GARDINER – In advance of Presidents’ Day auto sales events, Maine’s Bureau of Consumer Credit Protection is encouraging consumers to evaluate vehicle financing options and to understand their rights.
“For most of us, a new or used vehicle is the second-largest purchase we’ll ever make, second only to buying a home,” said David Leach, Principal Examiner at the Bureau. “We encourage the thousands of Maine residents who will visit auto dealerships during the upcoming sales to become familiar with financing details and their rights as consumers.”
The Bureau outlined key facts and recommendations to keep in mind when considering a vehicle purchase from one of Maine’s many reputable auto dealers. Additionally, the agency is making a “Downeaster Guide to Consumer Credit” available by calling 1-800-332-8529 or visiting www.Credit.Maine.gov and clicking on “Consumer Guides.” It’s a valuable source of information about financing various purchases and dealing with credit in general.
1) Assess your personal finances before you buy. Understanding what you can afford is an important starting point. Don’t commit too much of your income and savings at the expense of your household obligations over a four, five or six year auto contract.
2) Learn all you can about the car or truck you want to purchase. Various magazines, books and reliable internet sites offer reviews of mechanical reliability, overall owner satisfaction, pricing information, and depreciation rates of cars and trucks. Many dealerships also list their inventory and prices online.
3) Compare sources of credit. Contact your local bank or credit union to determine their loan rates for new and used vehicles, and determine the available annual percentage rate (APR) and other credit terms. Then compare the APR and terms to those offered by the dealer. Negotiate the vehicle price first, then use the information from lenders to separately evaluate credit plans available from the dealership.
4) Get the best price for your trade-in. Using print and internet sources, gain a clear understanding of the value of your trade-in to help you negotiate all aspects of the transaction with the dealership.
5) Limit the repayment term. Some dealers now offer 7-year financing. Consumers should consider whether the vehicle last that long, and avoid financing for longer than its useful life. While monthly payments may be lower with a longer contract, more interest will be paid over time.
6) Avoid no-money down financing, if possible. Making a down payment of at least 20% toward the vehicle’s sale price will help minimize the chance you’ll owe more than it’s worth. If you need to sell the car, a down payment may help you to break even or even get some equity out of the sale.
7) Understanding your rights. The law does not provide a return policy or “cooling off” period for an auto purchase. Once a deal is finalized, you do not have the legal right to change your mind and cancel the contract. Make sure you are comfortable with all aspects of a transaction before agreeing to the purchase.
“Maine has many outstanding auto dealerships that provide excellent service to consumers. Dealers respect knowledgeable shoppers and are generally willing to work with them to arrive at a deal that is acceptable to both the consumer and the business,” Leach added. “Buying a car should not be an impulse purchase.”