Buying a Car

Find tips on what to do when buying a new or used car.

Buy a New Car

Whether you are buying or leasing a new car, consider these tips to get the best deal and avoid problems:

  • Do your research and compare car makes and models. Visit the websites of car manufacturers to review the models that interest you. Then, when you decide which models, colors, and accessories you prefer, you can use the website to locate a dealer that has the cars you like.
  • Research the dealer’s price for the car and options. It’s easier to get the best price when you know what the dealer paid for a vehicle. The dealer invoice price is available at 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 car.
  • Find out if the manufacturer is offering rebates that will lower the cost.
  • Read car advertisements closely. Dealers' promises in ads may over promise on the deals, or only apply to a small group of buyers. 
  • Get price quotes from several dealers. Find out if the amounts quoted are the prices before or after rebates are deducted.
  • Research financing options. Be mindful of "loan packing", where a lender presses you to add features and services to your car to increase the amount of your loan.
  • Avoid low-value extras such as credit insurance, auto club memberships, extended warranties, rust proofing, and upholstery finishes. You do not have to purchase credit insurance to get a loan.
  • If you are looking for an environmentally friendly car, look for the Smartway logo to identify cleaner, more fuel-efficient cars and trucks. Fueleconomy.gov has more information about hybrids, electric vehicles, and alternative fuels.

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Buy a Used Car

If you are buying a used car, you should consider these factors to protect yourself from buying a defective car.

  • Learn what rights you have when buying a used car. Contact your state or local consumer protection office.
  • Find out in advance what paperwork you will need to register a vehicle. Contact your state motor vehicle department.
  • Check prices of similar models using the NADA Official Used Car Guide published by the National Automobile Dealer Association, or the Kelley Blue Book. These guides are usually available at local libraries.
  • Research the vehicle's history. Ask the seller for details concerning past owners, use, and maintenance. You should also find out whether the car has been damaged in a flood, involved in a crash, been labeled a "lemon" or had its odometer rolled back. The vehicle identification number (VIN) will help you do this. Also visit Vehiclehistory.gov to buy vehicle history reports gathered from state motor vehicle departments and other sources. These reports are helpful, but do not guarantee that a vehicle is accident-free.
  • Your state motor vehicle department can research the car's title history.
  • The National Highway Traffic Safety Administration (NHTSA) offers a searchable online database of recalls, investigations, and complaints.
  • The Center for Auto Safety provides information on safety defects, recalls, and "lemons", as well as 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 the car inspected by your mechanic. Talk to the seller and agree in advance that you'll pay for the examination if the car passes inspection, 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.

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Vehicle Financing

Learn about the options available for paying for a vehicle.

0:00 You know what kind of car you want and you know what you can spend. But don't
0:05 head to the dealer just yet.
0:07 Before you shop for a car, shop for financing. Financing a car means you pay
0:11 it off over time. But you don't have to get that financing through a dealer.
0:15 Check with banks, credit unions, and finance companies first, then take your
0:20 best financing offer with you to the dealer's.
0:23 You can still negotiate see if the dealer makes a better offer,
0:26 but if not, you can stick with the financing you already have.
0:30 If the dealer isn't honest when it comes to financing a car,
0:33 let the FTC know. Want to know more? Visit ftc.gov/cars

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Lease a Car

When you lease, you pay to drive a vehicle owned by a automobile dealership or leasing company. Monthly lease payments may be lower than loan payments, but at the end of the lease you have no ownership or equity in the car. To get the best deal, follow the advice below.

  • Compare leasing versus owning. The Consumer Leasing Act requires leasing companies to give you information so that you can compare monthly payments and other charges.
  • Shop around to compare lease offers from multiple dealers.
  • Find out what the down payment, or capitalized cost reduction, is for the lease. Consumers with better credit scores qualify for the low down payments and rates that are advertised in commercials.
  • Calculate the total cost over the life of the lease, and include the down payment. A lease with a higher down payment and low monthly payments may be a better deal for you.
  • Consider using an independent agent rather than the dealer. You might find a better deal. Most financial institutions that offer auto financing also offer leasing options.
  • Ask for details on wear and tear limits. Dings that you regard as normal wear and tear could be billed as significant damage at the end of your lease.
  • Find out how many miles you can drive in a year. Most leases allow 12,000 to 15,000 miles a year. Expect a charge of 10 to 25 cents for each additional mile driven.
  • Check the manufacturer's warranty. It should cover the entire lease term and the number of miles you are likely to drive.
  • Ask the dealer what happens if you give up the car before the end of your lease. You are responsible for any early termination charges if you end the lease early.
  • Ask what happens if the car is involved in an accident.
  • Get all the terms in writing. Everything included with the car should be listed on the lease to avoid being charged for "missing" equipment later.

The Federal Reserve Board offers more information to help you decide if leasing is the right choice for you.

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Car Safety Information

Car Safety Tests

These organizations conduct automobile safety crash tests:

  • The National Highway Traffic Safety Administration (NHTSA):
    • Conducts new vehicle crash tests to determine the protection level for drivers and passengers during front and side-impact crashes.  
    • Evaluates vehicle restraints such as air bags and safety belts. 
    • Determines the likelihood of a vehicle rolling over if involved in a single-vehicle crash.
  • The Insurance Institute for Highway Safety performs a different test that uses offset-frontal car crashes to assess the protection provided by a vehicle's structure.

Safety Performance Reporting

These organizations report on or provide automobile safety information:

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Car Rental and Car Sharing Services

Even if you don't own a car, there are times when you may need one. When you rent a car, you're using a company's vehicle for a short period of time. This can be convenient if your car is in the shop or when you're visiting another city. Use these tips before signing the rental agreement to help you avoid unexpected problems and charges:

  • Fees: What is the total cost, after all fees are included? Will there be an airport surcharge or fees for car drop-off, insurance, fuel, mileage, taxes, additional drivers, an underage driver, or equipment rental (for items such as ski racks and car seats)?
  • Driving record: Ask whether the rental company checks customers' driving records when they arrive at the service counter. If there are problems with your driving record, the rental company could turn you away, even if you have a confirmed reservation.
  • Insurance: Be sure that you aren't duplicating coverage. You might have coverage through your personal auto insurance policy, a motor club membership, the credit card you used to reserve the rental, or your employer, if you're traveling on business. 
  • Damages: Before driving off, inspect the vehicle for dents, scratches, and marks and check the tires. Report any pre-existing problems and ask the company to note them on your rental agreement. Try to return the car during regular business hours so you and the rental staff can look at the car together to verify that you didn't damage it.
  • Fuel: Some rental companies, particularly at airports, may require you to refuel within a 10 mile radius of the airport or show a fuel receipt when you return the car.
  • Payment method: Pay with a credit card rather than a debit card to avoid holds on other funds in your checking account.
  • Rental deposit: Does the rental company require a deposit? If so, ask for a clear explanation of the deposit refund procedures.

Some state laws cover short-term car and truck rentals. Contact your state or local consumer protection office for information or to file a complaint. Get more information from the National Association of Insurance Commissioners about renting a car.

Car Sharing 

If you’d rather rent a car on an hourly basis and have greater flexibility in where and when you can pick up a vehicle, you can join a car sharing service. You get the convenience of a car when you need one, without the costs of ownership.

  • Fees: What fees does the company charge (annual fees, application fee)? Are they refundable, even if you cancel or are denied membership?
  • Availability of cars: Are there cars available at times that you need one? How far in advance do you need to reserve a vehicle?
  • Attendants: Are there on-site staff present when you check out your car and return it? This can be very helpful when you need to verify that the car is returned in the same condition as when you borrowed it.
  • Fuel: Do you have to pay for gas out of your own pocket or does the company pay for it?
  • Extension of time: How easy is it to extend the length of your rental? Is it done through an app or is there a dedicated customer service hotline?
  • Cancellation: How far in advance must you give notice to cancel a reservation or your membership? And can the company cancel your membership without notification?
  • Damages: Are you responsible for damages, even if they were not your fault or they happened after you returned the car? This is especially important if you return the car to a lot that does not have on-site staff.
  • Insurance: Is insurance included? You may be insured by a personal policy or the credit card that you use to pay for this service.

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