First Car Guide for First Time Car Buyers

Only from dealers

All new cars must  be purchased from state-licensed and manufacturer-authorized new-car dealers. It's the law.

The process

After deciding on the new car you want, you'll settle on a price with a dealer salesperson or sales manager. You'll sign a purchase agreement that specifies the price, other costs, fees, and taxes. If you have a trade-in vehicle, the agreement will show the trade credit you're receiving. If you're still paying off your loan on the old vehicle, your agreement form will show that amount as well (see Trade-in Tips). You will also sign an odometer statement certifying that the displayed mileage on your old car is correct and that you haven't tampered with the odometer.

About your credit
Dealers often check customers' credit rating to weed out those who can't afford to buy or lease. But it's the finance company who will do a more thorough credit check and make the final decision on your loan or lease approval. If you don't know your credit score, check with MyFICO.com.

The F&I guy

You'll visit the dealer's Finance and Insurance (F&I) manager's office where you'll finalize your purchase. The F&I manager is responsible not only for getting your paperwork done but to also try to sell you on extended warranties, service plans, paint sealant, fabric protectant, window etchings, security systems, credit insurance, disability insurance, and a host of other products or services that make the dealer more profit.

Buying with a loan

If you're buying with a loan, the agreement will show your loan terms, down payment, interest rate, monthly payment amount, and total costs. You may also sign a bailment agreement that essentially says that the dealer will arrange your loan financing for you with a finance company or bank of his choosing, and that if the finance company won't approve your loan, that you must return your vehicle or arrange other terms.

The paperwork

In most states, you'll also be asked for proof of insurance and supply a photo ID. You might be asked to complete a registration and tag application form as well. State and local laws may require you to sign other forms that are unique to your area.

Out the door

You'll write a check for your down payment, taxes, and other fees that are required to paid up front. You'll turn over keys to your trade vehicle. You'll probably be given a brief lesson in operating your vehicle, an explanation of the dealer's service facilities, a set of owner's manuals, and your keys. The salesperson will also explain how you'll be receiving a satisfaction survey from the car manufacturer, and that it's important that you complete and return it – with a perfect score, or course, for the dealership and salesperson.