Business

Laws, some Lexington dealers don’t protect used car buyers. Safeguard yourself.

Nancy Roy said she had no idea she was driving a “time bomb” when she purchased a used car from a Lexington dealership. Within days, she experienced problems with the transmission mount, gas tank, motor mount and alternator belt, all of which had to be repaired.

“It was like a waterfall coming from the gas tank,” Roy said about filling the van up with gas while on a family vacation. “If someone had thrown a cigarette in front of us, the way the car was leaking, it could have blown up the whole vehicle.”

After putting about $1,500 into the car, Roy said she sent a letter to the dealership, 6K & Under Auto Sales, listing all the damages and safety concerns.

Even though the dealership offered to make free repairs without a warranty, Roy said she felt unsafe driving the car about 100 miles back to the dealership.

Roy’s experience buying a Lexington used car may be familiar. Complaints filed with the Better Business Bureau of Central and Eastern Kentucky against used car dealers have remained high after a jump in 2017. In Lexington, the number of Better Business complaints through 2018 was four times higher than in 2016.

A lack of used car lemon laws or legal protections in Kentucky can leave consumers vulnerable when buying a used car.

Multiple dealerships acknowledged bad seeds in their industry, but they argue consumers lack an understanding of buying ‘as-is,’ leaving car lots in precarious positions as well.

More complaints about used cars

There were just six complaints about Lexington used dealerships lodged with the Better Business Bureau in 2016. But the number grew in 2017 and 2018 to a high of 30. For 2019, 23 complaints have been filed through September.

The Better Business Bureau of Central and Eastern Kentucky’s regional complaints also have increased over time from 40 in 2016 to 113 in 2017 and 80 in 2018. Through September of 2019, there were 62 recorded complaints against used car dealerships.

Used car complaints tend to occur when a consumer buys a car as is and doesn’t know about potential mechanical problems. Customers sometimes are unaware that dealerships often won’t take the car back or repair it for free, leaving buyers stuck with the costs.

“You’re stuck between a rock and a hard place,” said Heather Clary, communications director for BBB. “You really have to look at a vehicle carefully.”

Before buying a used car, Clary suggested checking what other consumers experienced through dealerships’ BBB profiles, where ratings and accreditations are also listed.

Businesses can become BBB accredited if they meet standards, Clary said. BBB grades any business, accredited or not, on the same scale, A to F, for which the organization considers complaint history, time in business; transparency of the business; business licensing and government action; and honesty. Failure to respond to complaints can drive down a dealership’s grade. Clary explained a complaint does not necessarily need to be treated in a way the customer hoped, for it to be considered resolved.

Lack of protections

Unlike some states, Kentucky does not have lemon laws that apply to used cars. These laws, which only cover new vehicles in Kentucky, allow consumers to return severely malfunctioning vehicles under specific provisions.

Some states have sales and advertising rules while others limit “as is” warranties to protect or educate consumers; six states in the country have lemon laws for used vehicles while.

Several Lexington used car dealers and industry experts said customers do not fully understand that lemon laws do not apply to used cars, which leads to increased complaints and difficulties.

Moe Shoa, president of Autonomics, said he thinks used car lemon laws or additional protections should be in place to protect consumers. He added it could eliminate dealerships that are “negligent” and give the industry a bad name.

“I don’t have legal obligations, but I do have moral ones,” Shoa said.

With dealers protected, there have been few cases since 2010 in which a consumer has taken legal against a Lexington used car business over the quality of a car, according to Fayette County court documents. In some lawsuits where the dealership was trying to get the money owed for a car, consumers complained about quality. But rarely did the complaints influence the outcome.

The Federal Trade Commission revised the “Used Car Rule” in 2016 to require dealers to display a Buyers Guide on the window of a used vehicle. The revisions include a recommendation for consumers to get a vehicle history; a clarification that an “as is” sale does not include a dealer warranty. The guide also includes a list of major defects that commonly occur in used vehicles.

Bad practices

Buying a used car, Clary said, can be “Russian roulette,” as some dealerships put cars on lots after inspection, and some do not. Issues that no one, not even the dealer, knew about prior to purchase can occur in a car.

Representatives of about a dozen Lexington used car dealerships were interviewed, many acknowledged “crooks” or bad seeds within the industry. They sell cars that haven’t been checked for mechanical problems or fixed.

Inventory on a used car lot — unlike the used cars at a new vehicle dealership — is more likely to come from an auction, according to 2018 reports published by the National Automobile Dealer Association and the National Independent Automobile Dealer Association.

Several used vehicle dealerships said the majority of their lot comes from auctions even though they acknowledged leased cars or trade-ins are higher quality.

The number of vehicles sold at some auctions has increased. Tyler Hazelwood, office manager at the Lexington branch of Copart auctions, said he has seen the number grow from about 150 vehicles to 250 vehicles per auction.

Used car lots do get information from the auction about the quality of the cars. Hazelwood said the auction takes several photos of vehicles and provides histories for any buying dealer or member. Online, each vehicle up for auction also comes with a damage code, or brief description of where the vehicle is damaged. A vehicle with engine issues would be listed with “mechanical” damages.

A buyer might find fewer auction-obtained cars at new car lots that also sell used cars. Ross Taylor, manager of Don Jacobs Honda’s used car department, said the majority of the inventory comes from trade-ins and leases while a small amount of the inventory comes from auctions.

In the 17 years Taylor has been in the business, he said he’s found leased vehicles are more well kept, have fewer miles and are still under the manufacturers’ warranties. When buying from auctions, buyers and dealers don’t know what quality they will get, he said.

Once a vehicle is purchased from an auction by Autonomics, Shoa said it is inspected. Fluids, brakes, charging systems, tires, interior and more are checked. If a vehicle is found to need a new engine or transmission, he said it will be sold back to an auction.

Several other dealerships conducted similar inspections. Mike Speaks, manager of Tri-City Auto said he doesn’t let customers test drive a car until it’s been inspected and approved.

Despite inspections, Speaks and a handful of dealerships said they cannot catch every potential issue with a car.

“All cars that we sell are good, but you can never predict when something is going to happen,” Speaks said. “We can’t make it brand new.”

‘Smarter’ customers needed

Several used car dealership owners or managers said consumers should accept more responsibility and set realistic expectations when buying a used car.

Bob Harrison, manager at Brothers Auto Sales, said customers should realize the dealers don’t make the car and should not be solely blamed if a used car ends up faulty. He added customers need to be “smarter” before buying.

At most independent used vehicle dealerships, cars are sold ‘as is,’ meaning repairs are typically not free or ensured by the dealer. Several dealers and industry experts said customers may have misconceptions about these types of sales.

“As is means as is,” Clary from BBB said. “Not as is until it breaks two weeks later.”

Some dealerships, including Car-Mart and Don Jacobs Honda’s used department, offer a buyback period. Taylor said the dealership puts a lot of certified pre-owned vehicles on the lot, but for non-certified vehicles with less than 100,000 miles, they offer a three-month, 3,000-mile warranty.

Other as-is dealerships don’t automatically come with those options. While 43.8% of dealerships reported selling warranties, about half of those only sell one to five per month.

A number of dealership representatives told a reporter that they would repair purchased vehicles for free or a discounted price.

At Autonomics, Shoa said he would help customers repair used vehicles, to a point. If a customer has an issue with something his dealership has overlooked, he said he would address it. If a customer has issues that occurred during usage, he said the dealership would do repairs for a discounted price.

One such customer is Terry Bailey, who bought a car from Autonomics a few years ago and said he intends to buy another one soon because of the way he has been treated.

Bailey estimated he had purchased about 25 cars, both new and used, in his lifetime.

With past cars, Bailey said he ran into mechanical issues, and the dealers wouldn’t help. He said he has consistently been helped by Shoa, often for free, if something went wrong with the car.

In buying a car, used or new, Bailey said it is difficult to know if you can trust a dealership or know if the car will work correctly. To prepare, he recommended doing research on the car and the dealership before buying anything.

“Do your homework, and don’t be scared to ask questions,” Bailey said.

Most dealerships said they recommend customers take a car to an independent mechanic. Speaks, of Tri-City Auto Mart, said buying a car is an investment and should be treated as such. He compared it to having major surgery, which often warrants a second opinion.

Robert Lindsey, who has been the owner of Auto Tech for 10 years, said the mechanic shop frequently has customers come in with used cars. Auto Tech does full inspections and advises potential buyers on needed repairs. Sometimes, mechanics recommend not buying a vehicle. Some issues with cars are obvious, and others are found on closer inspection.

“There are times we’ll bring it in after a test drive, put it on the lift, and then we see the horror,” Lindsey said.

In his experience, Lindsey said a lot of people won’t come in until after they’ve purchased a vehicle.If a dealership refuses to let a customer have a vehicle checked by a professional, it’s probably a bad sign.

In Roy’s case, she said the dealership didn’t suggest she take the van to a mechanic for inspection and didn’t provide a vehicle history. She had bought the van while in town for her son’s doctor appointments and said she did little research on the dealership or car before purchasing.

The dealership said Roy was aware of some issues before she purchased the van; however she claimed the only problem identified by the dealership was a faulty window. 6K & Under owner Mike Shalash said the van was in driving condition, but the 2002 trade-in was not pristine.

Shalash said if a customer comes in for any repairs, the dealership will typically offer a discounted price. If an issue occurs a few days or a week after purchase, the vehicle may be fixed and, if nearby, towed for free.

Like other used car dealerships, Shalash said the dealership finances many of its vehicles, and therefore want customers to be happy and continue payments.

“We’re not in the business of cheating people,” Shalash said.

After Roy determined the van not drive-able, she said she had to borrow a car for a couple of months to get to her job 45 miles away. Coming up with a down payment for a second car also put her behind on bills.

A year later, the van still sits on Roy’s lawn.

What to do before you buy a used car:

  • Research the dealership. Are they BBB accredited or have few complaints online?
  • Look into the car you want to buy. Find out what cars notoriously have bad engines or major issues.
  • Take the care on a lengthy test drive.
  • Have a professional, independent mechanic look at the car before purchasing.
  • Inquire about or consider purchasing a warranty on the car.
  • Ask for a vehicle history or Car Fax, but know it may not cover everything.
  • There is no return period for a used car unless promised by the dealer. Even then, there are no legal protections for a return period.
  • If you feel a dealer was dishonest about the quality or sale of a car, speak with a general manager or go through various avenues to mediate problems

Sources: Industry, consumer group, used car dealers, mechanics.

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