FTC Buying New

8/9/2019 FTC Buying New

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Facts for Consumers

Because the price is a factor in thedealer’s calculations regardless of whetheryou pay cash or finance your car — and alsoaffects your monthly payments — negotiating

the price can save you money.Consider ordering your new car if you don’tsee what you want on the dealer’s lot. Thismay involve a delay, but cars on the lot mayhave options you don’t want — and that canraise the price. However, dealers often wantto sell their current inventory quickly, so youmay be able to negotiate a good deal if an in-stock car meets your needs.

LEARNING THE TERMS

Negotiations often have a vocabulary of theirown. Here are some terms you may hear whenyou’re talking price.

Invoice Price is the manufacturer’s initialcharge to the dealer. This usually is higherthan the dealer’s final cost because dealersreceive rebates, allowances, discounts, andincentive awards. Generally, the invoiceprice should include freight (also known as

destination and delivery). If you’re buying acar based on the invoice price (for example,“at invoice,” “$100 below invoice,” “twopercent above invoice”) and if freight isalready included, make sure freight isn’tadded again to the sales contract.

Base Price is the cost of the car withoutoptions, but includes standard equipment andfactory warranty. This price is printed on theMonroney sticker.

Monroney Sticker Price (MSRP) showsthe base price, the manufacturer’s installedoptions with the manufacturer’s suggestedretail price, the manufacturer’s transportationcharge, and the fuel economy (mileage).Affixed to the car window, this label isrequired by federal law, and may be removedonly by the purchaser.

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Dealer Sticker Price, usually on asupplemental sticker, is the Monroney stickerprice plus the suggested retail price of dealer-installed options, such as additional dealer

markup (ADM) or additional dealer profit(ADP), dealer preparation, and undercoating.

FINANCING YOUR NEW CAR

If you decide to finance your car, be aware thatthe financing obtained by the dealer, even if thedealer contacts lenders on your behalf, may notbe the best deal you can get. Contact lendersdirectly. Compare the financing they offer youwith the financing the dealer offers you. Because

offers vary, shop around for the best deal,comparing the annual percentage rate (APR)and the length of the loan. When negotiating tofinance a car, be wary of focusing only on themonthly payment. The total amount you will paydepends on the price of the car you negotiate, theAPR, and the length of the loan.

Sometimes, dealers offer very low financingrates for specific cars or models, but may not bewilling to negotiate on the price of these cars.

To qualify for the special rates, you may berequired to make a large down payment. Withthese conditions, you may find that it’s sometimesmore affordable to pay higher financing chargeson a car that is lower in price or to buy a car thatrequires a smaller down payment.

Before you sign a contract to purchase or financethe car, consider the terms of the financing andevaluate whether it is affordable. Before you driveoff the lot, be sure to have a copy of the contract

that both you and the dealer have signed and besure that all blanks are filled in.

Some dealers and lenders may ask you to buycredit insurance to pay off your loan if youshould die or become disabled. Before you buycredit insurance, consider the cost, and whetherit’s worthwhile. Check your existing policies toavoid duplicating benefits. Credit insurance is notrequired by federal law. If your dealer requires

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Facts for Consumers

Before you negotiate the price of your next new car, use this worksheet to establish the

bargaining room.

Model____________________________

Worksheet for Buying a New Car

Options:

Transmission: Automatic ___ Manual ___ . ____________

Air Conditioning ............................................ ____________ ____________

Engine: Size ________ ............................. ____________ ____________

Audio System:

AM-FM ___w/cassette ___ w/CD___ ___________ ____________Brakes: Antilock ___ Power-assisted ___ ... ____________ ____________

Power Locks................................................... ____________ ____________

Seats: Power ___ Heated ___ Leather ___ .. ____________ ____________

Rear Window: Wiper ___ Defroster _____ ..

Wheels and Tires:

Alloy Wheels ....................................... ____________ ____________ All Season Tires ......................... ___________ ____________

Mirrors and Lights:

Illuminated Dual Vanity Mirrors ....... ___________ ____________ Map Lights ................................. ___________ ____________ Exterior Power Mirrors ................. ___________ ____________

Alarm System................................................. ____________ ____________

Cellular Telephone ......................................... ____________ ____________

Remote Keyless Entry ................................... ____________ ____________

Sunroof ........................................................... ____________ ____________

Other: ............................................ ___________ __________________ ............................................ ___________ __________________ ............................................ ___________ ____________

______ ............................................ ___________ ____________ Totals.............................................. ___________ ____________

Invoice Price* Sticker Price

Base Price_______________________

*You can get the invoice price by looking at the dealer’s invoice or reviewing car publications.



Facts for Consumers

FOR THE CONSUMER1-877-FTC-HELP

ftc.govFEDERAL TRADE COMMISSION

February 2006

Federal Trade Commission

Bureau of Consumer Protection

Division of Consumer and Business Education

you to buy credit insurance for car financing, itmust be included in the cost of credit. That is, itmust be reflected in the APR. Your state AttorneyGeneral also may have requirements about credit

insurance. Check with your state InsuranceCommissioner or state consumer protectionagency.

TRADING IN YOUR OLD CAR

Discuss the possibility of a trade-in only afteryou’ve negotiated the best possible price for yournew car and after you’ve researched the valueof your old car. Check the library for reference

books or magazines that can tell you how muchit is worth. This information may help you get abetter price from the dealer. Though it may takelonger to sell your car yourself, you generally willget more money than if you trade it in.

CONSIDERING A SERVICE CONTRACT

Service contracts that you may buy with anew car provide for the repair of certain partsor problems. These contracts are offered by

manufacturers, dealers, or independent companiesand may or may not provide coverage beyondthe manufacturer’s warranty. Remember that awarranty is included in the price of the car while aservice contract costs extra.

Before deciding to purchase a service contract,read it carefully and consider these questions:

What’s the difference between the coverage

under the warranty and the coverage underthe service contract?

What repairs are covered?

Is routine maintenance covered?

Who pays for the labor? The parts?

Who performs the repairs? Can repairs bemade elsewhere?

How long does the service contract last?

What are the cancellation and refundpolicies?

TO FILE A COMPLAINT

The FTC works for the consumer to preventfraudulent, deceptive, and unfair businesspractices in the marketplace and to provideinformation to help consumers spot, stop,and avoid them. To file a complaint or to getfree information on consumer issues, visitftc.gov or call toll-free, 1-877-FTC-HELP(1-877-382-4357); TTY: 1-866-653-4261. TheFTC enters Internet, telemarketing, identity theft,and other fraud-related complaints into ConsumerSentinel, a secure, online database available tohundreds of civil and criminal law enforcementagencies in the U.S. and abroad.

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FTC Buying New

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