How to Read a Used Car Contract

February 23, 2012

Each state has a Bill of Rights offering basic protections against fraud, but you should use the following guidelines for reading a used car contract.

Used Car Contract

When you purchase any used vehicle, you will sign a used car contract. The contract outlines the details of your agreement. The problem is that your used car contract contains important legal information you need to know, and many people don't take the time to thoroughly read the fine print before they sign on the dotted line.

Price
There are a lot of things that your used car contract will explain. It will include the price of the used vehicle, which is usually based on the book or market value for the used car. If you have negotiated a lower price than what the dealer is asking for the car, make sure that this is reflected in the used car contract.

Fees and Charges
The used car contract also includes fees and finance charges associated with the purchase of the used car. The finance charges are outlined in your auto loan financing paperwork, so make sure that these numbers match and are what you agreed upon. The fees you need to pay close attention to. There are many dealerships that are required by law, in applicable states, to provide new tires for every used vehicle on their lot at the time that they take possession. The costs associated with these legal requirements, as well as advertising and other miscellaneous expenses should not be included in your fees. The basic fees that should be in your contract should be limited to things that actually apply to the purchase of the used car, like processing fees and the costs of the tags and title transfer.

Personal Information
Check the contract to make sure that your information is correct. Verify that they have correctly added your current residence information and spelled your name correctly. Even a small error can lead to problems in the future.

Service Protection and Warranties
Another important aspect of the used car contract is anything related to the servicing of the vehicle. You should know whether the used car is covered by a service warranty, what repairs are covered under this warranty and how long the warranty is valid. If you are buying a used car labeled "As Is," you are not getting any service protection and you are responsible for any repairs. The law in most states, however, states that a dealership cannot intentionally sell you a bad car. If there are issues with the car, they are required to tell you what they are in writing.

When you are reading your used car contract, you are likely going to have questions. Make sure that you ask about things that you don't understand. If the sales representative can't explain something to your satisfaction, you have the right to take the contract to a legal representative before you sign it. Don't allow them to tell you that you cannot do what you need to do to understand what you are signing. Every state has a car buyer's Bill Of Rights, and reading this before you visit a dealership is important.

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