Whether you're buying a new car or a used car, a little research up front can help ensure that you get the best value for your money. Make sure to take your time and shop around.
Buying a car is a major purchase; it is also usually a complex transaction involving a contract, financing, and a warranty. You will want to think carefully about each of these aspects of your decision. You will also want to be aware of some specific protections are available to you under the law.
You may consider the vehicle’s safety when considering a purchase. Crash testing results are available at www.nhtsa.gov/ratings.
When buying any car, new or used, you can check to see if the vehicle has any unresolved safety recalls and its safety recall history. Visit safercar.gov to learn more.
Shopping for a Car
First you must choose between buying a new car and buying a used car. A new car may cost more but will come with a longer warranty and no history of abuse or neglect. However, new cars depreciate (lose value) almost immediately when they leave the new car lot, which means that if you can find a well-cared-for used car, it might be a good bargain.
Consider the price of the car. This sounds obvious, but car dealers, new or used, may tempt you with a low monthly payment. You should be sure to look at the total price of the car, including interest.
Newspaper ads and the Internet can give you an idea of price ranges. The Texas DMV website has information on the prices of both new and used cars. Don’t forget to look up rebates and other incentives that may be available on a new car purchase. There are multiple online resources such as the "Blue Books" used by dealers to determine price ranges for used cars. Many people sell their used cars themselves. Buying from the owner often means paying a lower price than you can get from a dealer. And buying from the owner means you can ask the car's complete repair history. Dealers’ used vehicles may cost more, but, may offer services such as financing or warranties, and may also be able to provide vehicle history.
You should ask the seller for the history of the vehicle and even some repair history, although this may not be complete. If the seller won’t provide a report you may purchase one through a private service that researches insurance claims.
Whether you buy directly from the owner or from a dealer, consider:
- taking it for a test drive;
- taking it to a mechanic of your choosing or having a mechanic visit the lot for a pre-sale inspection; and
- inspecting the title.
If the seller won't let you do these things, you may want to consider walking away.
Closing the Deal
Make sure that the final price you base your decision on is the final price of the car, with all the features you want and nothing else. The car dealer may offer you many assorted products, such as extended warranties, nitrogen filled tires, window tinting, interior or exterior protection packages and other products. These products will affect the price of the vehicle and you may decide that you don’t want or need the product or service. If you don’t want those products, just decline to purchase the vehicle or negotiate the price of the products.
You will have to sign a purchase contract. The contract protects you as well as the dealer, so do not skip this step or hurry through it.
When reviewing your contract, you may want to check:
- that you have read and understood everything in it.
- whether it has blank spaces.
- whether it contains clauses or terms that are different from what the salesperson said to you.
If the salesperson has made written changes and you agree to them, make sure you both initial the new language.
If you are financing the car, make sure you understand:
- how much you will pay and how often;
- how many payments you must make in total;
- how much you will have paid in total; and
- what the annual interest rate is.
Don't just assume you will finance through the dealer. Sometimes, you can get better financing from your bank or credit union. You should also check your credit score before you go shopping as this can affect the terms such as the interest rate you are offered. By shopping around, you may be able to negotiate a better deal. Note that Texas law sets maximum interest rates for financing used cars. The rates vary according to the age of the car and the amount owed on it.
DO NOT leave with your new car before the contract has been finalized completely and signed by both parties. This is especially true if you are financing through the dealer and/or leaving a trade-in vehicle behind.
It has been known to happen: the consumer leaves the old car as a trade-in and drives away in the new car with only a verbal agreement about the amount of the monthly payment. The contract just needs final approval - "a mere formality" - by a manager who is not immediately available.
What happens? The buyer's credit is not approved, the monthly payment will be significantly higher and the trade-in has already been sold. The buyer is stuck with the new car at the higher payment or no car at all.
Warranties and Insurance
Get all promises about service and guarantees in writing in the contract and in the final copy of the buyer's guide. If you were promised something but it is not in writing, do not sign. If the seller offers a warranty, it must be in writing for it to be valid.
All used car dealers are required by federal law to tell buyers whether a used car is being sold with or without a warranty. Dealers must clearly display this information on a side window of each used car. This buyer's guide, or window form, should state either:
- "AS IS" -- the vehicle does not have a warranty and the seller is under no obligation for repairs; or
- "WARRANTY" -- the vehicle has a warranty, and the window form must list exactly what parts and services are covered and for how long.
The buyer's guide becomes part of the contract at the time of the sale, and any guarantees listed on it override any restrictions in the contract. If the sale is in Spanish, the buyer's guide must be in Spanish. If you don't see the buyer's guide in the car window, ask to see it before you agree to buy a car.
Under the Magnusson-Moss Warranty Act, you usually do not have to use a dealership for regular maintenance or a manufacturer’s replacement parts to maintain your manufacturer’s warranty. For more information about your warranty rights under federal law, visit https://www.consumer.ftc.gov/articles/0138-auto-warranties-routine-maintenance.
The law prohibits rolling back or changing the number of miles on an odometer. Texas law requires the seller of any used vehicle to state on the title assignment the total number of miles the vehicle has traveled. Make sure you get a copy of the odometer statement when you sign the contract.
Texas law requires you to have liability insurance. Whoever finances your car might offer to include the cost of the insurance in the loan, but it is your responsibility to have it.
The financier might also require you to have collision insurance to cover the balance owed on the car. If it is required and you do not have it, the financier can repossess your car. Before agreeing to allow the financier or the dealer to obtain insurance for you, shop around. Generally speaking, you will pay less for insurance you purchase yourself than you would for insurance purchased by your financier or arranged by the dealer. Understand all your insurance responsibilities before you sign.
After the Sale
Under Texas Law, you do not have 3 days to cancel the purchase like you may with some transactions the dealer is required to register and title the vehicle in your name within 30 days, regardless of if you owe money on the vehicle to the dealer or another financier. As soon as the vehicle is registered in your name, the dealer should provide you with the original title application receipt from the Tax Assessor-Collector's office.
If you owe money on the vehicle, the original title will be sent to your financier. If you pay in full for the car when you purchase it, you will be mailed the original title.
Keep all payment receipts and other documents in a safe place. Do not keep them in the glove compartment. If the car is stolen, or if a dishonest dealer illegally repossesses the car, you will have no records of ownership or payment.
Make your payments on time. If the dealer or your Lender says that you can change the payment dates, or pay late, get it in writing. Get a receipt for each payment.
Texas dealerships have the legal right to repossess your car without prior notice, even in the middle of the night. Keep your records safe and up to date for your protection.