Buying a New Car

  
     
Few thrills in life that equal the feeling of climbing into a brand new car and driving away from the dealer knowing you just bought the best vehicle for you at the best price. But with today's seemingly endless assortment of family and specialty vehicles, brands, options and prices, car shopping requires a bit of homework if you want to assure yourself of very best value and selection.

Determine Your Needs

What is the best vehicle for you: A full size car, mini-van, pickup, intermediate, compact, and subcompact?

Full size: Costs more to operate and maintain, but is roomier, more comfortable, has plenty of power and is stable under most driving conditions.

Intermediate: Slightly smaller, but costs less to operate and maintain. Cars in this category seat five average-size adults comfortably for long trips. The engine plant should be ample to provide a smooth ride under most conditions.

Compact: Good mileage and low operating costs, but may lack the power of larger models. Cars in this category are normally easy to handle and park. Compact cars seat four average-size adults comfortably on trips that aren't long.

Subcompact: Good mileage, low operating costs, easy to handle and park, with adequate pickup power. Subcompact cars will seat two to four adults but their comfort is often limited.

Mini-van: Good mileage and operating costs. Great for long trips and can usually seat six comfortably with room to spare for plenty of luggage. Practical family vehicle.

Pickup: Good mileage and operating cost. Excellent for utility needs: lumber, rubbish, hauling, etc., but has limited seating capacity. Extended cabs seat one or two addition average-size adults but not comfortably.


Areas To Compare When Purchasing Your Car

Safety:Consider the safety features offered in a car. For example, airbags built in child safety seats, anti-lock brakes, and traction control.

Reliability: A number of sources, most notably Consumer Reports, compare maintenance costs on vehicles and have compiled information about repairs that are likely with particular models

Fuel Economy: Federal law requires an environmental protection label to be placed on the window of every new car, listing average fuel economy for city and highway driving according to EPA tests.

Operating Costs: This includes fuel, oil, maintenance and tires. These costs vary greatly from one model to another, with sports and luxury cars costing more than economy cars.

Theft Rates: Anyone is susceptible to car theft, but certain cars are more popular with thieves. The primary reason for considering the theft factor is the higher cost of your insurance.

General Features: Consider your particular needs when purchasing a car. For instance you may need large trunk space for hauling groceries. Will others be riding in the back seat? You may want a two door or four door model.

Options: Options are usually offered, and can add considerably to the price of the car.
 

To Buy or Lease

If you drive more than 25,000 miles a year and most of the mileage is for business purposes, you can deduct much of the expense of a leased vehicle from your annual income tax. However, if the car is not used for business purposes and you travel much more than 15,000 per year, you may be better off buying the vehicle.

If you do decide on a lease, be aware of the two kinds of automobile leases that are available, "open-end" and "closed-end" which can greatly affect your overall cost. An open-end lease will usually have lower monthly payments, but you may be required to make a substantial final payment on the lease to make up for any loss by the dealer or lease agent when your car is resold. A closed-end lease contains a precise statement of the number of months that the contract is to run (usually 12, 24 or 36 months). When the closed-end lease expires the car is simply returned and the lessee has no further obligation.

Leasing a car can more expensive than buying, but there are advantages.
  • Insurance and excise tax and other fees are often included in the lease price.
  • Usually, there is a smaller payment needed to obtain the car. With leases this payment is called the "cap-cost reduction" in sales it is called the "down payment."
  • You do not need to worry about selling the car.
  • If you have a closed-end lease you are protected from sudden drops in the cars value

If You Are Considering A Lease

  • It is important to negotiate the best price you can for the vehicle you wish to lease. Then have the lease based on that price!
  • Get prices from several leasing companies before you sign any contract.
  • Check the reputation of the dealer or lease company (call the Better Business Bureau).
  • Get a written statement of all costs including "security" deposits, monthly payments and costs that you are responsible for. These could include: license fees; registration; taxes; and service fees.
  • Know the terms of the lease, your responsibilities and the responsibilities of the leasing company.
  • In writing, get the penalties for late payments and an explanation of your right to cancel the lease.
  • Ask the allowed mileage and the penalty for excess mileage. If the mileage allotment is too low per year negotiate for a higher amount.
 

Choosing The Best Dealer

Where you purchase your car is almost as important as what car you bought. Ways to find a good car dealer:
  • Get a reference from someone you know has bought from the dealer.
  • Also, you can check the dealer with your local Better Business Bureau.
  • Try to find a dealer close to home. This will save time, fuel and effort when your car needs service.
  • Appearance says a lot about the dealer. The dealer's place of business should be clean and neat... and don't overlook the service area.
 

Warranties

Warranties help protect you from problems down the road. Warranties come in two varieties "full warranty" or "limited warranty."

A full warranty will repair, replace any part of the car itself during the specified warranty period. A limited warranty, just as the name implies, does not cover all parts but usually covers the most expensive components.

Extended service contracts are agreed to and purchased at the time of the car sale, and usually include warranty coverage beyond the usual limitations of time and miles. Service contracts differ from dealer to dealer, so pay special attention to services offered to be sure that the regular warranty is not being duplicated in the service contract.

The bottom line is to make sure you know what is covered and what is NOT covered. Keep in mind that you have responsibilities under the warranty too, such as having the car serviced and inspected at specified times, and using recommended products.


The Test Drive

Before you purchase a car make sure you drive the car, equipped with your choice of accessories, over a bumpy road, up hills and in stop-and-go city traffic. Take a test drive checklist with you to examine important characteristic of the car. Items to include on the checklist are:
  • Visibility. Can you see the end of the hood and the trunk? Does any part of the car block your vision? Can you easily see all the mirrors?
  • Steering wheel placement: Are you comfortable? Is it easy to adjust?
  • Entry/exit: Is it easy to get in and out of the car from each position?
  • Seating: Is there enough legroom? Does the seat provide enough support?
  • Instrument panel and controls: While driving can you easily check the speedometer and fuel gage? Test the windshield wipers, lights, turn signals, and climate controls to see how easy they are to operate.
  • Trunk: Is there enough space? Is the spare tire accessible?
  • Braking: Take the car to an empty stretch or road, accelerate to about 40 mph and make an emergency stop. Does the car stop in a strait line? Do the brakes lock up?
  • Steering/handling: To check if the car is properly aligned, loosen your grip on the wheel and see if the car drifts. 


Negotiating Price

Do not hesitate to haggle about price, trade-in value or financing. Here are some guidelines to help you negotiate price:
  • Remember the difference between the sticker price and dealer cost is usually in the 12-percent to 16-percent range. It is best to obtain the dealer's cost of the car and negotiate the price up rather than down from the sticker price. Your best deal will likely come on a new car the dealer has in stock, more so if it is last year's model, and especially if the dealer has a huge inventory. Stock costs dealers money to maintain, so the dealer will likely jump at a deal that moves inventory.
  • Know the worth of your trade-in car, including the options it is equipped with, such as air conditioning, leather seats, power windows, stereo/radio tape deck and sun roof. Low mileage is one of the biggest add-on factors for a vehicle, and high mileage, similarly, the largest reduction. Before you show the trade-in car to the dealer, it's a good idea to have it washed and polished. A $5 car wash can add $50 to the trade-in value.
  • Compare prices for the same car (equipped the same) at other dealers. Be careful in comparing models. Cars can look alike but one is often a downgraded or "discontinued" version with less standard equipment.


Car Buying Services

If you don't want to go through this entire process, you might consider a car-buying service that will sell your old car, negotiate with a new car dealer and even test drive a new car for you for a fee of about $150 to $200. But don't hire a car buying service without first checking the reliability of the company with your Better Business Bureau.


Financing Your New Car

Naturally, the best way to pay for a new car is with cash, and if your savings account can afford it, you'll save plenty on interest charges. But more than likely, you'll have to borrow money to pay for it. And, like the new car, you will want to get the money for the lowest possible price from a source that you know is reliable.

One of the most common types of loans is an installment loan. Installment loans are just what the name implies: the loan is paid back to the lender in equal monthly amounts over a specified time period usually from 12 to 60 months.

Your new car may serve as the required collateral, but a down payment, usually 10-percent to 20-percent of the total cost may be required depending upon the finance source and your credit worthiness.

Lenders, other than banks, are available and are listed below.

Finance Companies: Your car is usually full security, but your interest rate will be all the law allows.

Insurance Companies: The cash value of your life insurance policy may be enough for a single payment loan. Credit Unions: Finance rates are usually lower than other lenders, but often a large down payment is required.

You should know, for your protection, the Truth in Lending Act requires lending agencies to provide you with complete loan information before you sign any contract. You must be given the true dollar amount of the money you are to be loaned, and the actual annual percentage rate (APR) of the loan.

You should know the answers to the following questions:
  • What company will lend the money?
  • Where will the payments be sent?
  • Who holds the title to the new car?
  • What happens when a payment is late?
  • If the car is repossessed because of default in payments, what are you rights?
  • Is there any cost for paying off your loan early? Any refund?
  • If credit insurance is required, can you use your own insurance agency? If not, why not?


Ordering The Car

Remember, if there is a car in stock that fits your want list, you'll save time and money by selecting it instead of ordering from the factory.

If you do order from the factory, figure on waiting a while for delivery, Be sure and read the order form. It should include the base price of the car, cost of options, dealer fees and the amount of the deposit. Compare the list with the sticker on the car.

It is important to note that, if you sign a purchase-and-sale agreement and then decide that you do not want the car, you may lose part or all of your deposit. So find out what your rights to a refund are incase you change your mind before you sign.

The dealer may want to re-appraise your trade-in when the new car is delivered and you arrive to pick it up. If you have already signed a firm purchase agreement, refuse the re-appraisal. Providing your trade-in car hasn't been damaged since being appraised, the dealer must stick to the original quote unless the agreement notes otherwise or more than 30 days have expired.


Picking Up Your New Car

Whether you've waited 10 minutes or 10 weeks for delivery, don't sign any final papers, and certainly don't get in and drive it out of the lot, until you have inspected the car.

Make sure:
  • The car is exactly the model you ordered with the options you agreed to. (Go by your original order form.)
  • There is no damage from shipment.
  • There are no loose or missing parts. (Check all caps, dipsticks, hubcaps, trim, etc.)
  • Check the mileage at the time of delivery.

Then, take the car for a short test drive and make sure it performs to your satisfaction. Ask the dealer for a signed delivery service form and to sign and date all applicable warranties.


And Finally, The Paperwork

A new car transaction requires mountains of paperwork, but normally an efficient dealer will handle most of it. However, make sure nothing is omitted by following this checklist:

Title: This is your proof of ownership. It is issued by the state and is usually filled out by the dealer and signed by you at the time of purchase. It may take several weeks for you to receive your copy of the recorded title, but usually your lender will receive the title and will not release it to you until the entire loan has been paid.

Insurance forms: The lender requires proof that the new car is insured to the satisfaction of specific terms, and will be notified of your policy by the insurer. If you allow the insurance to lapse, the insurer must notify the lender. At that time, your loan agreement is considered breached and the lender can demand that the entire balance be paid immediately.

Registration certificate: Shows that the new car has been legally registered in a certain state. Always keep the registration handy when you are driving, in the glove compartment or in your wallet if you are the only driver of the vehicle.

License plates: May be transferred from your old car to your new car, but some states require new plates for a new car. If you can transfer the old plates, the dealer will fill out the necessary papers to do so. If new plates are needed, often they can be obtained at the time of registration, but in some states, where the plates are mailed, the dealer will issue a temporary plate to use until the new plates arrive.

City/county tax licenses: Applied to the windshield by the dealer at the time of delivery. If not, the dealer will order them for you or go with you to purchase them.

Sales tax: These taxes are your responsibility. Sales tax is paid at the time of registration.


New York's New Car Lemon Law

The main reason people buy a new car is for reliability. But, if your car turns out to be a "lemon," don't despair. The Lemon Law protects non-commercial motor vehicles sold, leased or registered in New York State, except for motorcycles, certain motor homes, and off-road vehicles. You are protected against all material defects for 18,000 miles or two years, whichever comes first. You must be the original purchase, lessee, or person to whom the vehicle was transferred during the warranty period.

If you experience problems, you must report them to the manufacturer or authorized dealer who must correct them free of charge. If the same problem cannot be repaired after four or more attempts, or if your car is out of service for 30 or more days, you may be entitled to a new car or refund. Refunds are for the amount of purchase, plus license and registration fees, minus a mileage allowance if the vehicle has been driven more than 12,000 miles. All new car dealers are required by New York State to provide consumers, at the time of purchase or lease of a motor vehicle, with a copy of the new car lemon law.

To enforce the law, you may sue the manufacturer or participate in an approved arbitration program. The Better Business Bureau offers AUTO LINE, a FREE and easy way to resolve car problems. In fact, if your car is a Chevrolet, Pontiac, Oldsmobile, Buick, Cadillac, Chevy/GEO/ or GM Truck, you can use AUTO LINE for most engine or transmission problems. In some cases, current ownership is not required to get reimbursement of past repairs. Other cars eligible for AUTO LINE are Honda, Acura, Volkswagen, Audi, Nissan, Infinity, Saturn, Rolls Royce, Subaru, Suzuki, BMW, Toyota, Alfa Romeo, Isuzu, Hyundai, Kia, Lexus, Hummer, Land Rover, Range Rover and Porsche. You can file a complaint through the Bureau's AUTO LINE program online or by calling (800) 955-5100.
  • Decide how much money you can spend and what type of car best suits your needs.
  • Research the various models.
  • Narrow your choices to several cars- If you have your heart set on one car it reduces you bargaining power * Obtain updated price lists to compare with the dealer's cost of the car.
  • Get a firm quote, in writing, from the dealer.
  • Shop around to several dealerships. Check out their reliability with the Better Business Bureau.
  • Keep all negotiations separate. Consider questions about financing, service contracts, or trade-ins after you have settled on a price.
  • Test drive a car before buying it.
  • Read and understand the contract before signing.
  • Inspect your new car carefully before driving off the car lot.

A car is one of the most important and costly purchases you may make. By preparing yourself before you start shopping for a car, you can make the buying process much easier. Besides helping you decide what is best for you, your research and preparation will help you get the best deal.

New car dealers must be licensed by the New York State Department of Motor Vehicles. They also take complaints against dealers.

New York State Department of Motor Vehicles
Bureau of Consumer & Facility Services
P.O. Box 2700-ESP
Albany NY 12220-0700
518-474-8943

For a reliability report or to file a complaint against a new car dealer, contact the Better Business Bureau. The BBB serving Metropolitan New York can be reached in four ways. For immediate assistance, call 212-533-6200. The charge is $3.80 plus applicable tax, charged to a major credit card. Consumers can also call 1-900-225-5222. The charge is $3.80 for the first 4 minutes, and 95 cents per minute thereafter. The average call costs $3.80; the maximum charge is $9.50. For free information or to file a complaint, write to 257 Park Avenue South, New York, NY 10010-7384 or contact us.