Warranty of Merchantability on a Used Car, Explained

The implied warranty of merchantability is a promise the law adds to a sale by a dealer, saying the car is fit for the ordinary purpose of driving, and on a used car it applies unless the dealer properly disclaims it, usually with an as-is sale disclosed on the Buyers Guide. The rule comes from UCC section 2-314, adopted in some form by most states. UCC section 2-316 lets a seller exclude it with conspicuous language such as as is. A federal rule, 15 U.S.C. 2308, stops a seller from disclaiming implied warranties when it gives a written warranty, or sells a service contract within 90 days of the sale.

What merchantable means on a used car

Merchantable does not mean perfect. A used car is judged against what a buyer would expect of a car of that age, mileage and price. A ten-year-old car with worn brakes may still be merchantable; a car that cannot run, or has a cracked frame the seller hid, may not be. Courts look at the facts, so keep records.

How as-is removes it

The FTC Used Car Rule requires dealers to post a Buyers Guide on used cars and to say whether the sale is as is or with a warranty, as 16 CFR 455.2 sets out. If the guide is checked as is and your state allows it, the implied warranty is usually gone. Some states limit or bar as-is sales on certain cars. Our as-is guide and as-is disclaimer limits guide cover the details.

When a service contract keeps it alive

Under the Magnuson-Moss rule in 15 U.S.C. 2308, if the dealer sells you a service contract at the sale or within 90 days, it cannot disclaim implied warranties on the car. It can limit their length to the length of a written warranty, if it gave one. Our service contract guide explains what those contracts cover.

Private sales are different

Merchantability applies to merchants, meaning dealers. A private seller is usually not a merchant in cars, so a private sale often carries no implied warranty at all. That makes the inspection and the history report your main protection. Our private-party guide covers what to check.

Making a claim

Write to the dealer soon after you find the defect, describe it, attach a shop report and ask for a repair or refund. Federal law at 15 U.S.C. 2310 allows suits for breach of implied warranty in some cases. A local consumer lawyer can tell you how your state applies it.

Questions to ask the dealer

• Is this sale as is, or with an implied or written warranty?
• Can I see the Buyers Guide before I sign?
• If I buy a service contract, does that change the implied warranty?
• Can I take the car to my own mechanic first?

Reading the history report

Read the title section first: any salvage, rebuilt, flood or lemon brand changes the value more than anything else. Then line up the odometer readings by date and look for gaps or drops. Check the number of owners and the states where the car was registered. An approved NMVTIS check adds insurer and salvage-yard records. Our odometer discrepancy guide explains odd mileage entries.

Paperwork to keep

Keep the buyer's order, the retail installment contract, the odometer statement, any Buyers Guide, warranty or service-contract papers and every payoff or lien letter in one folder. Photograph the window sticker and the dash mileage on the day you sign. If a dispute comes up later, dated paperwork is what a lender, an insurer, a dealer licensing agency or a court will ask for first.

Compare the financing

Get a preapproval from a bank or credit union before you visit, so you can compare it with the dealer offer on the same term. Compare the APR, the amount financed and the total interest, not just the monthly payment. The CFPB auto loan tools walk through what to read on an offer. Decide on add-ons such as GAP and service contracts on their own merits, and get the price of each one in writing.

What the report costs

As of early November 2026 a CARFAX bought direct usually costs around $44.99, and AutoCheck sits a little lower. We are a licensed CARFAX and AutoCheck reseller, not affiliated with CARFAX, AutoCheck or Experian. Our guest price has been about $5.50 a report, about $4.50 for members, and about $6.75 for a CARFAX and AutoCheck bundle. Confirm the price at checkout, since it can change.

Sources

• UCC 2-314, Cornell LII
• UCC 2-316, Cornell LII
• 15 U.S.C. 2308, Cornell LII
• 16 CFR 455.2, Cornell LII
• CFPB auto loan resources
• NMVTIS