Shopping for a new car can be an overwhelming task. A new vehicle purchase is considered the second

most expensive purchase for consumers after a home. It is important that consumers thoroughly research a

price and still make a profit. Check publications at a library, at a bookstore, or on the Internet such as

www.edmunds.com or www.kelleybluebook.com to obtain the invoice price for specific models. If freight

is already included in the invoice price, make sure freight is not added again to the sales contract. The

invoice price should be your starting point from which you determine what to pay for the car.

Check for Rebates

It is important for new car purchasers to deduct from the invoice price all rebates that they are qualified to

receive. Check the newspaper or Internet sources such as www.kelleybluebook.com or

www.edmunds.com for current rebates. Some rebates may not be available if a consumer chooses a

manufacturer’s special financing rate. Additionally, special manufacturer financing may only be available

help assist consumers in determining whether to choose a manufacturer's rebate or special financing.

The Monroney Sticker Price

Consumers should not purchase the car based on the sticker price affixed to the car at the dealership.

Rather, consumers should negotiate up from the invoice price. The Monroney Sticker Price shows the

manufacturer's suggested retail price (MSRP), the base price, the manufacturer's installed options with the

manufacturer's transportation charge, and the fuel economy mileage. The MSRP is required by federal law

and is affixed to the vehicle.

Supplemental Sticker–Take Caution

always go into the dealership knowing the invoice price for the specific model and options they are

seeking to purchase. Knowing the invoice price, minus any applicable rebates, gives consumers a starting

point from which to begin negotiations. Consumers can find out the car invoice cost by researching

publications through a variety of sources. Check publications at a library, at a bookstore, or on Internet

sites such as www.edmunds.com or www.kelleybluebook.com to obtain the invoice cost for specific

models and options.

source, consumers should obtain financing quotes from their local banks, credit unions, and Internet sites

such as www.bankrate.com.

By obtaining their credit report and shopping for the lowest financing source, consumers will protect

themselves from being charged an unreasonable and unnecessarily high interest rate when purchasing a

new car. Vehicle purchasers have every right to finance a new car with a lender that is not associated with

the dealership.

Dealer-Arranged Financing–Get the "Buy Rate"

When a dealer arranges car financing for a consumer with a bank or other credit provider, the interest rate

for arranging financing ("yield spread premium"). If you finance through the dealer, you want the "buy

rate." Ask the dealership to disclose to you, in writing, both the "buy rate" and the "yield spread

premium."

Consumers should compare financing quotes from the dealer with quotes from their local banks, credit

unions, and the Internet, and choose the lowest annual percentage rate.

Taxes, Title, and Doc Fees

Under Illinois law, a dealer may add to the contract a "documentary fee" for processing documents and

performing services relating to the closing of the sale, as well as taxes, license, and title fees. However, the

one. Consumers should not discuss the trade-in of their vehicle until after the purchase price of the

new car is finalized. It is extremely important to keep the trade out of the new car purchase negotiation.

Learn the value of your trade-in vehicle before you go to the dealership. Check with lending institutions or

on Internet sites such as www.kelleybluebook.com or www.edmunds.com.

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Therefore, the dealer may inflate the trade-in price. However, the dealer may also inflate the purchase

price. This practice is commonly referred to as the "double bump." This is especially likely to happen

when you owe more money on your trade-in than it is worth and the dealer is attempting to demonstrate to

a lender an equity that does not exist. The result is that you will be deeper in debt.

After the Sale

After consumers have negotiated the sale price of the purchased vehicle, dealerships will attempt to sell

products and options such as rust proofing, scotch guard, gap insurance, credit life and disability

insurance, pin striping, window etching, and floor mats. These extra options are usually highly inflated to

maximize dealer profit and may not be advisable for purchase. If a dealer informs you that a bank or

lending institution is requiring purchase of any of these "after sale" products, ask the dealership to

put this demand in writing.

Extended Service Contract

A service contract or extended service contract may be offered to the purchaser to provide for the repair of

three years, a service contract is unnecessary and will cost you extra money. Do your homework and know

exactly what you want in a vehicle to avoid being haggled by the dealer.

Extended service contracts are a high-profit item for the dealer. For example, an extended service contract

may cost the purchaser $1,500; however, it might cost the dealer only $500. Like other products at the

dealership, extended service contracts may be negotiable—ask the dealer for their cost and negotiate.

Spot Delivery

Consumers utilizing dealer-arranged financing should not sign a financing contract or take possession of a

vehicle if there is any doubt concerning the approval of the lender. In a practice known as "spot delivery,"

dealers agree to take a down payment and allow the buyer to take the car home before financing is

finalized. Before executing a financial contract and taking possession of the purchased vehicle, consumers

should demand that the dealership put in writing that the financing from the dealer-arranged lender is

finalized.

back and walk away with their deposit and trade-in with no obligation. Instead, the psychological effect

this practice has on purchasers makes them think they are obligated to put more money down, find a

cosigner for the vehicle, or find another car, when in fact there is no obligation to do any of these things.

Consumers should be aware that, under Illinois law, if the purchase of a vehicle is conditioned on the

purchaser having an acceptable credit rating to the dealer and the dealer can not obtain financing for the

consumer at the contracted terms, the dealer must return to the purchaser any down payment or trade-in

under the contract. Consumers do not have to bring additional money for the down payment, pay a

higher interest rate, or find a cosigner. If the dealership does not secure financing at the contract terms,

Illinois law requires consumers to return the car to the dealership and requires the dealer to return to the

offer a right to cancel.

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