car buying and leasing made simple

8/14/2019 Car Buying and Leasing Made Simple

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CAR BUYINGOR LEASING

MADE SIMPLE

prepared and distributed by:AUTOCAP (Automotive Consumer Action Program)

1-800-522-3881

a program of the greater new yorkautomobile dealers association

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a guide to car buying or leasing vehiclesfrom a franchised new car dealer.

know your:needs, product, finances, dealer, rights



this brochure was published bythe greater new york auto

dealers association



Table of Contents

introduction ........................... 2

step #1: know your needs ............ 3

step #2: know your product ......... 5

step #3: know your finances ........ 6

buying vs. leasing ................... 6

buying .................................. 8

leasing ................................. 9

step #4: know your dealer ......... 11

step #5: know your rights ......... 13

some closing advice ................. 15

glossary ............................... 16

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Multiple makes and models….countless options….dozenso dealerships…extended service contracts…budgetcalculations…price negotiations…trade-ins… nancing…

So many actors go into the selection and purchase o a car ortruck today that prospective buyers, regardless o how auto-savvy they may be, should always educate themselves be oregoing to a showroom, or contacting an Internet buying service.The one piece o advice that consistently pays o is:

BE YOUR OWN CONSUMER ADVOCATE:DO YOUR HOMEWORK!

In short, use any and all resources available to help you get the

vehicle o your dreams.• Check out recent automotive trade magazines, consumer

publications and manu acturer and ranchised dealerInternet websites;

• Collect brochures on your avorite makes and models;

• I you are interested in a used vehicle, or are consideringa trade-in, gather current market acts and gures romthe N.A.D.A. Used Car Guide (www.nadaguides.com);

• Take advantage o the services available to researchthe history o the used car you’re looking at, to avoid

surprises later on;• I the timing is right, visit your local auto show (s), where

you can look, touch, and examine a wide cross-section ovehicles under one roo ;

• Choose your dealer wisely and use your accumulated

knowledge to maximize your working relationship withyour salesperson;

• Test drive each vehicle with your driving habitsand conditions in mind; and nally,

• Buy rom a licensed, ranchised dealer.

Franchised dealers o er consumers thegreatest number o consumer protectionsrequired by the Department o MotorVehicles, the O ce o the AttorneyGeneral, and regional ConsumerA airs agencies.

“

”

An educatedconsumer is our

best customer-sy syms



Be ore heading out to purchase or lease your new or used caror truck, it’s vital to de ne your ideal vehicle. The primary areasto consider are:

Size

• Compact • Mid-size • Large

• Minimal trunk space • Maximum trunk space• Roo rack • Do you have speci c interior space needs?• Is your garage/driveway space adequate?

Style

• 2-door • 4-door • Hatchback • Luxury• Station wagon • Sport Utility Vehicle (SUV)• Minivan • Bucket or Bench seating • Split rear seat• Leather or Cloth • Handicap Accessible• Crossover• Color (Both interior & exterior)• Crossover

Usage

• Primary vehicle • Secondary vehicle• Business travel• Pleasure vehicle • Daily commuting• Long trips/vacation

Function

Engine Power• 4 Cylinder • 6 Cylinder • 8 Cylinder• Gasoline • Diesel• Alternative Fuel (hybrid, electric, etc.)

Traction:• Front-wheel drive• Rear-wheel drive• Four-wheel drive

Transmission:• Manual ( or uel economy)• Automatic ( or ease in tra c)• CVT (continuously variable

transmission)• Is uel economy important?• Will you be towing a boat or

trailer?

STEP #1:KNOW YOUR NEEDS #

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Safety

• Anti-lock brakes • Child proo door locks• Night vision • Backup warning system• Fog lights • Air bags ( ront & side)• Automatic seat belts • Daytime running lights• Navigation System

Comfort

• Air conditioning • Cruise control

• Power steering • Power windows• Tinted glass • Remote entry• Adjustable steering wheel

• Remote trunk release• Adjustable/Power/Heated seats

Special Options

• Extended service contract • Tire/Wheel protection• Paint sealant • Sun roo /Moon roo• Rust proo ng or undercoating• Fabric protection• Alarm (Passive or Lo-Jack)• Sound system (CD, MP3 or satellite radio)• The t Deterrent System (VIN Etching)

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Playing the Rating Game

Once you’ve established your needs, the next step is tonarrow down your choices. To see how a vehicle meets yourrequirements, you will want to evaluate it in terms o exterior,interior, and drivability. Rate each category 1 through 5, with 1having the highest rating.

OUTSIDE INSPECTION

• Paint • Tires • Roo rack • Undercarriage• Overall appearance • Windows/Windshields

• Bumpers • Side View Mirrors

INTERIOR INSPECTION

• Upholstery & Carpeting• Controls & Sa ety Features

THE ROAD TEST: IN SEARCH OFS.A.T.I.S.F.A.C.T.I.O.N.

____ Steering: How does the vehicle react to turns o thewheel?

____ Acceleration: Does the vehicle accelerate evenly andwith su cient power?

____ Transmission: Does the vehicle shi t smoothly?

____ Instrumentation: Is the instrument panel easy toread while driving?

____ Seats & Seat Belts: Are they com ortable?____ Foot Brakes: Do they engage quickly and stop the

vehicle smoothly?

____ Accessories: Do turn signals, mirrors, headlights,gearshi t, horn etc. meet your standards?

____ Climate Control: Do both the air conditioner andheater work e ectively?

____ Turning Radius: Is the vehicle easy to maneuverand park?

____ Interior Lighting: How does it measure up in termso brightness and location?

____ Operation: Is driving the vehicle a pleasurableexperience?

____ Noise Level: How quiet is the overall ride?

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STEP #2:KNOW YOUR PRODUCT



APPLYING FOR CREDIT

Today, most o new-vehicle purchases rely on some ormo credit, o ten arranged through the selling dealer. Dealer

nanced loans or leases o ers a number o advantages:

1: The convenience o one-stop shopping2: Competitive rates3: Access to multiple sources or credit4: Access to exclusive nancial incentive programs rom the

manu acturers.

BUYING VS. LEASING

You’ll probably want to buy i :

1: You drive more than 15,000 miles a year. • When you purchase a vehicle there are no mileage

restrictions. A lease contract will normally lock you intoa speci c mileage limit, usually 10,000 – 15,000 milesa year. You will also pay a charge per mile or anymileage exceeding the contractual amount.

2: You want to own the vehicle.

• Buying allows you to obtain title to the vehicle. In alease transaction the title remains in the lessor’s name.

3: You plan to modi y the vehicle in some way. • Most lease contracts restrict lessees rom making

modi cations to the vehicle.

When does the “greatest vehiclebargain in the world” cease to be abargain?

When it exceeds your budget.The rule o thumb is:1: Be realistic and always ocus on

your bottom-line.

2: Consider your payment options:leasing, paying cash, or nancing.3: Take your time making your nal

decision.

STEP #3:KNOW YOUR FINANCES

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You’ll probably want to lease i :

1: You pre er lower monthly payments and desire fexibility

in designing a payment schedule; • Leasing allows you to in e ect “rent” the vehicle or

a limited period o time. Since you are only paying othe vehicle’s depreciation during the lease term, plus“rent” charges, monthly payments are lower!

2: You like to drive a “new” vehicle a ter two, three, or ouryears o operation. • Lease contracts allow you to simply return the vehicle

at lease end. However, most leases include a purchaseoption.

3: You want to put little or no money down. • Most lease o ers ask or little or no money down.

Whereas a nanced purchase requently requires asubstantial down payment (up to 20% o the totalprice). Leasing allows you to invest that moneyelsewhere.

Balloon Financing -What is it?

Balloon nancing allows you to make payments as you wouldin a lease – based on the depreciation o the vehicle, notthe total cost - resulting in lower monthly payments thantraditional nancing. At the end o the nancing term, youhave our options:

1: Re nance the remaining cost,

2: Buy the vehicle by paying the outstanding balance(the balloon)

3: Sell the vehicleto pay o theoutstandingbalance andkeep any pro t

or yoursel ,4: Return the vehicle

and pay the agreed upondisposal ee, plus any othercharges that may apply.

Whether you buy orlease, remember toconsider all of youroptions and make

the choice that bestsuits your needs.



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BUYING

To be well prepared, you’ll want to put together apersonalpurchase plan. But be ore you start crunching numbers,keep the ollowing in mind: your trade-in+, scheduledmaintenance++, and consumer elected options

The next step is to determine exactly what you can a ordin the way o :

Price o vehicle $__________(include service contract)

Tax, registration, and +__________state inspection ee

Total =__________

Less down payment or trade -___________

Less Rebates/Coupons -___________

Total amount fnanced =__________

Annual percentage rate (APR)* x__________

Length o loan (# o months) ÷__________

Monthly payment =__________

Cost o insurance (monthly) +__________

Fuel & maintenance (monthly) +__________

Using these fgures as a guide,this is your total estimated

monthly expense: $__________

*Many banks include an amortization program on their websites. This will allow you to

calculate your monthly payment based on annual percentage rates.+Trade-in advantages: Trading in your old vehicle to a ranchised dealer can save you time,e ort and advertising expense. Also, you will save on sales tax because the trade- in issubtracted rom the price o the new vehicle be ore the sales tax is computed!

++Scheduled maintenance: Be sure to read your owner’s manual or your vehicle’s serviceschedule.



LEASING

Those considering leasing should also determine what theycan a ord on a monthly basis. By completing the worksheetbelow, you will be able to come up with a rough estimate owhat your monthly expenses will be. Do keep in mind, however,the key word here is “rough”, as no two leasing programs areexactly the same.

Gross Capitalized Cost* $__________

Capitalized cost reduction** -__________

Residual value -__________

Rent Charge (Interest Rate) +__________

Length o lease (# o months) ÷__________

Monthly payment =__________

Cost o car insurance (monthly) +__________

Fuel & maintenance (monthly) +__________

Using these gures as a guide,this is your total estimatedmonthly expense: $__________

*Gross capitalized cost includes: negotiated cost o car, sales tax+,

registration, inspection, bank/acquisition and documentation ees, service

contracts, gap insurance and any outstanding prior credit or lease balance.

**Rebates, down payments, or trade-in.

+Sales tax on a lease is calculated by multiplying the monthly payment by the lease term,and the tax rate. (example: $200 monthly X 50 months X .85 = $850)

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Additional considerations when leasing a vehicle:

• First monthly payment and a re undable security depositare generally required upon delivery.

• Early termination o a lease always involves additionalcosts. Review your lease contract care ully or earlytermination ees and other charges.

• Under the terms o a lease agreement you will becharged or excess mileage above the amount speci ed inyour lease agreement.

• You must return the vehicle to a designated drop-opoint and you will be responsible orunreasonable wearand tear.

Make it a point to inspect the PartsService area. Be sure you are comfo

with the professionalism and organiof the service department.

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Be ore choosing a dealer, consider the ollowing:

Location

Is the location convenient? • A ter you buy or lease your vehicle, you’ll want to

establish a relationship with your dealership’s servicedepartment. To ensure maximum per ormance anddurability you will need to ollow the routine maintenanceschedule according to the owner’s manual. There ore, youmay want to consider a ranchised dealer close to yourhome or workplace.

Service

• Does the service department have convenient servicehours?

• When necessary, is a loaner car a ter rental provided at adiscounted rate?

• What is the average wait or a service appointment?

• Does the service department ever eature specialcoupons, promotions, etc.?

• Are technicians ASE (Automotive Service Excellence)certi ed?

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STEP #4:KNOW YOUR DEALER

andrtablezation



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Reputation

• How many years has the dealership been in business?

• Is the dealership a member o a respected tradeorganization such as the Greater New York AutomobileDealers Association?

• Does the dealership have a “Satis actory” rating rom theBetter Business Bureau?

• How did the dealership score on their last manu acturerCSI (Customer Satis action Index)? An auto dealership’sreputation is based on riendliness, honesty, and goodcustomer service. Talk to people you know who havebought cars rom a particular dealership to get a sense oits dependability and responsiveness to customer needs.

Dealers invest time and moneyin training, state-o -the-art

equipment, and building a strongcustomer base. They know that

satisfed customers mean repeatbusiness – and repeat businessis, a ter all, key to maintaining asuccess ul, long-term operation.

REMEMBER…



The ABC’s of Buyer Protection

When you purchase a new or used vehicle rom afranchised dealer in New York State you are automatically covered bya number o Federal and State protectionsunavailablethrough private sales.

New Car

• Repairs under warranty will be honored by the sellingdealership or any other ranchised dealership in thatmanu acturer’s network. Even i the selling dealershipgoes out o business, the manu acturer will honor yourwarranty.

• I the vehicle is sold or registered in New York State, youare protected by New York State’s New Car Lemon Law,which o ers warranty protection or the rst two years or18,000 miles, whichever comes rst.

Used Car

• The dealer must disclose in writing whether the vehiclewas used as a police car, taxicab, rental vehicle, or adriver education vehicle.

• With New York State’s Used Car Lemon Law (as o thedate o this printing), i the vehicle has:

• more than 18,001 but less than 36,000 miles youreceive a 90-day or 4,000 mile warranty, whichevercomes rst.

• I the vehicle has more than 36,000 but less than80,000 miles you receive a 60-day or 3,000 milewarranty, whichever comes rst.

• Between 80,000 and 100,000 miles you receive a 30-day or 1,000 mile warranty, whichever comes rst.

Under 18,000 miles the provisions o the New Car Lemon Lawapply. Vehicles with more than 100,000 miles or that cost lessthan $1,500 are exempt rom the Lemon Law.

• The New York State Department o Motor Vehiclesrequires that every used vehicle sold by a dealer must

be sa e or use on the public highways (Certi cate oAdequacy).

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STEP #5:KNOW YOUR RIGHTS



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BUYER BEWARE …..

• Generally, there is no right to cancel a purchase once youhave taken delivery o the vehicle. The so-called “ThreeDay Cooling O Rule” (changing your mind within 3days o purchasing) does not apply i you, as a buyer,

voluntarily go into a dealership to purchase a vehicle. • The window sticker (Monroney Label) showing the

Manu acturer’s Suggested Retail Price (MSRP) must bea xed and visible in a window o a new vehicle.

• The New York State Damage Disclosure Law requires thata consumer be noti ed o any signi cant pre-existingdamage to a new vehicle PRIOR TO SALE AND DELIVER

• Optional products such as extended warranties, servicecontracts, and anti-the t items arenot mandatory andshould not a ect your interest rate, or the ability toquali y or nancing.

• According to New York State law, the dealer has 30 daysrom the estimated delivery date to deliver a new vehicle.

I the vehicle is not delivered within this time rame, thebuyer is entitled to cancel the deal and receive a re undo their deposit.

• A demonstrator vehicle is titled as a new vehicle wheninitially sold to a consumer. Mileage is not a actor indetermining whether this type o vehicle is new or used.

• Misleading statements in advertising the product beingsold are covered under the O ce o the Attorney Generaland local Departments o Consumer A airs laws andregulations.

• A used vehicle must display the Federal TradeCommission’s (FTC) Buyer’s Guide, disclosing relevantin ormation about the vehicle.

I you are unable to resolve a problem involving a new orused vehicle rom a licensed dealer; there are governmentand private agencies available to assist you. These includethe New York State O ce o the Attorney General, regionalDepartments o Consumer A airs, the New York StateDepartment o Motor Vehicles and the Automotive ConsumerAction Program (AUTOCAP).



AUTOCAP

AUTOCAP is a ree mediation service specializing in theresolution o complaints between ranchised new vehicledealers and their customers. Consumers are welcome to callwith questions on sales, service, and warranty issues on new or

used vehicles.

You can reach AUTOCAP toll- ree bycalling1-800-522-3881.

• Be ore signing any agreement READ IT –BE SURE YOU’RE GETTING EVERYTHINGYOU AGREED UPON.

• Signed contracts are binding on both thecustomer and the dealer. NEVER SIGNA DOCUMENT WITH BLANK SPACES!Also make sure you get a copy o thecontract(s) at the time you sign.

• When your vehicle is presented to youat the time o delivery, INSPECT ANDTEST-DRIVE IT AGAIN. I there are anyadjustments or corrections to be made,have them noted IN WRITING.

• Maintain your vehicle according to themanu acturer’s schedule contained inthe owner’s manual, and keep all repairorders and maintenance receipts topreserve your rights under your warranty.

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A layperson’s guide to leasing language and sales talk.

AMORTIZATION:The reduction o a debt by making payments in installments.

ANNUAL PERCENTAGE RATE (APR): Interest cost o a loan calculated on a yearly basis.

APPRAISED VALUE:In leasing, the current value o a vehicle at the time oappraisal. Appraised value is important:a) i a vehicle is stolen, andb) at the end o the lease term.

BALLOON PAYMENT:

A nal lump sum payment made at the end o a nancecontract. The lump sum payment must be disclosed at the timeo the sale.

BUMPER-TO-BUMPER WARRANTY: Warranty that includesalmost every part o the vehicle rom

the ront bumper to the rear bumper. Check your warrantymanual or a list o covered items.

CLOSED END LEASE:In a closed end lease the lessee isNOTobligated to buythe vehicle.NOTE:Some closed end leases o er lessees a

purchase option at the end o the lease term, either or apre-speci ed amount (residual) or air market value.

DEMONSTRATOR (“DEMO”):Vehicle used by a manu acturer, dealer, or distributor primarily

or demonstration purposes.

DEPRECIATION:Reduction in a vehicle’s value due to age and normal wearand tear.

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Glossary



GAP INSURANCE:Insurance covering the di erence between what is owed ona retail or lease contract and the value o the vehicle upon itsloss or destruction.

GROSS CAPITALIZED COST:The total selling price o the vehicle (i.e., negotiated sellingprice plus optional equipment, extended warranties, etc.). Alsore erred to as “cap cost”.

LEASE TERM:Total number o monthly payments.

LESSEE:Consumer leasing a vehicle rom a lessor.

LESSOR:Owner (bank or leasing company) o the leased vehicle.

MANUFACTURER’S SUGGESTED RETAILPRICE (MSRP):Price at which a manu acturer “suggests” a dealer sella speci c vehicle. Customer cost may be higher or lower,depending on market conditions.

NEGATIVE EQUITY (“UPSIDE DOWN”):Owing more than a vehicle is worth.

REGULATION “M” (TRUTH IN LEASING ACT):I a dealer is arranging a lease or a customer, the dealermust show the terms to the customerBEFOREthe customer

signs the lease agreement. I the customer does not acceptthe terms, the customer is entitled to cancel the contract andreceive a re und o their deposit.

REGULATION “Z” (TRUTH IN LENDING ACT):I a dealer is arranging nancing or a customer, the dealer

must show the nancial terms to the customerBEFOREthecustomer signs the nance agreement. I the customer doesnot accept the terms, they are entitled to cancel the contractand receive a re und o their deposit.

RENT CHARGE:

In a lease contract, the amount similar to the interest ornance charge on a loan or credit agreement.

RESIDUAL VALUE:Predicted value o the vehicle established at the beginning othe lease.

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this brochure was published by the greaternew york automobile dealers association

18-10 Whitestone Expressway, Whitestone, NY 11357718.746.5900

car buying and leasing made simple

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