealer does not reveal the previous use, you have the makings of a potential lawsuit. Similarly, if the vehicle in question was the subject of a forced “buy back” because it was labeled a lemon according to the state lemon law, that information should be disclosed to the buyer prior to the sale.

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A vehicle transaction is very complicated. The majority of used cars aren’t purchased outright by consumers. They are financed by a bank or other lender, and this can lead to confusion, and sometimes outright fraud, regarding the terms of the deal. This situation is made worse by the fact that many buyers don’t pay nearly as much attention to the purchase price as they do to the size of the monthly payments. The result of this is that various areas of the deal, including the full price of the vehicle, can be altered as the paperwork is being written so it is not reflective of the deal the consumer thought she or he had made. Often car buyers don’t discover this until they go over the paperwork back at home after the deal has been done.

The first thing you should do if you believe you have been lied to by the used car dealer is to contact that dealer. You might be uncomfortable with this feeling that the dealer will be hostile to you, but we can almost guarantee you that if the dealer has been in business for any time at all it will have encountered some inquiries like yours. It is possible that the dealer was unaware of the problems the car you bought had. And it is equally possible that the dealership will want to preserve its reputation by attempting to address your situation and the cause of contention. It is wisest to spell out your complaint in a written document that clearly defines the problem and why you believe the car or the deal was misrepresented to you. Once you have done that, try to put emotion aside and seek a solution that works both for you and the dealer. Having the dealer take the car back and refund your money probably won’t be regarded as reasonable by the dealer. Fixing the problems with the car in the dealer’s repair facility at the dealer’s expense could be.

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Should you be unable to resolve the situation after a discussion with the dealer, you might find relief with state and local agencies that handle consumer affairs. As you might guess, auto dealerships are the subject of many consumer complaints, so these agencies are well-versed in dealing with issues like the ones we have outlined. Since car dealers are licensed by the individual state in which they do business, they are also regulated by the state. Often these agencies have many levers to pull in an effort to persuade the dealer to make the situation right for individual consumers. In extreme cases, the agency might institute fines or even withdraw the dealer’s license to sell vehicles. These state and local agencies are government-funded so enlisting their help will cost you nothing but your time.

If, after talking with the dealer and enlisting the help of a state agency you still have not resolved your issue, you might want to resort to hiring a lawyer and starting legal action against the offending dealer. If the dealer has indeed lied to you about one or more of the items we have discussed in this article, it is quite likely the dealer has violated the state regulations governing auto dealers’ actions. The threat of losing their dealer license should prompt many dealers to enter into a settlement. Further, lying could indicate a charge of fraud or breach of contract. Even if the offense was accidental — say the dealer didn’t know the car had been in rental service — you might still have a case for negligent misrepresentation. It can be alleged the dealer should have known. The legalities vary from state to state, so if you consider this type of litigation be certain the attorney you hire is well-versed in this area of the law.

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As you might have heard when you were younger, “an ounce of prevention is worth around of cure.” That means that keeping something bad from happening is much better than trying to fix the bad thing after it occurs. The same holds true with this issue. When you are buying a used car, you should take the necessary precautions so you don’t have to get involved in a dispute after the fact. If you’re seriously considering a used car, invest in a vehicle history report. Many used car dealers will provide them for free. Take the vehicle on a thorough test drive. Ask the salesperson a lot of probing questions about the car, and have the vehicle inspected by a good mechanic before you buy. Then, as you consummate the transaction, read the sales contract carefully, and make certain it matches your understanding of the deal. If it doesn’t, don’t sign it until corrections are made. By doing all these things you probably won’t need to know what to do if you’ve been lied to about your used car.

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