The History of Used Car Warranties

Used vehicle warranties were not always available to protect car buyers, but two important pieces of legislation--the Federal Lemon Law and Used Car Rule--go a long way to providing peace of mind to car buyers.

Federal Lemon Law - Under Warranty

The Federal Lemon Law, also known as the Magnuson-Moss Act, was passed in 1975. Under this law, buyers can be compensated if the vehicle was still under manufacturer's warranty when purchased, considered "Certified" by the manufacturer or if the buyer purchased an extended warranty. Since 1975, all 50 states enacted their own lemon laws.

Federal Lemon Law - No Warranty

The Federal Lemon Law also protects buyers when the vehicle is no longer under warranty. The law covers vehicles that were salvaged; had the odometer rolled over; formally rentals, police car or taxis; stolen or rebuilt; were involved in a flood or had mechanical problems known to the seller.

Used Car Rule

In 1988, the Federal Trade Commission (FTC) enacted the "Trade Regulation Rule; Sale of Used Motor Vehicles," or the Used Car Rule. This requires all dealers to put a Buyer's Guide warranty sticker in the vehicle's side window.