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Vehicle Buying Checklist
We want to help you have a smooth journey during the buying process. Here are suggestions for making a smart vehicle purchase.
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Determine your needs and wants first, make a list and prioritize.
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Establish a budget and choose car makes and models that fit. Learn all you can about them.
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Research dealerships and sellers.
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Know the fair market value and vehicle history of any vehicle you're considering. Obtain Vehicle Identification Numbers (VINs) and research vehicles online.
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Use the Annual Percentage Rate (APR) as a yardstick when you begin looking for a vehicle. Check out our different loan options and click on Rates & Calculators to help you decide what loan works best for your budget.
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Get price quotes from several dealers. Find out if the amounts quoted are the prices before or after the rebates are deducted.
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Test drive the vehicle for a minimum of 20 minutes. If possible, test drive on two separate occasions. Include a variety of roads that you drive regularly. Take the vehicle on hills, highways and in stop-and-go traffic.
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Have a mechanic check over the vehicle before you buy it. Ask the mechanic to inspect and test drive the vehicle. Request a written report with a cost estimate for all necessary repairs.
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Ask for the vehicle's maintenance record. If the owner doesn't have copies, contact the dealership or repair shop where most of the work was done. They may share their files with you.
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Talk to the previous owner, especially if the present owner is unfamiliar with the vehicle's history.
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ASK QUESTIONS and consider all loan options.
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Confirm all agreements and promises in writing.
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Deal Wisely With Dealerships
When talking to dealers, remember it is very difficult to get out of a contract once you sign on the dotted line. There is no 3-day "cooling off" period.
Do your homework and take the information you have gathered and show the dealer you are an informed buyer. Then you can make the deal on your terms instead of theirs.
Negotiate based upon the selling price - not payment plans. Be sure to get full disclosure of every charge involved.
Private Sellers May Save You Money
Finding private sellers is as easy as checking the newspaper classifieds. Don't forget to check with your family and acquaintances to see if anyone is selling a vehicle.
When you buy from private sellers, you usually pay less than you would if purchasing from a dealer. However, you may not have as many legal protections. In many states the "lemon laws" do not apply to used car purchases between private parties. You run the risk of getting lower quality as well. Check out your state's lemon laws to find out what your rights are.
Consumer Protection
The Federal Trade Commission's Used Car Rule requires dealers to post a Buyers Guide in every used vehicle they offer for sale. Buyers Guides do not have to be posted on motorcycles and most recreational vehicles.
The Buyers Guide must tell you:
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Whether the vehicle is being sold "as is" or with a warranty
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What percentage of the repair costs a dealer will pay under the warranty
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That spoken promises are difficult to enforce
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To get all promises in writing
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To keep the Buyers Guide for reference after the sale
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The major mechanical and electrical systems on the vehicle, including some of the major problems you should look out for
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To ask to have the car inspected by an independent mechanic before you buy
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When you buy a used vehicle from a dealer, get the original Buyers Guide that was posted in the vehicle, or a copy. The Guide must reflect any negotiated changes in warranty coverage. It also becomes part of your sales contract and overrides any contrary provisions.
For example, if the Buyers Guide says the vehicle comes with a warranty and the contract says the vehicle is sold "as is," the dealer must give you the warranty described in the Guide.
When the dealer offers a vehicle "as is," the box next to the "As Is - No Warranty" disclosure on the Buyers Guide must be checked. If the box is checked but the dealer promises to repair the vehicle or cancel the sale if you're not satisfied, make sure the promise is written on the Buyers Guide.
Ask Questions
No matter how you pay for a new or used vehicle, you will get the best deal if you're an educated consumer. The following are points to consider as you prepare to buy a vehicle from a dealership or a private party, and before you sign any loan documents make sure you find out:
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The exact price you're paying for the vehicle.
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The amount you're financing.
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The finance charge (the dollar amount the credit will cost you).
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The Annual Percentage Rate (APR) is a measure of the cost of credit, expressed as a yearly rate.
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The number and amount of payments.
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The total sales price (the sum of the monthly payments plus the down payment).
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Approach Incentives Carefully
A parade of incentives continues to draw vehicle buyers into dealerships. Don't be misled by ultra-low interest rates. Look at the whole cost - all interest and finance charges, plus the purchase price.
Loan Length Impacts Cost
In determining total cost, the APR (annual percentage rate) is less of a factor than the length of the loan. Two otherwise identical loans that differ by three percentage points won't affect your monthly payment and total interest as much as changing the repayment period by 12 months.
If you can afford the somewhat higher monthly payment for a loan with a shorter repayment period, you will pay less in the long run.
Also beware of balloon payments. Coming up with a big payment may cancel out the benefit of a few months of low payments.
Balance Payments With Living Expenses
A good rule of thumb: your monthly auto loan payment should not be more than 20% of the money you have available each month after you pay for your usual living expenses - rent or mortgage, utilities, food and transportation, credit card payments, etc.
Also consider costs such as fuel, license, registration, personal property taxes and insurance. Call your insurance company before you purchase your car to determine what the monthly insurance cost will be.
Make a 10% Down Payment
If you're taking out a car loan, figure on a down payment of at least 10 percent. If you have enough cash available to boost that percentage, do so. Cutting the principal of your loan will do more to slash payments than getting a lower interest rate. |
