How to Buy a Car
Whether you are buying a car from a dealership or have picked out a used car that you want to buy online, there are a variety of steps you need to take to make the purchase go smoothly. Before you buy a car, you will want to make sure you have all of the required paperwork in hand. It also helps to run a vehicle history report on the car you want to buy to make sure it is not under any recalls and has no negative information in its history.
When you buy a new car, you may also want to learn about the different options for financing your purchase. Most people lease or finance new vehicles, as they are usually too expensive pay for all at once. In the sections below, learn everything you need to know about purchasing your next car and find out how to get the proper documentation for your vehicle.
Buying a Car From a Dealership Versus a Private Party
When you are ready to buy a vehicle, one of the most important decisions to make is whether to purchase it from a dealership or an individual. One popular way to shop for cars is to buy a car online from a private party because it is easier to negotiate on the sale price. Dealerships tend to ask for higher prices, but they also offer options for leasing a car or obtaining car financing assistance. Financing options help you get the car you want even if you cannot pay for it all at once.
Many people choose to complete the transaction with a dealership because of the protection it offers them as consumers. Most dealerships are required by the Federal Trade Commission (FTC) to provide a Buyer’s Guide in the window of each car that includes important manufacturers’ specifications. On used cars, this guide also needs to detail any known mechanical issues as well as the terms of any warranties that may still exist on the vehicle.
Consumers who buy a used car can refer to the guide in order to make a more informed decision. If a dealership violates any FTC rules, buyers can complain to the local consumer protection office to hold the dealership accountable. It is not as easy to report a private party who uses unfair practices when selling a vehicle.
Documents to Obtain When Buying a Vehicle
While the details of the sale may differ depending on whether you buy cars from a dealership or a private party, you will still need to use similar documents to complete your purchase. Most of the time, the seller will be responsible for producing the required documentation. However, as the buyer, it is usually your job to keep all of the paperwork together and present it to your state’s Department of Motor Vehicles (DMV).
Note that the exact paperwork you need to complete the sale of a vehicle will depend on whether you have purchased it from a private party or a dealership. In most cases, you need the following documents to buy a car:
- A car title, also called a certificate of title
- An odometer disclosure
- An emissions certificate if you live in an area that requires smog and emissions inspections
- A safety inspection certificate if required by your state
Note that certain details, such as odometer readings, may be included on a bill of sale. Some states require that you use a bill of sale, while others consider this document optional. Furthermore, some states will require you to use a specific DMV form, while others may allow you to create your own bill of sale, provided that it includes all of the necessary information.
Why is a VIN report important to have when buying a car?
When buying used cars, you should always run a vehicle identification number (VIN) check. This report will tell you if there are any unresolved recalls out on the vehicle that you are considering buying. It will also include information on whether the car has been involved in any accidents, what the status of the vehicle’s title is and whether the title has any brands on it (such as “flood damaged” or “rebuilt”). Brands do not necessarily affect the safety of a vehicle, but they do affect its value, which is important to know as a buyer.
Steps to Complete When Purchasing a Car
After you buy or lease a car, there are a few steps you must take to finalize the purchase and the transfer of ownership. The process is slightly different depending on whether you have a car lease, are financing your vehicle or have paid for it in full. Regardless of how you bought your vehicle, you will have to do the following:
- Complete a title transfer.
- Get insurance on your car.
- Register your car at the DMV.
To complete a title transfer, both you and the seller will both sign the certificate of title in the appropriate sections. Some states allow you to sign the title on your own, while others may require that you and the seller have your signatures notarized or that you visit the DMV in person to sign the title.
Buying a Car From Out of State
Many people purchase cars from out of state because they can get a better price. Most of the time, buyers can complete the same steps for purchasing an out-of-state car that they would do for an in-state purchase. However, the title transfer will usually need to be done according to the rules in the seller’s state. For example, if a seller lives in a state that requires titles to be notarized, both parties will need to do this even if the buyer’s state does not require notarized signatures.
Financing a Car Purchase
Financing is a popular option when buying a new car from a dealership or even from a private party. The main options for financing include:
- Direct lending, which means borrowing money from a bank, credit union or finance company.
- Dealership financing, which means applying for a loan through the dealer, who usually offers multiple financing choices as well as special incentive programs.
There are benefits to both methods for financing a car, but your choice should depend mostly on where you can get the best interest rate and terms for your loan. Shopping around and comparing different loan offers is a good idea before signing a contract.
Required Taxes and Fees When Buying a Car
When you purchase a car, you will face a variety of expenses on top of the sticker price for your vehicle. Fees vary depending on whether you lease a vehicle, buy it from a private party or get financing from a dealership. In general, the taxes and fees you should expect to pay include the following:
- Dealership fees.
- State, county and/or local sales tax.
- Title transfer fees.
- Registration fees.