The following information is adapted from that offered by the Federal Trade Commission at http://www.ftc.gov/bcp/edu/pubs/consumer/autos/aut03.shtm.
Over and above individual state Lemon Laws, the federal Magnuson-Moss Warranty Act standardizes express warranties and requires car dealers to disclose the terms of any written warranties provided to consumers.
A new vehicle typically comes with a manufacturer's limited warranty that covers a certain length of time or number of miles. Lemon Laws frequently come into play when the express warranty is breached. In other words, the manufacturer promises that certain components or systems will work, and if they don't, then they will be repaired. When the manufacturer (or the dealer, as the manufacturer's representative) doesn't fix a problem in a reasonable number of attempts, the warranty is breached and you may also have a Lemon Law claim.
If a used vehicle is fairly new, it may still be covered under the original manufacturer's warranty, and thus may be covered under a state's new car Lemon Law. If the manufacturer's warranty still is in effect, the dealer may include it in the "systems covered/duration" section of the Federal Trade Commission Buyers Guide that comes with the vehicle. To make sure you can take advantage of the coverage, ask the dealer for the car's warranty documents. Verify the information (what's covered, expiration date/miles, necessary paperwork) by calling the manufacturer's zone office. Make sure you have the Vehicle Identification Number (VIN) when you call.
Dealers may offer a full or limited warranty on all or some of a used vehicle's systems or components. These are express warranties. Most used car warranties are limited and their coverage varies. A full warranty includes the following terms and conditions:
If any of these statements don't apply, the warranty is limited.
A full or limited warranty doesn't have to cover the entire vehicle. The dealer may specify that only certain systems are covered. Some parts or systems may be covered by a full warranty; others by a limited warranty.
When you buy a used vehicle, the dealer must check the appropriate box on the Federal Trade Commission Buyers Guide to indicate whether the warranty is full or limited, and the dealer must include the following information in the "Warranty" section:
You have the right to see a copy of the dealer's warranty before you buy. Review it carefully to determine what is covered. The warranty gives detailed information, such as how to get repairs for a covered system or part. It also tells who is legally responsible for fulfilling the terms of the warranty. If it's a third party, investigate their reputation and whether they're insured. Find out the name of the insurer, and call to verify the information. Then check out the third-party company with your local Better Business Bureau. That's not foolproof, but it is prudent. Make sure you receive a copy of the dealer's warranty document if you buy a car that is offered with a warranty.
Like a warranty, a service contract is an express warranty and provides repair and/or maintenance for a specific period. But warranties are included in the price of a product, while service contracts cost extra and are sold separately. To decide if you need a service contract, consider whether:
If you buy a service contract from the dealer within 90 days of buying a used vehicle, federal law prohibits the dealer from eliminating implied warranties on the systems covered in the contract. For example, if you buy a used car "as is," the car normally is not covered by implied warranties. But if you buy a service contract covering the engine, you automatically get implied warranties on the engine. These may give you protection beyond the scope of the service contract. Make sure you get written confirmation that your service contract is in effect.