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New sales agreement needed for many used cars beginning July 1

March 24, 2017
Illinois dealers will need to update their purchase agreements when selling used vehicles that qualify for an implied warranty, effective July 1.
 
The CATA is working with Reynolds Document Services to update itsLAW® Illinois F&I Library, a comprehensive library of standardized, legally reviewed F&I documents that will benefit CATA members and Illinois dealers. 
The impending law, detailed in the March 13 edition of this newsletter, will require dealers to extend an implied warranty on most used vehicles for 15 days or 500 miles, whichever occurs first.
The coverage concerns power train components only, not bumper-to-bumper coverage. The law does not apply to vehicles with more than 150,000 miles at the time of sale, or to vehicles that have been branded "rebuilt" or "flood."
A dealer’s maximum liability for repairs under the new law is limited to the purchase price paid for the used vehicle, to be refunded to the consumer in exchange for the vehicle.
On the Buyers Guide, the "As Is" box would be checked when selling vehicles affected by the new law, but the purchase contract must carry the following statement in boldface 10-point type or larger, set off from the body of the agreement:
Illinois law requires that this vehicle will be free of a defect in a power train component for 15 days or 500 miles after delivery, whichever is earlier, except with regard to particular defects disclosed on the first page of this agreement. "Power train component" means the engine block, head, all internal engine parts, oil pan and gaskets, water pump, intake manifold, transmission, and all internal transmission parts, torque converter, drive shaft, universal joints, rear axle and all rear axle internal parts, and rear wheel bearings. You (the consumer) will have to pay up to $100 for each of the first 2 repairs if the warranty is violated.
 
The warranty does not extend to damage that occurs as a result of off-road use, racing, towing, abuse and other negligence. 
The legislation was spawned after an Illinois woman’s used car broke down on her way home after buying it from a used-car store. She returned to the store and was offered another vehicle, which also broke down on her trip home.
Illinois Gov. Bruce Rauner signed House Bill 4377 last August. He vetoed similar legislation a year earlier because that bill affected only independent dealerships, not those that also sell new vehicles.
The LAW Illinois F&I Library was created and is maintained by the combined legal expertise of Reynolds Director of Compliance Terry O’Loughlin, Reynolds AFIP certified compliance legal specialists, and the CATA. 
"We are continually looking for products and services that help new-car dealers and their customers achieve a more efficient, effective, and pleasing end-to-end automobile retailing experience," said Dave Sloan, CATA president.
The Reynolds LAW Illinois F&I Library documents are available to order. Dealers can protect their businesses today by talking to their Reynolds Document Consultant, or call (800) 344-0996 to speak to a customer service representative.
 
 

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