Buying a New Vehicle

People needing a vehicle can choose between buying or leasing. The big difference is that when you buy a vehicle, you will own the vehicle. Even when you use financing to buy a vehicle, you own it subject to seizure if you fail to make payments.

In certain situations, a loan-financed purchase may give you greater flexibility than a lease agreement. One example might be if you come into some extra money and want to pay off your vehicle early. With a loan, you can pay out your obligations early, often without a penalty. Another could be if you run into financial difficulties and cannot make your payments. If you have trouble making payments, you can arrange to sell the vehicle and pay off the loan.

However, there may be some drawbacks to a new vehicle purchase...

• You will be responsible for maintenance and repair costs that are not covered by warranty while some leases cover these costs.
• Your monthly payments will likely be higher than for a lease.
• You may not have the same income tax deduction benefits as with a lease.
• While you will own the vehicle, it could be worth much less than you paid for it even after a short time.

Before you decide on a vehicle:

• research the vehicle you are considering buying to get information about things like the frequency of repairs and safety records for particular models
• check with other consumers to see if they are satisfied with their new car choices and the service they are receiving from the dealer
• shop around for the best price for the vehicle
• look for incentive deals that are generally only available for a limited time
• if you are financing, shop around for the best rate and compare the rate you would get at your own bank with the rate a dealer is offering

When you have decided to buy a vehicle:

• confirm that the dealer is licensed (you can check this here)
• ask if the price was advertised and if so what the advertised price is (dealers must stand by these prices)
• ask if the vehicle was damaged during transit or on the lot and, if so, the amount of damage (if it is more than 20% of the purchase price this must be disclosed)
• discuss each transaction separately starting with the value of your trade-in, if you have one, then the purchase price and finally the cost of financing
• find out the total cost including taxes, financing and any add-ons (dealers cannot charge for add-ons above an advertised price unless you have the option to decline the add-ons)
• read the contract, including the fine-print, and make sure it has all the required information in it as well as any other terms you and the dealer have agreed on