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:

  • Check out different car makes and models. Do your research first and compare vehicles. You can go to the website of every car manufacturer and review every model of car available. Many manufacturers' websites will even let you use drop down menus to “build” an electronic version of a car. Then, when you decide which models, colors, and accessories you prefer, you can use the website to locate a dealer and find the closest showroom 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.
  • 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.
  • Hybrid-electric cars are popular among consumers interested in fuel economy and reducing their negative impact on the environment. These cars combine the benefits of gasoline engines and electric motors, and can be configured to achieve different objectives such as improved fuel economy, increased power, or additional auxiliary power. Also look for the Smartway logo to identify cleaner, more fuel-efficient cars and trucks. 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 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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Car Rental

When you rent a car, you are using another company's car for a short period of time. This option can be convenient if your car is in the shop or when visiting another city. However, there are several factors to consider before you sign the rental agreement:

  • Ask what the total cost will be after all fees are included. There may be an airport surcharge or fees for car drop-off, insurance, fuel, mileage, taxes, additional-drivers, under aged-driver, and equipment rental (for items such as ski racks and car seats).
  • Ask whether the rental company checks the driving records of customers when they arrive at the service counter. If so, you could be turned away even if you have a confirmed reservation.
  • Check in advance to be sure you aren't duplicating insurance coverage. If you're traveling on business, your employer might have insurance that covers accidental damage to the vehicle. You might also have coverage through your personal auto insurance, a motor club membership, or the credit card you used to reserve the rental.
  • Carefully inspect the vehicle and its tires before renting and when you return it. 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.
  • Check refueling policies and charges. 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.
  • Pay with a credit card rather than a debit card, to avoid holds on other funds in your checking account.
  • Ask the rental company if a deposit is required. If so, ask for a clear explanation of the deposit refund procedures.
  • Visit the National Association of Insurance Commissioners for more information about renting a car and the insurance options.
  • 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.

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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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Lease a Car

When you lease, you pay to drive a vehicle owned by a automobile dealership. 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 in addition to the general suggestions for buying a car.

  • 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 Consumer Financial Protection Bureau and the Federal Reserve Board offer more information to help you decide if leasing is the right choice for you.

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