Consumer Alert: How to Buy a Car Without Getting Taken for a Ride
ATLANTA, GA – Are you ready for a new set of wheels? Next to buying a home, a vehicle is the biggest purchase most people will make, and once you sign a contract, there is typically no turning back. So, it’s crucial that you do your homework up-front. This is even more critical when you’re purchasing a used vehicle, since most used cars in Georgia are sold “as is,” meaning that once you sign the contract, the dealer is not required to repair the vehicle or allow you to cancel the contract if you encounter problems with the car.
“We want consumers to be educated and confident when they make a purchase of this magnitude,” says Attorney General Chris Carr. “Doing some planning before buying can save consumers money and a lot of headaches.”
These days you can do a lot of research and negotiating online before you ever step foot inside a dealership. This can save you a lot of time and minimize the time you’ll have to spend at the actual dealership. With Georgia dealerships open for business, the Attorney General’s Consumer Protection Division offers the following tips on how to find a reliable car from a reputable dealer at a reasonable price.
- Know Your Budget. Figure out what your budget for a car is. Don't forget to factor in Title Ad Valorem Tax (TAVT) and the interest rate (if you'll be financing all or part of the cost). Also remember to contact your insurance company to get a quote on car insurance based on the year, make, model and mileage of the vehicle and include that cost in your overall budget. Consider the amount of your down payment, the trade-in value of your old car, the length of the loan, the interest rate, and what the amount of your monthly payment will be. Here are two helpful calculators: How much car can I afford? and Estimate monthly payment.
- Research makes and models. Do some online research to see which vehicles are rated high for reliability, safety, performance. You might want to check out websites like Consumer Reports, Edmunds, and Kelley Blue Book.
- Choose a car dealership with care. Ask friends or family members if they can recommend a dealership with which they had a positive experience. Go to the Better Business Bureau's website (www.bbb.org) to see how they rate the dealership, how many consumer complaints have been made against the dealership, and how many of those have been resolved.
- Get pre-qualified for a loan from your bank or credit union. Contact your financial institution before going to the dealership to see the amount of loan you qualify for and what loan terms (interest rate and length of loan) you qualify for. Often, your bank can offer you a better deal on financing terms than the dealership. It can also give you a basis for financial negotiations with a dealership.
- Find a few vehicles you’re interested in. Once you have found a reputable dealership(s), go to their website and find a couple of vehicles you are interested in buying. (Note that when dealers know you are shopping around at other dealerships, they may be more willing to negotiate a lower price.)
- Vehicle History Report. Get the VIN (Vehicle Identification Number) of the cars you are interested in and pull a vehicle history report from a website such as AutoCheck.com or CarFax.com. The report will show whether the car has been in any accidents, whether it is a flood-damaged, salvaged or repurchased Lemon vehicle, what the odometer reading was at last service, whether it was previously a leased or Fleet vehicle, whether the car was sold at auction and how many previous owners there have been. Keep in mind that occasionally the reports may lag or not contain complete information, however, they are useful resources for better understanding a vehicle’s history.
- Find out the actual market value of the vehicle. Check Kelly Blue Book, National Automobile Dealers Association or Edmunds for the market value of the car you want to buy. You'll need to know the year, make, model and mileage. Print that out and bring it with you to the dealership so you can use it in your negotiations.
- Personal Inspection/Test drive. This step is especially important if you’re buying a used vehicle. You’ll want to inspect the vehicle thoroughly inside and out. Do the tires look good? Is there rust? Do all the buttons/signals/indicators work? Ask if the car is still under the manufacturer's warranty. Take it for a test drive on both city streets and the highway. Drive with the radio off so you can listen for any unusual sounds.
- Pre-Purchase Inspection by a Trusted Mechanic. When buying a used vehicle, this may be the single most important thing you can do to ensure you are getting a vehicle that’s in good condition. You’ll want to have the car thoroughly inspected by a trusted mechanic that has NO affiliation with the dealership. This may cost around $75-$100, but it can save you thousands of dollars and lots of headaches in the long run. If the mechanic finds something wrong with the car, but which isn't a deal-breaker, you can use that to negotiate a lower price.
- Negotiate for a good price. These days you can negotiate a price online and over the phone. This may give you an advantage since you have more time to consider an offer and make a counter-offer without feeling pressured.
- For a used car, remember to refer to the Kelly Blue Book, or other value books such as Edmunds or National Automobile Dealers Association (NADA) in your negotiations.
- If you’re buying a brand new vehicle, find out the invoice price, which is the amount the dealer actually paid for the vehicle. This can be a good starting point for your negotiations. Some dealers will sell a vehicle for near (and sometimes even below) invoice price, especially if they need to move old inventory off the lot or if they will receive cash incentives from the manufacturer for selling a particular vehicle.
- Negotiate the purchase price separately, and prior to, negotiating the trade-in value of your current car. Better yet, consider selling your current vehicle on your own, separate from your new transaction.
- While advertised vehicle prices are supposed to include everything except for tax, tag, title and Lemon Law fees, many dealerships nevertheless state prices that do not include the dealer fee or certain add-ons. So, in your negotiations, always insist that the dealer give you the out-the-door price and show you the breakdown of that price. In addition, make sure that the price given is the one that corresponds to the financing terms you want.
- Review contract carefully. Get all verbal promises in writing. Read over your contract and paperwork thoroughly and make sure you understand everything before you sign. Don’t buy what you don’t want or need. Additional options (such as paint sealants, additional undercoating, fabric treatments and anti-theft parts etching) and additional services (such as extended warranties or service contracts, routine maintenance packages, credit life or credit disability insurance) should be evaluated carefully as they may not be necessary or worth the price.
- Take your time. Don't give in to high-pressure tactics. You can walk away. You can sleep on it. You can go look at another car at another dealership and then come back (or not). There will always be good cars/good deals. Relax, breathe and remember to listen to your gut.