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Dealer or Private Sale?
An alternative to buying from a dealer is buying from an
individual. You may see ads in newspapers, on bulletin boards,
or on a car. Buying a car from a private party is very different
from buying a car from a dealer.
- Private sellers generally are not covered by the Used
Car Rule and don’t have to use the Buyers Guide. However,
you can use the Guide’s list of an auto’s major systems as a
shopping tool. You also can ask the seller if you can have
the vehicle inspected by your mechanic.
- Private sales usually are not covered by the "implied
warranties" of state law. That means a private sale probably
will be on an "as is" basis, unless your purchase agreement
with the seller specifically states otherwise. If you have a
written contract, the seller must live up to the promises
stated in the contract. The car also may be covered by a
manufacturer’s warranty or a separately purchased service
contract. However, warranties and service contracts may not
be transferable, and other limits or costs may apply. Before
you buy the car, ask to review its warranty or service
contract.
- Many states do not require individuals to ensure that
their vehicles will pass state inspection or carry a minimum
warranty before they offer them for sale. Ask your state
Attorney General’s office or local consumer protection
agency about the requirements in your state.
Source: Federal Trade Commission
How much car can you afford?
Use our auto loan calculator to see what your monthly payments
will be, based on the cars price, down payment and interest
rate.
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What to do before you apply for a
loan.
The first thing a lender will do after you've applied for a
loan is to run a credit report. This credit report can and
will affect whether you get the loan as well as the interest
rate you pay. A fraction of a percentage point in the
interest rate can greatly affect your final monthly payment.
Knowing what the lender will see before they see it can save
you a lot of aggravation, money and even embarrassment. It's
not unusual for a credit report to contain open accounts for
previous loans that should be listed as closed and these
simple mistakes can cost you by making it appear to the
lender that you're a higher risk and thereby raising your
interest rate. The simple solution is to get a copy of your
credit report before you apply for your new loan and correct
these mistakes first.
Cash or Credit?
Once you’ve settled on a particular car, you have two
payment options: paying in full or financing over time.
Financing increases the total cost of the car because you’re
also paying for the cost of credit, including interest and
other loan costs. You also must consider how much money you
can put down, the monthly payment, the loan term, and the
Annual Percentage Rate (APR). Rates usually are higher and
loan periods shorter on used cars than on new ones. Dealers
and lenders offer a variety of loan terms. Shop around and
help your teenager negotiate the best possible deal. Be
cautious about financing offers for first-time buyers. They
can require a big down payment and a high APR. To get a
lower rate, you may decide to cosign the loan for your teen.
If money is tight, you might consider paying cash for a less
expensive car than you first had in mind.
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