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Mellody isPresident of Ariel Investments, a Chicago-based money management firm that serves individual investors and retirement plans through its no-load mutual funds and separate accounts.  Additionally, she is a regular financial contributor and analyst for CBS news.

Mellody: We have all seen the news the last few months and years. The streak really began with Toyota and their acceleration problems in 2009-2010, and more recently GM is having a really rough time. having initiated a number of recalls since the beginning of the 2014, the most recent of which occurred just last week, the number GM of automobiles affected has reached over 15 million cars worldwide so far this year. But considering all of the coverage the recalls have received, there has been relatively little information about what you need to do if your car is affected by one! So this morning, i am here to give our listeners a few tips, in case they have been affected, or are in the future!

Tom: Sounds great. Start us off!

Mellody: Ok, first things first. What causes a recall? A recall occurs when defects are found within the manufacturing process that could potentially impact the safety of drivers. most of the time, manufacturers will identify the defects and issue a voluntary recall, meaning that they are taking precautionary action and were not mandated by the government to recall the vehicles. In other cases, the government will mandate recalls if necessary. According to Kelley’s blue book, in most cases a recall of your car does not mean that it is destined to breakdown, but rather that a problem in the manufacturing process has been identified in a number of similar models and therefore has the potential to surface in yours.

Now before you get worried about your car having been recalled and not knowing about it, don’t worry. Aside from obvious signs like fire or random malfunctions, you’ll be notified by the manufacturer or the government about the recall, either via standard mail or electronically. When the manufacturer or the government concedes that there is a defect an official safety recall notice, which provides details about the problem as well as information on the best way to handle it, will be sent to owners who are at risk. In most cases, vehicle owners are advised to bring the car to a dealership as soon as possible.

If you have not been contacted by the manufacturer in writing, but want to confirm that your car has not is recalled just for peace of mind, you can go to To check, you will need your vehicle identification number (VIN).

Tom: Alright. What happens if your car is recalled?

Mellody: Once you learn your car has been recalled, you then have to determine whether you are eligible for free repairs. If your car is under 8 years old from the date of the first purchase, the automaker is required to fix the problem, either by repairing or replacing your car, or giving you a refund for the price you bought the car for, minus depreciation. However, if it has been more than 8 years since you bought the car, you will have to pay for repairs out of pocket.

There are a couple of additional caveats here. First, if a manufacturer challenges the government’s demand for a recall in court, vehicle owners cannot fix their car until the case is finished. Since court battles contesting recalls can take years, it often falls to you to repair your car on your own. But, if this is the case for you, you need to keep all your receipts because, if the government prevails, you can often get reimbursed for some costs.

The second caveat? You might be on the hook for repairs if you were in an accident prior to the recall being announced. In this instance, manufacturers are not required to cover any repair costs that you may have incurred. However, auto companies do sometimes compensate consumers if they can prove that the repairs remedied a recall-related malfunction, so again, it is important to keep any receipts and records of repairs you have done on your car.

Tom: Anything else we should know?

Mellody: Most importantly, recalls are issued to prevent accidents and keep drivers safe. i understand that these things can sometimes seem minor, but the last thing you want to do is compromise your safety or the safety of your family or other. these systems in place to protect you, so please keep informed, and take action if you need to. hopefully your car won’t get recalled, and hopefully these will help you, your family and your pocketbook if it does!

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Auto Recalls — What You Need To Know  was originally published on