Buying a Vehicle

This guide offers advice for each step of the complicated process of buying a new or used vehicle.

Also learn about your rights under Oregon’s Lemon Law.

Before You Go to the Dealer

1. Know the fair purchase price.
   • Edmunds » and Kelley Blue Book » are resources to compare different cars and how much you should expect to pay for them.
2. Do the math.
   • Before going to a dealer, calculate the most you want to spend and then figure out what monthly payments fit your budget. If you negotiate based solely on what you can pay per month, you may end up paying more over the life of the loan.
3. Research your financing options.
   • Often, the best rate is available when the manufacturer is offering special rates. If you are not looking to purchase a new car during a sales event, or are looking to purchase a used car, check financing rates with your bank or credit union. You may be able to pre-qualify with a bank or credit union before you visit the dealer.
4. Know your score.
   • Knowing your credit score will help you determine if you may qualify for better financing.
5. Choose a dealer you trust.
   • Before you do business with anyone, check our Consumer Complaints Database » to see if others have reported problems.

Negotiating the Deal

1. Everything is negotiable.
   • Keep in mind that everything is on the table, this includes:
     • the price of the vehicle
     • the trade-in value of your current vehicle
     • financing options
     • insurance and service contracts
2. Buying a car includes multiple transactions.
   • Buying your new car, selling your old car and financing your new car are three separate steps in the transaction. Approaching your purchase this way will help you understand what you are paying for.
3. Get the best interest rate.
   • Put your research to work. Always ask the dealer if the interest rate being offered is the lowest available. You can even inquire how much the dealer profits.
4. Don’t lower your monthly payments by opting for a longer loan term.
   • It may seem like a good idea, but it could cost you thousands of dollars in interest over the term of the loan. Plus, vehicles lose value the moment they leave the lot and continue to do so every year after. The longer the term of the loan, the more likely it is for the value of the car to fall below the amount left on the loan. This creates “negative equity.” If you sell or trade-in a vehicle and you owe more than it is worth, you have to pay off the negative equity.

We offer the following advice:

1. Take notes.
   • Once you have agreed on a price with a dealer, make written notes of what the agreement is and make sure to include the cost of each item.
2. Bring a calculator.
   • Compare the agreed-upon prices with the prices listed in the purchase agreement. Make sure they match before signing anything. For example, you may think you are getting a great deal on your trade-in, but in exchange the dealer may have increased your interest rate.
3. Take someone with you.
   • Two people are less likely to miss something.
4. Do not believe that additional products or services are free or included in the cost of the car.
   • Verify there are no hidden charges or fees before you start signing the documents.
5. Be cautious of aftermarket add-ons or treatments offered by the dealer.
   • Consider your needs. Some add-ons are unnecessary, or significantly overpriced, and may greatly increase the price or cost of your overall financing.
6. Ask for a copy of the purchase agreement and Retail Installment Contract.
   • It is your right to keep a copy of every document you sign.
7. Request a vehicle history report.
   • If purchasing a used vehicle, search it’s vehicle identification number for information about the car.

Closing the Deal

1. Be prepared to walk away.
   • You have no obligation to sign a contract – especially if its terms have changed.
2. Make sure that all promises are in writing.
   • If a contract has terms substantially different from what the salesperson initially promised, do not sign the contract unless you are willing to accept the new terms.
3. Take your time.
   • Do not let anyone rush you to sign paperwork without reviewing the terms of the agreement. Read all documents and understand all terms before you commit to them.
4. Get an expert opinion.
   • If you are purchasing a used vehicle, have it inspected by a trusted mechanic. This may cost $100 or more, but could save you thousands in the long run. Be wary of any dealer who resists an independent inspection.
5. Do not lie.
   • Do not allow false information on any forms. Beware of any salesperson who suggests putting false information, such as a higher income, a larger down payment, or false living expenses on your finance application. If something goes wrong, you will be held accountable for that false information.
6. Do not sign a blank contract or application.
   • Do not sign anything that contains blank spaces – especially on contracts or credit applications. Draw a line through all blanks on any document you sign.
7. Free DEQ Emissions Test.
   • A used vehicle in good condition will still fail an emissions test if the exhaust sensors have been tampered with or disabled. Visit a DEQ Clean Air Station during a test drive and ask for a free, “voluntary,” test.
8. Processing the paperwork.
   • A purchaser of a vehicle may negotiate the amount of the document processing fee with a vehicle dealer, but in no case shall the document processing fee charged by a vehicle dealer exceed: (a) $250, if the vehicle dealer uses an integrator; or (b) $200, if the vehicle dealer does not use an integrator (see ORS 822.043 »).
   • If a vehicle dealer charges a document processing fee and uses an integrator, $35 of the fee collected must be paid to the integrator.
9. State taxes regarding vehicle sales
   • State taxes assessed to Oregon dealers, which may be passed along to consumers. These are not taxes assessed by the state to vehicle buyers and should not be listed as government taxes on your purchase paperwork.
     1. Corporate Activity Tax (CAT) »: Oregon vehicle dealers charged this tax may pass the cost of the CAT on to consumers who purchase vehicles from them.
     2. Vehicle Privilege Tax »: Vehicle dealers in Oregon are responsible for paying the one-half of one percent (0.005) Vehicle Privilege Tax on the retail sales price of each taxable vehicle sold. Dealers may collect the amount of the tax from the buyer in the same manner and at the same time as the collection of document processing fees. Not all vehicles are taxable.
     • This practice is called “spot delivery.” It is designed to lock you in to a purchase. If you are tempted to do this, take a moment to read up on the Yo Yo Scam ». There is no 3-day right of rescission for a car purchase or lease, even if you do not yet have final approval of financing. However, if you cannot get financed at the exact same terms for which you signed an agreement, or if financing is not complete within 14 days, you must bring the car back to the dealer and the dealer must give you back your trade-in vehicle and down payment.
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