New Legislation Surrounding Used Cars May Help Buyers
Earlier in July, the United States Senate Minority Leader Charles Schumer called for increased legislation surrounding used cars in order to protect buyers. This legislation would increase the power of an existing piece of legislation, called the Used Car Rule or the Used Motor Vehicle Trade Regulation Rule. The New York senator raised these concerns after a storm began brewing over North Carolina. He fears that many vehicles that were refurbished after hurricane damage are now sitting in dealerships across the country, just waiting to be sold.
His fears are not unfounded. After all, 2017 saw three significant hurricanes tear through parts of the United States and cause millions of dollars worth of damage. First, there was Harvey, which decimated much of the Texas coast and the Gulf of Mexico. Then, there was Irma, which tore through the Virgin Islands and St. Martin before taking on Florida. Finally, there was Maria, which caused unspeakable damage to Dominica and Puerto Rico, leaving many people without power for months. Although the totals are still being calculated, many estimate that the three hurricanes caused over 200 billion dollars’ worth of damage, and vehicles were a major portion of that damage. Some estimates cite over 600,000 cars as being damaged by the extensive flooding caused by the hurricanes.
What does all of this mean? How would this legislation affect car buyers? We’ll take you through the history of this legislation and how potential changes will affect you as a consumer shopping for your next used car.
The Used Car Rule
In effect since 1985, the Used Car Rule, or the Used Motor Vehicle Trade Regulation Rule, requires dealerships to display a window sticker on the used cars they offer for sale, known as a Buyer’s Guide. This Buyer’s Guide shows if a dealership offers a warranty, and discloses the terms and conditions of that warranty. These terms and conditions typically include the duration of the coverage, the percentage of repair costs the dealership will pay, and the vehicle systems the warranty covers. This rule was put in place to help ensure that buyers were protected from purchasing vehicles with problems known to the dealership. With these stickers, buyers can know precisely what will be covered if the vehicle develops issues after purchasing it. Because of these additional disclosures, the Used Car Rule helps take some of the uncertainty and risk out of purchasing a used car.
Senator Schumer’s Proposal
So, how is Senator Schumer planning to use this rule to keep refurbished flood vehicles, which he calls “hurricane cars,” off the market? Schumer is urging the Federal Trade Commission (FTC) to tack on some additional rules to this legislation. In addition to the Buyer’s Guide, Schumer wants every sticker on the cars to include a thorough flood check and an indication that the car was involved in a serious flood. These disclosures would allow consumers to be able to make informed decisions about the cars they buy. After all, a car with severe flood damage can be cleaned up for about two thousand dollars and resold without the buyer ever knowing about the flood damage. While many ethical dealers perform the necessary inspections anyway, there are also many unethical dealers that will not notify their customers of flood damage, and these scammers often increase right after major floods or storms due to the glut of damaged vehicles.
What’s the Big Deal?
You may be wondering why all of this even matters. First of all, the driver has a right to know all pertinent information about the cars they are looking at buying, and they shouldn’t have to jump through a bunch of hoops to get that information.
Salvage vehicles or flood-damaged vehicles can also be hazardous to drive or major hassles to own because of all the issues that may crop up. If your car has a salvage title, it means that the car has suffered extreme damage and the insurance company has decided that the vehicle is a total loss. While vehicles with salvage titles may be really cheap up front, it can cost a lot of money to get a salvage vehicle back in driving condition. Additionally, trying to get insurance for a used car with a salvage title will be extremely difficult because most insurance companies don’t want to put comprehensive or collision policies on cars with a history of extensive damage.
Even if the car doesn’t have a salvage title, buying a used car with flood damage still presents many risks. Flood damage can disintegrate the electric wiring of the vehicle or seize up the mechanical systems. Rust and corrosion can irreparably damage your engine. Sometimes the issues take months or even years to surface after suffering flood damage, and many vehicles won’t have any outward signs of flood damage.
As you can see, Senator Schumer’s proposal that the FTC adds a flood check requirement and disclosure to the existing Used Car Rule ultimately protects consumers. It will allow consumers to make sure they don’t accidentally buy a damaged vehicle or to be prepared for the potential repair costs or mechanical issues that may crop up with a flood-damaged car. After all, buying a car is a huge investment, and accidentally buying a flood-damaged car could potentially ruin people financially or even cause serious accidents, injuries, or even deaths, depending on how and when the issues caused by flood damage present themselves.
If you’re in the market for a used car, make sure to do your research and thoroughly inspect any car you intend on purchasing. If possible, get your potential vehicle inspected by a third party mechanic, as they will be able to spot damage easily. Look for mud, rust, and debris in all of the car’s nooks and crannies, especially in the areas that are hard to reach. Smell for mildew on the interior. These are just some of the measures you can take to protect yourself from accidentally purchasing a used car with flood damage. Most of all, trust a reputable and time-tested dealer like the Faricy Boys for your auto needs. With over 75 years of helping our customers find the right car, Faircy Boys is proud to be a part of our great community.