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What to Expect Buying a Car from a Registered Dealership

4 min read

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By Tim Lee

Feel confident purchasing a used car from a registered dealership, and learn about your rights as a consumer and the regulations that dealerships must adhere to.

Trust is a key element when buying a car, and when you purchase your vehicle  — new or used — from a registered dealership, it’s important to feel confident about what you’re buying and who you’re buying it from. We’re exploring what you can expect when you buy a used vehicle from a registered dealership, as well as looking into the used car purchase return law.

What Is a Registered Dealership?

In the U.S., direct sales of vehicles from the manufacturer to individuals are almost exclusively prohibited. New cars must be sold through a car dealership. Car dealers must register as a franchise and purchase franchise rights from different manufacturers.

Once the interested dealership has purchased its franchising rights, the company also needs to register the business with its home state. In the U.S., regulation of car dealerships operates almost entirely at the state level. In order to be a registered dealer, the potential dealership must obtain a license from its state government. Different states have different regulations, but there are some commonalities:

Erik Mclean/Unsplash

Buying a Used Car from a Registered Dealership

When you buy a used car from a registered dealership, you do have a few guarantees to help put your mind at ease. Car dealers are in the business of selling cars and they’ll only offer used cars that are worthy of being sold. This means that, for the most part, there’s little chance you’ll get a “lemon” from your local used car dealer.

Beyond that, there are a few other things that make buying a used car from a registered dealer better than buying from a private seller.

Standards of Quality

There are certain rules and regulations that dealerships have to follow with regard to the quality and safety of vehicles that they offer for sale. Car dealers are required by law to only sell vehicles that meet certain quality standards, such as being able to pass state inspections and those that have fewer than a certain number of miles on their odometers. Privately sold vehicles or those from an unregistered dealership don’t have to adhere to those standards.

Warranty Guarantees

Even though some cars sold at registered dealers may not still be under factory warranty for some parts, registered dealerships typically offer certain limited warranties as a sales incentive for used cars sold from their lots.

While private sellers will generally provide a history of the car and the maintenance records, dealerships are held to higher standards and must provide a full history of the cars they sell.

Omotayo Tajudeen/Unsplash

Less Paperwork

A registered dealer will complete all needed paperwork, including trading in your old car. They’ll also help complete auto financing and the transfer of ownership paperwork, making it less work for the buyer. This includes registering the car with the DMV and even securing permanent license plates.

Buyers Guide

Every used car at a registered dealership must, according to law outlined by the U.S. Federal Trade Commission (FTC), post the Buyers Guide in the car.

This law covers lease returns, whether short- or long-term, and vehicles that were traded in at the dealership or purchased by the dealership at auction for resale.

The Buyers Guide:

Note: Wisconsin and Maine are exempt from this FTC Buyers Guide and use a separate one.


Erik Mclean/Unsplash

What Is a Used Car Purchase Return Law?

Well, there isn’t actually a law that requires dealerships, even registered dealerships, to allow purchasers to return their used vehicle. According to the FTC:

“Dealers are not required by federal law to give used car buyers a three-day right to cancel. In some states, dealers are required to give a right to cancel. In other states, the right to return the car in a few days for a refund exists only if the dealer chooses to offer this privilege.”

While many reputable dealerships will offer customers a “cooling off” period, these aren’t required by law. However, this courtesy may actually signify a dealership that is honest with customers and transparent about its business dealings. That being said, before you sign a purchase contract, ask about the dealership’s return policy, make sure that you fully understand it and get it in writing.

Final Thoughts

As with any big-ticket purchase, do your homework before buying a car — both for the vehicle itself and the dealers in your area. Check the dealership’s certification online, and don’t be afraid to ask questions about the return policy if something happens to the car soon after purchase.

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Tim Lee



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