Maximizing Sales While Balancing “As Is” Car Disclosure Laws

How to strike a balance with vehicle disclosure that sells cars legally and makes customers happy

You do everything you can to keep your inventory moving— no car sits on your lot for more than 60 days, and you always have a steady stream of in-demand used vehicles coming in. You like to have a variety of vehicles for customers to choose from, at all different price points. Not everyone wants a brand new car, and you want to make sure that anyone who sets foot in your dealership will find what they need.

Whether you’re buying at auction or accepting a trade-in, you’re not always going to get cars, trucks, or SUVs that have had the easiest lives. You may find after buying a used car that it’s been in a couple of accidents, used to roam the city streets as a taxi cab, or served as a government vehicle. Though it might be a little harder to sell this car, disclosure about its past is non-negotiable. You must be honest with the consumer about what they may be getting into because it isn’t just the right thing to do—it’s the law.

Why you need to disclose everything

To begin with, you need to follow the Federal Trade Commission’s (FTC) Used Car Rule, which requires you to display a Buyers Guide in the window of every used car on your lot. The Buyers Guide is a type of vehicle disclosure that tells the customer if the car is being sold “as is” and if there are any applicable warranties.

However, in addition to the Used Car Rule, you must fully disclose a vehicle’s known history. You can’t play dumb and insist you had no idea about a vehicle’s past or potential defects.

“Vehicle history information is a material fact and, therefore, must be disclosed under state unfair and deceptive acts and practices laws,” said the National Association of Attorneys General. “There are a number of sources where dealers can find this information, including vehicle titles, state motor vehicle record databases, NMVTIS, private services such as CarFax and AutoCheck, auction announcements, and manufacturer records. The information is there and dealers have greater access to it than do consumers. Whatever information the dealer can reasonably obtain should be disclosed.”

Vehicle disclosure requirements can vary from state to state, but when in doubt, overshare. You may feel like it will hurt your chances of making a sale—and truly, it might—but would you rather lose the sale or get a lawsuit filed against your dealership? Then you won’t just have lost the sale—you’ll lose your job, too.

Help customers see the positive side of vehicle disclosure listings

Disclosing a vehicle’s checkered past doesn’t have to be a deal breaker. It’s completely possible to sell imperfect vehicles and have a customer be happy with their purchase. You just need to try to sell those cars to the right customers when they step on your lot. A less-than-perfect vehicle could be just the ticket for someone who has an extreme need for a car but doesn’t have a lot to spend. Or, for an individual that just wants something basic for the five-mile roundtrip drive to work every day. There are plenty of people who just don’t want all the bells and whistles.

If you have a customer who’s on the fence, there can be some positives to highlight to help them make a decision in your favor.

1. Former rental vehicles

It’s impossible to know how many different people have driven a rental vehicle, but in general, they can be an excellent purchase. When people drive rental cars, they’re often overly cautious because they’re not driving their own vehicle and don’t want to deal with the repercussions of any fender benders. Rental car companies also usually have strict maintenance policies and keep up with oil changes, tire rotations, and any repairs.

2. Former government vehicles

The government leases fleet vehicles for three to five years, and then the dealer sells them at auction. They’re usually pretty good quality, have been well-maintained by the government, and have only had one owner. How they were used, however, can vary significantly.

3. A Lemon Law “buyback”

The term “Lemon Law” is enough to strike fear in the heart of a worthy buyer, but don’t let them run away too quickly. Try to explain that it means the vehicle was reacquired by the vehicle manufacturer because of a specific warranty defect or defects. When the manufacturer gets the car back, they will usually try to address the problems and repair them—meaning the car should be safe to drive now.

You never want to tell prospective buyers anything that isn’t true, but you also don’t have to be entirely negative about vehicle disclosures. It’s a service to your customers to be transparent so you can frame it that way. Be honest about the vehicle’s shortcomings, but be sure to talk up any positive points as well—top auto salespeople are experts at turning lemons into lemonade especially when the price reflects it.

Additional Considerations Regarding Used Car Disclosure Laws

While the federal Used Car Rule sets the foundation for used car disclosure practices, it’s essential to take note of the various state-specific regulations that further shape this landscape. Some states have disclosure laws that supplement federal regulations, ensuring a more transparent process for the consumer and additional responsibilities for the seller.

For instance, in many states, sellers are required to provide a detailed written statement about the car’s overall mechanical condition. This includes any known issues with the car’s major systems, like the engine or transmission. Some states have laws that specifically require the disclosure of flood damage, a factor that could significantly impact the vehicle’s lifespan and safety.

Furthermore, some state laws require sellers to disclose if the odometer has been altered or if there’s a difference between the actual and indicated mileage – a key factor for many used car buyers. Any discrepancies here could lead to fines and penalties.

Then there’s the case of ‘branded’ or ‘salvage’ titles. In many states, if a vehicle has been written off due to severe damage and then restored to a drivable condition, the title of the car must bear a ‘salvage’ or ‘rebuilt’ brand. This branding must be disclosed to potential buyers, as it can significantly impact the vehicle’s resale value and insurance costs.

How Used Car Disclosure Laws Benefit Dealers

It might seem like these laws add extra burdens to used car dealers, but there are potential advantages to fully embracing disclosure laws. Firstly, comprehensive disclosure can boost a dealership’s reputation. In the digital age, consumers have numerous platforms to share their experiences – good or bad. Transparent practices make customers feel respected and valued, increasing the chances of positive reviews and recommendations.

Secondly, it can lead to increased customer loyalty. Customers who have a positive buying experience, where they feel informed and treated fairly, are more likely to return for their next vehicle purchase or recommend the dealership to friends and family.

Finally, the rigorous adherence to used car disclosure laws can protect the dealership from potential legal action. By fully complying with all disclosure laws, dealerships protect themselves against lawsuits that can harm their reputation and result in significant financial penalties.

Full Disclosure is Key

Being completely transparent with customers when selling used cars is not just the ethical way to operate; it’s also legally necessary due to federal and state used car disclosure laws. By adhering to these regulations, dealerships can not only maintain compliance and avoid legal repercussions but also enhance their reputation, build customer trust, and ultimately, contribute to their long-term success.

Moreover, it is worth noting that educating the consumers about the legalities and the technicalities behind vehicle disclosures can also help facilitate the sales process. Many buyers are unaware of what these disclosures mean for them and the vehicle they’re considering. By walking them through the process, explaining the importance of each disclosure, and helping them understand how these disclosures ultimately protect their rights as consumers, dealers can establish a more meaningful connection with buyers. This not only aids in making an immediate sale but also fosters a relationship of trust and respect, likely leading to repeat business and referrals in the future. Ultimately, full transparency in vehicle disclosures is a win-win scenario for both the dealer and the customer.

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Patrick H.
Patrick H.