For most people, purchasing a car is a major expense that raises unique concerns. You need to make sure that the dealer offers sufficient warranties to protect you in case the car is in poor condition or requires frequent repairs. It's also important that you consider financing options carefully and protect yourself against dealer fraud.

Warranties Can Be Optional

A private seller doesn't have to offer you a warranty when you purchase a car. Even a dealer can avoid warranties by including the words "as is" or "with all faults" in a written notice. A dealer may offer written warranties, although these warranties are typically limited in scope. Your car might also be covered by a manufacturer's warranty, whether you bought it from a dealer or a private seller. To enforce a manufacturer's warranty, you will need to contact the manufacturer's representative. The dealer or manufacturer might also offer a service contract, often called an extended warranty, for an additional fee. A service contract offers warranties beyond the standard dealer warranties.

Implied Warranties

Unless you purchase your car from a dealer on an "as is" or "with all faults" basis, two implied warranties automatically apply. These warranties are "implied" because they apply even if they are not included in any written warranties. The implied warranty of merchantability guarantees that the car is roadworthy and can be driven with reasonable safety. The implied warranty of fitness for a particular purpose guarantees that the car is suitable for any purpose you may have expressed to the dealer, such as racing or hauling.

Financing Adds to the Expense

Most buyers find it necessary to finance the purchase of a new or used car. Read the contract carefully to understand how much you are actually paying. The Truth in Lending Act requires that your creditor, whether it's a bank or a car dealer, provide you with certain disclosures. You must be informed of the price you are paying for the car, the amount of the loan, the dollar amount you are paying for the credit, and the annual percentage rate (APR) of interest. You must also be told the number of installment payments, the amount of the payments, and the total sales price including the cost of credit.

Car Dealers Can Be Sued for Fraud

Dishonest auto dealers can find many ways to defraud you.

• A dealer might roll back the odometer on a used car.
• A dealer might fail to disclose that a used car is defective and was repurchased by the manufacturer before it was resold to the dealer.
• A dealer might let you take a vehicle home before financing is approved and then demand its return until the financing contract is rewritten (on less favorable terms than you expected).

If you've been defrauded by a dealer, consider talking to a lawyer.