Buying a new car is an exciting process. It is a serious one too. Not only does it lead to a potentially long-term financial obligation, but also requires you to wade into a system where many sales professionals capitalize on your lack of knowledge to profit more from the sale. This most often occurs through the financing process, where you end up paying thousands of dollars extra for a car loan that would have cost substantially less from a bank or credit union. If you follow the basic rules outlined here, you can protect yourself when you buy your next car.
- Leave yourself time for the process. Researching the model of car you want, the dealer you want to work with, and the company you want to finance your auto loan will take time, often weeks. Be patient and always plan at least two trips to a dealer before you sign anything.
- Investigate the car’s history. After getting the car’s relevant information from the title (which the dealer should have), use the National Motor Vehicle Title Information System (www.nmvtis.gov) to research the car’s accident and service history. This service draws from a larger database than Carfax. Also, feel free to contact the car’s prior owners (noted on the title) to ask them about what the car has been through.
- If used, investigate the car’s current mechanical condition. Take the car to a trusted mechanic for review.
- Research what the car should reasonably cost. Ask friends, neighbors, family members, and/or chains-of-command what they think a reasonable price should be. Call competing dealerships for their opinion. Check Autotrader, the Kelly Bluebook, Edmunds, www.cars.com, etc. for pricing.
- Shop for your loan. This is very important. Often, banks and credit unions will offer better terms on car loans than dealers. For example, a bank might offer you seven percent interest on a loan, whereas a dealer might offer 17 percent. That is a difference of thousands of dollars over the course of the loan. Dealers do this because they sometimes get a significant cut of the profits gained from the interest charged by the financing companies with whom they work. Be wary of this; know the cost of the credit prior to stepping foot on the car dealership lot.
- Read all contract documents and check that all numbers and promises are accurate and in writing. Before you sign paperwork, read and understand it. The Legal Assistance Office wants to help you with this. You can bring any and all car buying documents, and we will help you understand the terms.
- Be sure that you take physical possession of the car’s ownership documents, or in the case of new cars, photocopies. In order to own a car, make sure the title has been signed and handed over to you. If the car is new, make sure that you either get the Certificate of Origin or you see the dealer apply and sign for it. When purchasing a new car, even if you cannot walk away that day with the Certificate or Origin, at least get copies of everything the dealer uses to apply for it.
If you have any questions about, or want assistance buying a car (e.g. getting a contract reviewed before you sign it), please stop by building 288, Fort Irwin’s Legal Assistance Office. We are here to help!