New York -- What's the car of the future for American consumers? Increasingly, it's a used car.
New cars are being priced out of more and more family budgets. Back in 1973, it cost 17 weeks of earnings for a median-income family to buy a new car, according to the National Association of Automobile Dealers. Now, it costs more than 24 weeks' earnings.
NADA expects new-car prices to continue to rise. At the same time, more high-quality used cars are showing up on dealers' lots. The top of the line: Nearly new "program" cars, used by car-rental companies for four to six months and then resold. They may have been driven only 10,000 to 15,000 miles and are priced 25 percent to 35 percent less than you'd pay for the same car brand new.
Thanks to these cream puffs, new-car dealers are now selling more older cars than new ones.
This growing volume of sales should have two good effects on the used-car business, NADA says. First, buyers should benefit from increased professionalism. More cars will be sold by the dealers who disclose the car's condition and offer decent warranties, as opposed to the con artists who sell lemons in disguise. And second, dealers will be making greater efforts to repair and service older cars.
You have some legal protection when you buy a used car from a dealer:
* The Federal Trade Commission's Used Car Rule requires dealers to post a Buyers Guide on each car. The guide should disclose what's known about the car's condition and any guarantees the dealer offers.
Many dealers have ignored the Used Car Rule, probably because it wasn't being enforced. But enforcement began in 1987. Since July 1990, the FTC has nicked violators for some $500,000 in penalties, according to Brent Mickum, an attorney in the FTC's division of enforcement. At least that's a start.
Don't buy from a dealer who doesn't post a Buyers Guide. Report any violator to your state or local consumer protection office with a copy to the FTC, Public Reference Branch, 6th and Pennsylvania Avenue N.W., Washington D.C. 20580.
* No specific guarantees are given on a car sold "as is." But depending on circumstances, you may still be protected under state law if it turns out that the car won't run. Mr. Mickum advises that you ask specifically whether each of the car's systems is in order ("Is the exhaust system OK? Is the valve pressure for the cylinders OK?"). Write down the answers. If the dealer deceives you, your notes may help you win a lawsuit.
Maryland and at least 10 other states (Connecticut, Maine, Kansas, Massachusetts, Minnesota, Mississippi, New York, Rhode Island, Vermont and West Virginia, plus Washington, D.C.) limit or prohibit "as is" sales, the FTC says.
* It's a crime to roll back an odometer, to raise the car's price by making it appear less used. Still, it's widely done. A 1985 study found that 50 percent of the business and leased vehicles had been rolled back, says Richard Morse, chief of the Odometer Fraud Staff of the National Highway Traffic Safety Administration. Each 1,000-mile reduction unfairly adds $85 to the price of an intermediate-size car.
Current law requires that odometer readings be written on the title when the car changes hands. This new law has taken effect in all states except California, Ohio and Nevada, which should be on line by July. (Some titles, however, are forged or tampered with.)
* A growing number of states require dealers to disclose whether car has been "rebuilt." Such cars were totaled in accidents, then rebuilt using scavenged parts. The title is then "laundered" to hide the car's history, says Martha Martell, general counsel of the Iowa Automobile Dealers Association.
Rebuilt cars may run fine. But a "clipped car," assembled from the front of one car and the rear of another, may be weak along its welded seams, warns Jack Gillis, author of "The Used Car xTC Book." That makes it more likely to break apart if hit.
* Various states offer other types of protection. Call your local consumer protection office or the office of your state's attorney general. Also call the Better Business Bureau, which runs mediation and arbitration programs.
Despite all the laws, your best warranty is a skilled, independent mechanic or an American Automobile Association diagnostic test center, Gillis says. If the used-car dealer won't let the mechanic check out the car, don't buy it.