The Truth About That Car You Just Bought? What is "Truth"?

You're driving home from the dealer with that New Car smell wafting about you. The dealer didn't tell you that the car you just bought had been taken on a destructive joyride a week ago. And he didn't break the law.

I get a lot of grief for telling stories where car dealers do bad things, so here is a story where no laws are broken by any dealers or salesmen. Our hypothetical dealer is in the state of Michigan.

You walk the lot and see a late model used car (hence, the "New Car" smell). The salesman tells you it still has the remainder of its manufacturer's warranty and has been on the lot for a week. He knows for a fact it is a one-owner vehicle. Beyond that, he knows nothing but the price. He notes that it is a "Program Car," according to the paperwork, but is not sure what that means. You buy it.

A few days later as you are detailing it, you notice that there is broken window glass – those little cubes that look like large grains of salt – under the seats. There is a lot of it. You begin going over the car with the proverbial fine-toothed comb. Your friend who is a bodyshop expert helps you. He points out that someone has done quality work but the glass – ALL OF IT – has been replaced. The bumpers have also been replaced completely. Interestingly, he notices that the tires and wheels are not the same ones that came with the car. Not sure how he knows that but assume it is true for our story.

He then notices that there has been some body work done on the car. Several panels have been repainted. He estimates the repairs probably cost $750. He also points out that the in-dash audio system has been replaced. Again, they did a good job of it but it's not the one that came with the car from the factory.

Understandably, you go back to the dealer and find the sales manager. After explaining what you have discovered, he pulls the deal folder. He flips through it and find a lengthy police report: "Wow. Your car was on our lot for one day when a band of hoodlums, hopped up on drugs, busted the window out and stole it. They took it for a joyride and as they drove around huffing Glade, they kicked the rest of the windows out of it. Have you ever heard of the weird thing teenagers are doing with vodka-soaked tampons?" He points to the police report which lists "soiled, alcohol-infused tampons" among the items found in the backseat. "Anyhow, when we recovered it, it was up on blocks, missing its window glass, wheels and tires, bumpers, stereo and it had a bit of body damage that cost $750 to fix. We made the repairs, cleaned it up and sold it to you."

As every organ in your body begins manufacturing hate he adds, "Oh, and the car was a rental vehicle. We bought it from [Hertz/Avis/Enterprise/PickOneItReallyDoesn'tMatter] and they were the 'one-owner' you were told about."

Now, the question: Can anything be done legally to force the dealer to buy this car back based on these facts?

In Michigan and many other states, NO. There was a time when dealers would have a situation like this and consider disclosing the true history of the car to buyers. Prices plummeted when they did. So, most dealers chose to not disclose. Fancy-pants attorneys came along and sued claiming it was somehow "wrong" to not tell the buyer what he was really buying.

After having a few too many lawsuits like that go south, the dealers came up with an idea: Go to Lansing and ask the legislature to pass a law making the foregoing completely legal. And the legislature did. MCL 257.233b. It goes so far as to coin the term "Program Car" for what you and I would call a late model former rental. But no one wants to buy a former rental – at least not as much as they'd like to buy a "Program Car." Got it? Up is Down, Black is White. Rental is Program.

So long as the damages to the vehicle are limited to the items I described above and the dollar value of body damage doesn't exceed $750, the dealers do not have to disclose any of it. As you'd expect, similar laws have been passed in other states.

And I hate to get all math on you here but guess what happens when the joyride-wreck has $1,000 in damages? The dealer takes it into its own bodyshop, does the repairs and bills $750 for the repair The bodyshop loses $250 but that is way less than the dealer would lose if forced to disclose the body damage at $1,000.

I will point out one small item from this story where our buyer screwed up: If he had looked closely at the title to the vehicle before he bought it – the previous title – it would have shown the owner as being a rental car company. But in the blizzard of paperwork you see at the sales vortex (often the five minutes before closing which somehow is the only time they can get you in to seal the deal) these things can be overlooked.

Want to crazy this up a notch? Remove the rental history from the facts above and make the car BRAND NEW. A dealer in Michigan can sit quietly and sell you a formerly damaged NEW vehicle without disclosing - based on this law - so long as the damages are limited to those above. I just did the hypothetical with the rental history so I could run the table with all the possibilities.

Know the law. Inspect. Remember that in the grand scheme of things, people dislike lawyers (zing!) and car salesmen but they dislike politicians even more. Now you know why. At least in states like Michigan.

(Photo credit: Steve Lehto)

Steve Lehto has been practicing consumer protection and lemon law for 23 years in Michigan. He taught Consumer Protection at the University of Detroit Mercy School of Law for ten years and wrote The Lemon Law Bible. He also wrote Chrysler's Turbine Car: The Rise and Fall of Detroit's Coolest Creation and The Great American Jet Pack: The Quest for the Ultimate Individual Lift Device both published by Chicago Review Press. Follow him on Twitter: @stevelehto