Know your Needs
In This Section
|Know Your Needs|
|Pricing a Car|
|Comparing Auto Loans|
|Leasing v Buying|
|Truth in Advertising|
By educating yourself on your personal needs, and your rights and responsibilities as a consumer, you will significantly lower your chances of financial risk. It will also significantly decrease the odds of you falling victim to those wishing to take advantage of you or your family. The following is a basic guide to purchasing a new or used vehicle. To see specific information regarding practices that would be considered a violation of the Consumer Protection Act, please see our Before you Buy site.
It is important for you to identify your automotive needs and budgeting restrictions before you begin the process of obtaining a new, used, or leased car. Some general questions to ask may include:
- What kind of driving will I do?
- Who or what will I be transporting?
- What is my monthly budget for car payment, gas, insurance, and maintenance?
- How much car can I really afford?
You will find the process much easier if you also understand that you have the right to shop and compare not only your local auto dealers, but also your financing and warranty options.
We have provided a host of information regarding your rights and responsibilities in Washington State’s auto market. General car buying tips and suggestions can also be found through several state and federal nonprofit organizations and agencies including the Federal Trade Commission, Washington State Auto Dealers’ Association, Washington Law Help, and the Washington State Department of Licensing.
After you determine your needs and what you can afford, you should research the market value of the various makes and models before you start looking for your car in order to avoid paying too much for the car you buy. Dealers will often refer to a car’s “sticker price” as the amount you have to pay, but often the dealer is willing to sell the car for less. You can obtain information about how much it costs a dealer to buy a particular model and optional equipment (called invoice cost) by consulting a number of publications and services including Consumer Reports Magazine, Edmunds True Market Value, and The Car Book. These pricing guides can assist you in determining where to start your negotiations. Several additional car pricing guides (such as the Kelly Blue Book and the NADA Official Car Guides) also assist you in determining the value of a used car or your trade-in. These pricing guides are often available at your bank, credit union, on-line through the internet, or your local library.
Before visiting a dealer, you may want to consider researching the various auto loan options that exist in today’s market. Loans are available from several sources, including credit unions, banks, savings and loan institutions, and dealers.
When comparing loans, be sure to consider the following:
- interest rate (the annual percentage rate or "APR")
- down payment; your approximate monthly payment
- number of payments and total cost of the loan (a lender can make this calculation for you)
The loan term can run one to seven years. Long term loans may not be a good idea if you plan to trade the car in after three or four years; at that point you may still owe more on the loan than the car is worth. You may wish to look at a shorter term loan with higher payments to avoid a potential "negative equity" problem (loan balance higher than worth of vehicle at time of resale).
Dealers and manufacturers sometimes offer very low interest loans which have special conditions. Know your financing alternatives before you make a commitment to a finance package.
You have the right to:
- Negotiate your finance package separately from the purchase price of the vehicle
- Seek pre-approval from a credit union, bank, and other savings and loan institutions
- Discuss financing prior to selecting a vehicle
Auto Financing Tips:
- Stay within your budget.
- Find out your credit score. View our Credit Freeze & Fraud Alerts page for more information.
- Save money for a down payment so you reduce the amount you need to borrow. This could save a lot in interest payments over the life of the loan.
- Do your research online first before visiting the dealer. Bring a copy of the ad or offer you seen online.
Use this Comparison Sheet to compare leasing v purchasing options
Leasing is very different from purchasing a vehicle. Leasing or purchasing will have different advantages that should be evaluated thoroughly and matched with your needs. Read the section on Leasing and consider consulting a financial advisor to assist in making the best decision for you.
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There are a number of auto advisory and buying services that can assist you in deciding on a make and model, and then negotiate for you. This can save a substantial amount of time in the car-buying process. Before signing up with such a service, find out exactly what it will cost and what you get for your money. Do not give the money for the vehicle to the broker or buying service; money must be paid directly to the dealer that delivers the vehicle.
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Another step to buying a car is to check advertisements in the newspaper, web and magazines and compare. Remember; even if you are unaware of existing advertised pricing, dealers have a legal obligation to offer you the price that was advertised publicly. Even the side sticker on the vehicle is considered an advertisement and is required by law to be posted on the vehicle’s window.
Should you become aware that you were not offered the advertised price, make a copy of the advertisement and file a complaint with the Attorney General.
While you will probably negotiate on the price of the car, you may also need to negotiate other aspects of the transaction, including financing terms and trade-in value. Optional additions to the purchase may also be negotiated. These can include service contracts, add-ons such as spoilers, vehicle protection options like protective paint coatings, and credit insurance.
While negotiating on the trade-in value of your vehicle, you must reveal to the dealer any "brand" which appears on the title, such as "rebuilt", "salvage", or "non-conformity". If you don't disclose the "branded" title, the dealer can come back to you when the "brand" is discovered and attempt to renegotiate the trade-in value.
It is important to remember you always have the right to walk away if you are not 100% satisfied with your deal or dealership. You must walk-away, however, before you sign any contracts. Once you sign the contracts, there is no law that allows you to cancel the contract for any reason within three-days of purchase.
BEFORE you sign, remember:
If you do not understand all of the terms and conditions, do not sign
Never sign a contract with spaces left blank, mark them out or fill them in as appropriate
By law, the dealer must separately disclose in writing the finance charge, insurance costs, taxes, and other charges you will be responsible for
You should always get a copy of each document you sign for your records
Get all verbal promises and representations in writing
If any terms vary from those you negotiated, insist they be corrected in writing
Once you sign a contract you are bound by that contract
You DO NOT have a three day right of cancellation on vehicle purchases or lease contract
If your contract states it is "subject to financing" or some other contingency, it is not advisable to take the vehicle home until financing arrangements have been completed or the contingency is met. By law, the dealer has 4 working days from the time of purchase (excluding Saturdays, Sundays, and holidays) to find financing or resolve the contingency and finalize the sale. If that is not done, there is no binding contract and the dealer must offer to return your contract documents, down payment and trade-in vehicle before attempting to negotiate a new agreement with you. If you have taken possession of the car, you must promptly return it.
Changing the Terms of the Contract
After a deal is agreed upon and the contract signed, if you are contacted by the dealer saying they now need a larger down payment or higher monthly payments, you are not required to accept these new terms.
By law, the dealer has 4 working days from the time of purchase/lease (excluding weekends and holidays) to find financing and finalize the sale according to the terms of the contract. When the dealer fails to locate the financing specified in the contract in that time period, there is no binding contract and the dealer must offer to return your contract documents, down payment, and trade-in vehicle before attempting to negotiate a new agreement with you.
If you have taken possession of the car, you must promptly return it when notified that the transaction cannot be completed within the 4 working-day period.