The Consumer Action Handbook

price from the original owner
who knows the car’s service and
repair record. But private sellers
generally have less
responsibility than dealers
for defects or other problems.
● Check with your state’s
motor vehicle department
on what paperwork you
will need to register a
vehicle.
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● Make sure the seller isn’t
a dealer posing as an
individual.That might
mean the dealer is trying to
evade the law and might be
an indicator of problems
with the car. Look at the
title and registration. Make
sure the seller is the registered
owner of the vehicle.
● Ask the seller lots of
detailed questions about
the car.
Car Leasing
When you lease, you pay to
drive someone else’s vehicle.
Although leasing can involve
lower monthly payments than a
loan, at lease end, you still have
no ownership or equity in the
car. The Consumer Leasing Act
requires leasing companies to
disclose standardized information
to lease customers. In
addition to the information disclosed
on a standardized form,
you should always ask for an
itemization of the capitalized
cost. Shop as if you’re buying a
car. Negotiate all the lease
terms, including the price of the
vehicle. Lowering the lease
price will help reduce your
monthly payments. Get all the
terms in writing.
Ask about standards for
wear and use. Dings that you
may regard as normal wear and
tear may be billed as significant
damage at the end of your
lease. Ask the dealer to give
you an example of the early
termination charges, for
example, if the car is totaled six
months after the lease is
signed. Expect to pay a substantial
charge if you give
the car up before the end of
your lease. Most leases allow
you to drive 12,000 to 15,000
miles a year. Expect a charge
of 10 to 25 cents for each additional
mile. Make sure the manufacturer’s
warranty covers the
entire lease term and the number
of miles you are likely to
drive. Get every item of equipment
listed on the lease.
Otherwise, you could be
charged for “missing” equipment
at the end of the lease.
Before you sign the deal,
take a copy of the contract
home and review it carefully
away from any dealer pressure.
Be alert for any charges
that were not disclosed at the
dealership, like conveyance, disposition,
and preparation fees.
Make sure you got credit for any
trade-in. You do not have an
automatic three-day right to
cancel a lease after you sign
it. When you finance a car, the
finance charge must be stated
as an Annual Percentage Rate
(APR). There is no similar
requirement for disclosing the
cost of leases. “Lease rates”
or “money factors” do not
have standardized definitions
and are not equivalent
to an APR.
Auto Service Contracts
Dealers may try to sell you an
auto service contract or
“extended warranty” when
you buy a new or used car. A
warranty comes with a new car
and is included in the original
price of the vehicle. A service
contract is sold separately and
is a promise to pay for certain
repairs or services. Service
contracts are usually highprofit
add-ons, costing hundreds
to more than $1,000. The
service contract may duplicate
warranty coverage you get from
the manufacturer or dealer. Ask
these questions:
● Does the dealer, manufacturer,
or an independent
company back the service
contract?
● What happens to your coverage
if the dealer or
administrator goes out of
business?
● How are claims handled?
● Can you choose among several
service dealers or
repair centers or do you
have to return to one dealer?
● Is your car covered if it
breaks down on a trip or if
you move out of town?
● Do you need prior authorization
for repair work?
Common repairs for parts
like brakes and clutches
Credit and Sublease Brokers
These are con artists who prey on people who have bad credit and cannot get car loans.
“Credit brokers” promise to get a loan for you in exchange for a high fee. In many cases, the
“broker” takes the fee and disappears.
“Sublease brokers” charge a fee to arrange for you a “sublease” or “take over” someone else’s
car lease or loan. Such deals usually violate the original loan or lease agreement. Your car can be
repossessed even if you’ve made all of your payments. You also might have trouble insuring your car.