During this time of year, there are many people buying cars. I have bought a lemon or two in my day, so I thought with this being National Consumer Protection Week I would share some things consumers need to know when purchasing an automobile.
Tips for purchasing an automobile
Whether you are buying or leasing an automobile, these tips will help you get the best deal and avoid problems.
- Decide what kind of vehicle best suits your needs and budget. That’s a no-brainer, right? No so. You would be surprised how many times slick talking car salesmen convince consumers to purchase a vehicle that may not be right for them.
- Check out the seller. Research car dealers with your state or local consumer protection agency and Better Business Bureau. If you are buying from an individual, check the title to make sure you are dealing with the vehicle’s owner.
- Take a test drive. Another no-brainer I am sure. Drive at different speeds and check for smooth right and left turns. On a straight stretch, make sure the vehicle does not pull to one side.
- Handle trade-ins and financing separately. When trading in one vehicle to finance purchasing another, do it separately. This will ensure you get the best deal on each. Get a written price quote before you talk about a trade-in or dealer financing.
- Shop in advance. Compare financing options at your credit union, bank or finance company. Look at the total finance charges and the Annual Percentage Rate (APR) not just the monthly payment. It may also be worth checking out a website such as Auto Finance Online to give you help and advice.
Make sure to read and understand every document you are asked to sign. I had a car salesman ask me once why I was reading everything and asking all those questions. I told him because it is my right to be an informed consumer. This is my money we are talking about and I have the right to know and understand everything pertaining to it. Because of his question and what I felt was an underhanded rush tactic, I decided that I did not want to do business with this dealership and left that vehicle right there.
When buying a new car, do your research first and compare vehicles. Research the dealer’s price for the vehicle and options available. It is easier to get the best price when you know what the dealer paid for the vehicle. The dealer invoice price is available on a number of websites and in printed pricing guides. Try to locate the wholesale price; this figure factors in dealer incentives from a manufacturer and is a more accurate estimate of what a dealer is paying for a vehicle.
Find out if the manufacturer is offering rebates that will lower the cost. Get price quotes from several dealers. Find out if the amounts quoted are the prices before or after the rebates are deducted. Avoid low-value extras such as credit insurance, extended warranties, auto club memberships, rust proofing, and upholstery finishes. You don’t have to purchase credit insurance to get a loan.
When buying a used car, learn what rights you have by contacting your state or local consumer protection office. Contact your state’s motor vehicle department to find out what paperwork you will need to register a vehicle. Check prices of similar models using the NADA Official Used Car Guide, published by the National Automobile Dealers Association, or the Kelley Blue Book. These guides are usually available at your local library.
Research the history of the vehicle. Don’t be afraid to ask the seller for details concerning past owners, use, and maintenance. Find out whether the car has been damaged in a flood, crash, or labeled a “lemon.” Research the car’s title history with your state motor vehicle department. The Center for Auto Safety provides information on safety defect recalls, complaints, and technical service bulletins.
Make sure any mileage disclosures match the odometer reading on the car. Check the warranty. If a manufacturer’s warranty is still in effect, contact the manufacturer to make sure you can use the coverage. Ask about the dealer’s return policy. Get it in writing and read it carefully. Have your mechanic inspect the vehicle. Talk to the seller and agree in advance that you will pay for the examination if there is a charge for it, but the seller will pay if significant problems are discovered. A qualified mechanic should check the vehicle’s frame, tires, air bags, and undercarriage as well as the engine.
Examine dealer documents carefully. Make sure you are buying, not leasing the vehicle. Leases use terms such as “balloon payment” and “base mileage” disclosures.
Dealer vs Private Party Purchases
The Federal Trade Commission (FTC) requires dealers to post a Buyer’s Guide in the window of each used car or truck on their lot. This guide specifies whether the vehicle is being sold “as is” (in the vehicle’s current condition, without a warranty) or with a warranty, and what percentage of repair costs a dealer will pay under the warranty. When buying from a private party, this guide is not required. Private sellers generally have less responsibility than dealers do for defects or other problems. FTC rules do not apply to private-party sales.
You can expect to pay higher prices at a dealer than if you buy from an individual. Many dealers inspect their vehicles and provide an inspection report with each one. However, there is no substitute for your own inspection. Some dealers provide limited warranties, and most sell extended warranties. Steer clear of dealer warranties that are “power train” only warranties and not “bumper-to-bumper, ” full-coverage warranties. It is best to compare warranties that are available from other sources.
Some dealers sell “certified” cars. This generally means that the cars have had a more thorough inspection and come with a limited warranty. Prices for certified cars are generally higher. Be sure to get a list of what was inspected and what is covered under the warranty.
In general, buying a used car from a dealer is a safer option because you are dealing with an institution, which means you are better protected by law. Purchasing a vehicle from a private seller may save you money on the front end, but there are risks. The car could be stolen, damaged, or still under a finance agreement. If a private seller lies to you about the condition of a vehicle, you may sue the individual if you have evidence and you can find the seller. An individual is very unlikely to provide a warranty,
Sometimes a manufacturer makes a design or production mistake on a vehicle. A technical service bulletin notifies the dealer of the problem and how to resolve it. Because these free repairs are not publicized, they are called “secret warranties.”
If you have a problem with a vehicle that is a safety hazard, check whether the manufacturer has recalled your vehicle. When a safety-related defect exists, the maker MUST fix it at no cost to you, even if your warranty has expired.
If you have a vehicle with a unique problem that just never seems to get fixed, you may have a “lemon.” If your car is declared a “lemon” you will have the right to return the car for a refund. The “lemon” law requirements vary from state to state, but the criteria to qualify as a lemon often depends on things like:
- The defects must occur early within the cars first year or within the first 12,000 to 15,000 miles.
- The car must have a substantial defect with parts like the engine, transmission, or steering controls.
- You have to have given repair shops a reasonable number of attempts to fix the problem.
- Your car was in a repair shop and you were unable to use it for a certain number of days within the year.
Contact your state or local consumer protection office to learn whether you have such protections and what steps you must take to get your problem solved.
If you believe your car is a “lemon” give the dealer a list of the problems every time you bring it in for repairs. Get and keep copies of the repair orders listing the problems, the work done, and the dates the car was in the shop. Contact the manufacturer as well as the dealer, to report the problem.
As you can see, making an automobile purchase is more than just walking onto a car lot and picking a car. Make sure as a consumer, you are informed before you drive off the lot.