Consumer Law

Buying a New Vehicle

A new vehicle, whether a car, truck or crossover, is one of the most expensive purchases you'll make as a consumer. The only purchase likely to cost more is your home. Carefully research and plan this major purchase.

Before Taking a Test Drive

Do your research before you even go out to a dealer's showroom. The Federal Trade Commission has a number of consumer resources to help you learn about automobile buying and financing. Consumer publications, and online automotive and banking web sites offer reviews and finance resources, too.

Budget, Finance and Getting Ready to Shop

Before you decide on a certain vehicle type or model, take a look at your budget. Get a rough idea on where your finances stand. Know how much you'll have for a down payment, including your trade-in, the maximum monthly payment you can afford, and how much you expect to borrow. Other factors may include dealer/manufacturer promotions and rebates, or incentives you may have, such as a credit card rebate.

Include in your target budget costs such as sales tax, any extras, including an extended warranty, or license and administrative cost that show up on your final bill. It all adds up.

Once you've got an idea of total price, have at it and look at cars in your price range. So many factors go into making the short list of cars for your test drive, from trim level to engine options. The internet makes car shopping much easier. Visit the manufacturer's web site for a virtual tour of a car. You can probably check dealer inventory to see what's on the lot, too. Consumer and auto web sites offer pricing information, or you can look into using a car-buyer's or broker service.

Visiting Dealers and Making the Purchase

Once you arrive at a dealership, check out the cars available on the lot, take your test drives, and decide on a car. While it's possible to order a car with the options you want, dealers tend to order cars with certain option packages. Buying off the lot, even if a car has items you wouldn't have chosen, can be the better deal. Option packages can vary by region as well.

Notice the Monroney sticker on the car window. The sticker is required by federal law, and shows you a car's base price, options installed by the manufacturer, the suggested retail price, freight charges and mileage info or fuel economy ratings. You may see a second sticker, showing the Dealer Sticker Price. This shows options installed by the dealer, and "ADM" or "ADP" - additional dealer markup or profit. Charges for dealer prep and extras such as coatings are displayed.

Negotiating a Purchase Price

It's wise to negotiate for the price of the vehicle and then discuss trade-in and financing arrangements. Be ready with your negotiating skills. The profit margin for the dealer is often in the range of 10-20 percent. It's roughly the difference between the manufacturer's suggested retail price (MSRP) and the "invoice price," or what the dealer initially pays for a car.

Be aware the invoice price doesn't tell you exactly what the dealer paid for a vehicle. It may be less after adjustments such as dealer rebates, incentives and awards are applied. This is why you'll see cars offered for "less than invoice" or $100 under invoice. There's still room for dealer profit. The invoice price should include the transportation or freight charge, so make sure a separate charge doesn't appear on the final sales bill.

Your Trade-In

You may be trading in your current car. There are pros and cons to trading in a car, so be informed. First, know the value of your car. Reference guides, such as the Kelley Blue Book, are as close as your computer or library. While you may make more selling your car privately, it can be a hassle, and the value of your trade-in may mean you'll pay less sales tax on your purchase. The trade-in offer may look reasonable.

Completing the Purchase and Claiming the Keys

There are several more items to take care of after you've agreed on a price for the car. You'll be offered extra services such as fabric protection, clear coatings for the paint and underbody protection options. The cost is often rolled into your car loan. Opinions differ on the value of these add-ons, so do your research and decide.

Most buyers need a car loan. Financing needs to be a part of your research, too. You can get a car loan from a direct lender, such as your bank or credit union, or arrange financing through the dealer.

Once the financing is settled, you're almost ready to drive off. While the dealer is getting your car ready, make sure your paperwork is complete and signed, and that you have copies. Ask about your car's title - it may be sent directly to your lender, which keeps it until your car's paid off. It can be stressful and take time, but be patient, pay attention to all the details and reward yourself with the drive home in your new car.

Questions for Your Attorney

  • I bought an extended service contract. Can I cancel the contract and what if the price was rolled into my car loan?
  • I was charged for extra services, such as underbody coatings, I didn't want. The dealer says it's too late to do anything since the work's been done. Can I get a refund?
  • Are there limits on charges for "dealer and document preparation"? Is this set by state law and were charges on my sales contract correct?
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