Frequently asked questions about owning a vehicle
What's a fair price to pay? Invoice, Sticker, or somewhere in between?
There is no one set price when shopping new vehicles. Sometimes manufacturers will offer customer or dealer incentives. Because of this you can often find new vehicles for sale at under invoice price. At the same time, some vehicles are in very high demand and may command sticker price or above. The best way to guarantee the price you are paying is fair it to shop it to several dealers or buying services, and check out the web sites that we recommend. This way you can find out what the recommendations are, compare dealer and website offers and select the best one.
Should I lease or should I buy?
Leasing vehicles used to be the sole domain of large corporations and fleet buyers, but today it has become an attractive alternative for the average consumer. However, leasing is not for everyone. Here are some guidelines:
Why are car lease payments lower than loan payments?
- Leasing is most beneficial to those who claim their car as a business expense.
- A large down payment isn't required for most leases, and monthly lease payments also are generally lower than a loan payment for an equivalent car.
- While monthly payments may be lower on a lease, in the long run it is usually cheaper to buy and keep cars five years or longer.
- Lease now, buy later? To lease a car for a few years and then buy it at the end of the lease is probably more expensive than buying it in the first place.
- Most leases are for two or three years. Avoid leases that run longer than the car's factory warranty.
With rare exceptions, every new car or truck depreciates--goes down in value--as soon as you drive it off the lot, and continues to depreciate with age and as you add miles to it.
Lease payments cover only the portion of the vehicle's value that you use during the time you drive it--the depreciation--not its entire cost. Finance charges are tacked on to your payment and most states charge sales tax on your payment amount.
When you buy a car with a loan you are responsible for paying its full cost, plus finance charges and the entire sales tax required by your state. Depending on your downpayment or trade-in value of another car, that can result in higher payments than for a lease, even if you obtain a long term loan.
How do I determine true Dealer cost?
The first thing you have to do is check out our recommended websites and select the car you want and the equipment. As you are doing so you will receive the MSRP and Dealer Invoice prices for the car and chosen options. You may also receive the current rebate that you are entitled to. Copy this information down. When you are finished completing the quote process you will be able to figure out dealer cost using the following formula:
Dealer Invoice + Destination Charge + Options - Holdback = True Dealer Cost
True Dealer Cost + taxes/Licensing - Rebate = Your on the road price.
What is the difference between the MSRP and Dealer Sticker Price?
Monroney Sticker Price (“ MSRP ”) shows the:
- Base price
- Manufacturer's installed options with the manufacturer's suggested retail price
- Manufacturer's transportation charge
- Fuel economy (mileage)
Affixed to the car window, this label is required by federal law, and may be removed only by the purchaser.
Dealer Sticker Price,usually on a supplemental sticker, is the Monroney sticker price plus the suggested retail price of dealer-installed options, such as additional dealer markup (ADM) or additional dealer profit (ADP), dealer preparation, and undercoating.
What should I look out for if I'm considering a car loan?
If you decide to finance, make sure you understand the following aspects of the loan agreement before you sign any documents:
- The exact price you're paying for the vehicle
- The amount you're financing
- The finance charge (the dollar amount the credit will cost you)
- The APR (a measure of the cost of credit, expressed as a yearly rate)
- The number and amount of payments
- The total sales price (the sum of the monthly payments plus the down payment)
Is there a "cooling off period" where I can return a car I purchased?
Do I have to purchase credit insurance to get a car loan?
Dealers aren't required by law to give used car buyers a three-day right to cancel. The right to return the car in a few days for a refund exists only if the dealer grants this privilege to buyers. Dealers may describe the right to cancel as a "cooling-off" period, a money-back guarantee or a "no questions asked" return policy. Before you purchase from a dealer, ask about the dealer's return policy, get it in writing and read it carefully.
Possibly. Some dealers and lenders may ask you to buy credit insurance to pay off your loan if you should die or become disabled. Before you buy credit insurance, consider the cost, and whether it's worthwhile. Check your existing policies to avoid duplicating benefits.
Credit insurance isn't required by federal law. If your dealer requires you to buy credit insurance for car financing, it must be included in the cost of credit. That is, it must be reflected in the APR. Your state Attorney General also may have requirements about credit insurance. Check with your state Insurance Commissioner or state consumer protection agency.