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May 24, 2016

Buying, Selling, or Leasing a Vehicle

Buying a New Car

As with any other big-ticket item, it is important to do your homework—decide in advance what kind of car you need, and how much you can afford to spend. Think about size. Think about options.

Before you start pounding the pavement, check out some of the consumer-oriented publications that have information on cost, reliability, comfort factors, and other features of many cars. The Internet is also a great place to look. Learning a bit about the law—and how you can protect yourself in this important consumer transaction—should also be part of your preparation.

What information should an auto ad include?

This is an area largely regulated by statute, and it varies from state to state. In some places, the ad must state the number available of that type of vehicle. Other items that may be required include price, dealer and factory-installed options and warranty terms. In addition, if the vehicle is "on sale," the ad should state the date the sale ends.
Beware of “bait and switch” ads. "Bait and switch" is advertising a vehicle that the dealer does not intend to sell. Usually this is done to lure the unsuspecting customer toward buying an unadvertised, often higher-priced vehicle. The ad draws the customer into the showroom, but the advertised car is not available at that time or stated price. If you suspect that you have been the victim of such advertising, contact the consumer protection division of your state attorney general's office. If they have received a number of reports about this kind of advertising, they may file a claim against the dealer on behalf of all of the duped customers. If they find that yours is an isolated incident, they may still help you pursue an individual claim. In either case, it may be possible to hold the dealer to providing the vehicle at the publicized price.

Must an auto contract be in writing?

Yes, according to the Statute of Frauds of the Uniform Commercial Code (UCC). The UCC regulates sales of goods and securities and governs many kinds of commercial transactions. Since it has been adopted, with minor variations, by every state legislature except Louisiana's, it governs most auto transactions in the country.

The UCC says any sale of goods of $500 or more must be in writing and signed by the party against whom enforcement is sought. If the contract is challenged, the courts will not be permitted to enforce it unless it is in writing.

What terms should the contract include?

The sales contract should describe the car and include:

  • the vehicle identification number (VIN). You can find it on the driver's side of the dashboard near the windshield;
  • state whether the car is new, used, or has had a previous life as a demonstrator, rental car or taxicab;
  • include price terms consistent with your oral agreement, and details on any trade-in you will supply, including mileage and the dollar amount credited;
  • state the warranty terms; and 
  • state financing terms, including price, deposit, trade-in allowance, annual percentage rate of interest (APR), and length of term.

How should I evaluate the contract?

Before you sign, make sure you understand and accept all the contract terms, because you'll probably have to abide by a contract you have signed, even if you have not read it. Read the contract carefully. Ask questions. Cross out blank spaces to avoid any additions after you sign. Make sure that the dealer's promises appear in the contract. Do not sign until the contract satisfies you. The contract you sign binds you, and escape from the contract is both difficult and expensive.

May I change a seller's preprinted contract?

Yes, if the seller agrees. If you do change terms, cross out the unwanted language, and write or type in the substitute terms. Both you and an authorized dealer representative should initial the changes. Handwritten or typed changes to both copies of a printed contract overrule printed terms.

May I cancel the contract even after I sign it?

If the car you buy is not what the dealer promised, the dealer may have breached its warranty. If so, then you might attempt to cancel the contract because of the breach. Or you might try canceling for no reason. However, you risk losing your deposit. The dealer also might file a lawsuit to recover lost profits, for time spent with you and on your car, and other damages.

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