Money Talks, So Should You

Q&A: What questions should I ask when buying a car?

Mitch Marsden
by Mitch Marsden , NAPFA

Buying a car is often one of the largest single expenses the average American makes throughout life. It is very important to ask many questions and fully understand the financial ramifications of this event. Below are a few pointers on questions to ask and other investigative measures you should consider taking.

Have an independent mechanic complete an inspection. Unless it is new from a dealership with all the warranties, it is wise to have an independent third-party mechanic take a look at the car to get a better understanding of its strengths, weaknesses, future repairs or replacement needs, etc.  ven if you are a trained mechanic yourself, you may have someone else inspect it to give you an unbiased opinion. An inspection will cost a nominal fee, so be sure you are serious about the car in all other respects — the type, appearance, condition, age, feel, price, etc. Using vehicle history reports such as a CARFAX report can be helpful as a preliminary screen.

READ: How used cars can save you money

“Is that truly the best price you can give me?”  When it comes to getting the most bang for your buck, consider using this question or something similar as you negotiate the final price. It is very simple, but can save hundreds of dollars. Besides, if the seller isn’t willing to lower the price further, you certainly have lost anything by asking. 

Get a good understanding of the financing terms. If you are financing it through the seller or through some other financial institution be sure to understand the loan amount, the interest rate, monthly payment, the term and any other loan origination fees. Don’t sign paperwork before understanding each of these. Lenders are required by law to disclose these items clearly to consumers.

Shop around both for the car and financing options. A little bit of effort on these fronts can yield some savings and make the decision even more financially sound for you. In today’s lending environment, dealers with special financing terms may have the most attractive rates, but don’t be afraid to check at your bank, local credit union or other institutions to get the best available.

WATCH: How to buy a used car

Ask about the warranties that are (or aren’t) provided. Most private sales will not include any sort of warranty, but it is still important that this is made clear. When buying from a dealer, ask about the details of the warranty such as the length of coverage, what parts are covered, what kind of repairs or replacements are covered and whether or not anything is specifically excluded or has different terms from the overall warranty.

If a private purchase, work with your local DMV to ensure the transaction is completed legally. Problems can crop up if the sale is not completed with the appropriate paperwork to formalize the transaction and effect the change of title. Your DMV will be happy to provide you with instructions regarding the needed documents, insurance requirements and any applicable taxes and registration fees.



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Mitch Marsden is a member of the National Association of Personal Financial Advisors (NAPFA), a fee-only professional association and a Dimespring knowledge partner.