An official contract is involved in the overwhelming majority of car sales and functions as an agreement between you and a dealer in which you promise to pay the cost of the vehicle in installments over time in addition to interest, according to Ford. Here's everything you need to know about a car sale contract so you're prepared when it comes time to make a purchase.
Ford also explains that to fully understand the contract, you need to recognize all of its components. Fortunately, car sale contracts are relatively simple. Basic information includes your name and address as well as the seller's name and address. The contract will also list the vehicle identification number or VIN. This is the unique number assigned to every vehicle that can typically be found on the driver-side dashboard nearest the windshield.
An important area of the contract is the truth-in-lending disclosure area. In this area are five boxes that detail the most important components of your purchase. The five boxes will contain the following information:
Your contract should also include all relevant service information, according to CarsDirect. Even the best vehicles need routine maintenance every now and then, so make sure your vehicle is covered by any appropriate warranties. Specifically, the contract should describe exactly what services are covered by any applied warranties and for how long the warranty is applicable in terms of both mileage and time.
When you're looking to purchase a used car, the sale contract will look slightly different, but it still serves the same purpose in functioning as an agreement between the seller and the buyer. If you don't need to finance the used car and are simply buying it outright, the only contract you need is the bill of sale as explained by Trusted Choice. This is commonly used among private parties when purchasing vehicles not involving a dealership.
The bill of sale or used-car sale contract will contain virtually the same information that a new-car sale contract would. You'll find the seller and buyer names and addresses in addition to the vehicle description and VIN. The primary difference is that a used-car sale contract also includes the number of miles on the odometer at the time of the sale, according to Edmunds.
Car sale contracts are often far from flawless, according to Trusted Choice, so it's important that you keep an eye out for the most common mistakes that could leave you in a much weaker position. Here are a few red flags to watch for:
If you spot any mistakes regarding extra items or fees you weren't prepared for or never agreed upon, you can simply refuse them, according to Edmunds. To do so, mark through the items with a thick line, or draw an 'X' and write the word 'refused' over them. Depending on what you mark, the seller or dealer may not sign the contract, but it can be a useful way to express that you don't want any add-ons you didn't ask for.
Keep in mind that the list of charges in a car sale contract can be significantly long, so it'll likely take some time for you to sort through everything. To make sure you aren't paying for anything you don't want, however, this process is absolutely necessary.
Armed with this knowledge, you'll be in a much better position to understand and get the most out of the car sale contract when making a purchase. Remember, according to CarsDirect, it's always best to ask the seller about all the details of your contract that you don't understand or seem wrong.
Information and research in this article verified by ASE-certified Master Technician Duane Sayaloune of YourMechanic.com. For any feedback or correction requests please contact us at research@caranddriver.com.
