Automobile Sales Regulations

Automobile sales regulations are in place in every state across the United States to assist consumers and dealers in buying, trading, and selling new and used vehicles. These laws pertain to the rights of consumers purchasing new vehicles, reporting sales of vehicles, and giving the average citizen confidence that if something unexpected goes wrong with a new vehicle, the dealership will make every effort to fix that vehicle or replace it. States also certify and license all automobile sales personnel to ensure that each representative has no criminal history of theft or fraud.

Who May Sell

All automobile dealerships and sellers working for a dealership must be certified and licensed by the state the dealership is conducting business in. This license is necessary for an employee of an auto dealership to process paperwork and conduct financial negotiations with a consumer for the sale of a vehicle. Dealership employees are sent through a certification process with the state government, which checks an employee's background and work history. This assures the state government that dealerships are employing honorable citizens with theft/fraud-free backgrounds.

Lemon Laws

All fifty states in the U.S have some form of "lemon law" regarding the sale of new automobiles. This law protects the purchaser of a vehicle from the financial cost of defects in the first 12,000 miles of use or through the term of warranty. Additionally, the purchaser of the vehicle may request that the auto dealer replace the purchased defective vehicle with a comparable automobile at no additional cost to the purchaser. Replacement applies when the vehicle has been unable to function for a period of thirty days due to the defect or if the defect has been repaired at least three times without alleviating the problem.

Cash for Vehicles

Under federal guidelines, dealerships are permitted to accept cash in payment for automobile purchases. All buyers paying in cash in excess of $10,000 must fill out IRS form 830 at the dealership so that the income may be claimed. Failure to do so can result in the auto dealership losing its license. The selling agent of the dealership could face significant financial penalties and jail time.