Owning a car is necessary for many people in Maine. Especially in rural communities, having a car may be the only way you can get to work, buy groceries, and get to school or medical appointments.
Cars are getting more expensive all the time – buying a car may be one of the biggest financial decisions you have to make. Know your rights and some information about the car-buying process before you start shopping. This article covers some of the most important things to know before you buy a car in Maine.
What should I know before I start shopping for a car? How can I get ready?
Before you search for cars online or go to the dealership, it’s a good idea to prepare. This can help you avoid some of the traps that can leave you with a problem car or unexpected costs. These are some important things to think about.
Vehicle Make and Model Information
There are a lot of great used cars, but some cars are well known for having mechanical problems that can cost you money. When considering which car to buy, it’s important not to rely on reputation alone. Even cars that have a “good reputation” can have bad years, recalls, or well-known problems.
Check the consumer reliability ratings for used vehicles. These ratings have good information about which makes, models, and years have known issues. Knowing more about a car’s reliability rating can help you know what questions to ask and avoid unexpected issues.
There are many companies that rate vehicles - we are not recommending any of them. Some, like Consumer Reports, charge a membership fee. You can ask your local library if they have a subscription, and if they do, you may be able to access those reports for free. For example, the Bangor Public Library subscribes to Consumer Reports, all you need is a valid library card to use that service from home. Other options like JD Power ratings and Kelley Blue Book Reviews are free. You can also use the National Highway Traffic Safety Administration (a government agency) website to look up any recalls or serious safety issues with vehicles.
If you are thinking of trading in your car, visit a car value website like Kelley Blue Book to see how much it might be worth. You can use this information to help you if you are trading your vehicle in at a dealership.
You can often get more (sometimes hundreds or thousands of dollars more) for a car when you sell it privately to another person than if you trade it in. If you choose to do that, you can use the money you make on the sale as the down payment on the next car.
Financing and Your Budget
Review your finances and decide how much you are able and willing to pay for a car.
- How much are you willing to pay in total?
- If you need a car loan, how much can you afford as a monthly payment?
It can be helpful to write this number down and stick to it when you go to negotiate.
If you will need a loan to buy a car it may be a good idea to talk to your own bank or credit union about your options before you start shopping. You may be able to get a much better interest rate than what a dealership would offer you.
It’s always a good idea to shop around! Here are some steps you can take before you go shopping and when you go shopping that may help.
Before you go shopping:
- Spend some time searching around online. Save copies of the ads and prices of cars you might be interested in.
- Get to know typical prices in your area.
- Check out consumer reports and the Better Business Bureau reviews of dealerships before visiting. This can help you choose which dealerships you want to do business with.
- Make a list of the kinds of cars you are interested in.
- Write down your budget.
When you go shopping:
- Shop around at each dealership before you choose one car.
- Sometimes dealers say they can give you a great deal now, but not if you leave and come back. That’s ok, you can still leave and come back. This is a common sales tactic. It may mean that you find a much better deal somewhere else, and they might still offer you the same deal if you return.
With all this information you will be in a better position to get a reliable car at the right price for you!
Buying a car from a dealership
There are specific rights and protections that come along with buying a car from a dealership. It’s important to remember that a car dealer’s #1 goal is to make money. They use some common strategies to make as much money as they can on a sale. Knowing more about these “tricks of the trade” can help you protect yourself when you buy a car.
What information does a dealer have to share about a car?
Dealerships in Maine are required to share information about used cars they are selling by posting a “Used Car Buyer’s Guide” in the window of each vehicle. Sometimes called the “window sticker,” this is what the ‘Guide’ will look like. It should include:
- Where the dealership got the vehicle
- Information the dealer knows about the mechanical condition of the vehicle
- Warranty information
- Information about available service contracts
- Any documentation fees charged
Many dealerships buy damaged cars at auction – cars that have been in accidents or other disasters. Sometimes these cars are not repaired properly, so it is important to know where the dealership got the car, and what they know about its condition!
If the salesperson makes specific claims about the vehicle, like saying ‘it runs great,’ ‘there are zero problems,’ or ‘the engine is perfect,’ ask them if they would be willing to put it in writing. If not, ask them what they would be willing to put into writing about the condition of the car. This can help you get a more specific idea of the true condition of the car if there are certain things the dealer will not put in writing.
Should the used car I’m buying have an inspection sticker?
Yes. In Maine, most vehicles on public roads are required to pass a basic yearly safety inspection. A car must show an official sticker on the windshield as proof that it has passed this inspection.
A car at a dealership must have an inspection sticker that was placed no more than 60 days ago. The only exception is if a car is clearly marked as “non-inspectable” or “tow-away.” This is meant to protect the buyer – letting you know that the car meets Maine’s minimum basic safety standards. But it is important to know that this basic safety inspection does not include things like the engine or drivetrain. There may still be serious and expensive problems with a car that can pass inspection! And if there are no other warranties on that car, the dealer may not be responsible for repairs.
If the car has a sticker that has expired, you can ask that the car be inspected before you agree to buy it. Do not rely on a car dealer who tells you a car will pass inspection – if it can pass, it should already have a sticker.
What should I know about dealer financing and interest rates?
Most people will need a loan to afford a car. Dealerships make a lot of their money through the financing process. There are some important things you should know about financing, and steps you can take to protect yourself!
Dealerships often provide financing by working with 3rd party lenders. In other words, the dealership isn’t usually holding on to your loan, even if they provide financing. A dealership may make a car loan, and then very quickly sell the right to collect on the loan to another company. This means the dealership isn’t really taking a risk by trying to sell you something over your budget. If you can’t afford the payments on your car loan and default, it isn’t the dealership that will lose money. On the other hand, the dealership will make more money if they can convince you to buy a more expensive car.
Sometimes dealerships will quote a higher price to you on the lot than they advertised online or elsewhere, even though they are not supposed to do this.
Another common way dealerships make money through financing is by telling you a higher interest rate than the 3rd party lender will actually ‘buy’ your car loan for. If they do this, the dealer will get a cut of the interest on that higher interest rate.
But there are things you can do to protect yourself and make sure you are getting the right deal. It is important to know:
- You can bring copies of advertisements you saw with you and compare the price advertised to the price on the car or in the paperwork. If they do not match, you can ask the dealership to honor the advertised price.
- Most interest rates given by a car dealer are negotiable. You can ask for a lower or better interest rate than what they offer.
- You can ask your own bank or credit union about financing before you even start shopping around for a car. You do not have to get your car loan through the dealership!
- Even if you can’t get your loan from a bank or credit union, you can call one with the vehicle identification number, or VIN, and ask them what they would value that car at and how much a typical loan interest and payment might be. You can use these numbers to compare and make sure that you aren’t being offered a really bad deal. You can also use them to help you negotiate with the dealer.
- You can walk away from any deal you are unhappy with. You do not have to accept the dealer’s “best offer” if it’s not affordable for you. Dealers can make it feel like you cannot say no, or make it hard for you to leave – but you can always walk away.
- Go car shopping with someone you trust. Buying a car can be overwhelming. Having a friend or family member with you, even just for support, may help you feel less pressured or trapped. They could also help you stay organized and remember important questions to ask.
- If you have a trade-in, you do not have to give it up to the dealer until you have signed the paperwork. Sometimes dealers will take the keys and make it seem like you cannot get the car back, even before you have agreed to anything. They do this to make you feel like you have no choice but to buy a car. This can be a very scary and effective sales tactic - but you do not have to buy a car from them! You are allowed to change your mind before you have agreed to anything.
- If they tell you they have already sold your car, will not give you back your keys when you ask, or say you cannot leave and you haven’t agreed to anything, what they are doing may be illegal. If they continue after you tell them this, you can call law enforcement. You can also tell the dealer you will report them to the Maine BMV's Dealer Licensing Division.
Are the extra services and add-ons worth the cost?
Another way dealerships make money is by bundling in “aftermarket” products with the purchase of a car – usually at a big mark-up. Some common examples of these aftermarket products are:
- tire protection
- window etching
- extended service contracts, sometimes called “extended warranties”
You don’t have to buy those things from the dealer! But if you are interested in any of these products, you can almost always negotiate the price.
If you are potentially interested in a service contract, sometimes called an “extended warranty,” make sure you carefully review what it costs and what it covers. Often the service contracts have so many restrictions that they end up not being useful to the buyer. Or they cost more than a simple repair may have cost. Check the paperwork and make sure that you are getting what you plan to pay for and that you agree to the terms and restrictions for the coverage.
How do I know how much I will be paying? Is knowing the monthly car payment enough?
You should carefully look over any papers the dealer gives you to sign. It can be difficult to figure out the actual total cost of the vehicle. It may help to think about what total price you are willing to pay for a car before you go shopping. Write that number down and don’t let the salesperson or dealer push you to go above that number. Remember – they are trying to make money, not looking out for your budget or best interests.
A low monthly payment can be misleading. You may pay less each month, but you will be paying over a longer period and the interest can cost you a lot more than you might think! Here are some things you can do to avoid any nasty surprises:
- Review all the paperwork carefully before you sign anything. Don’t let anyone rush you to make a decision.
- Check the total price of the transaction – how much will you have paid by the time the car loan is paid off?
- If you had a trade-in, check to be sure that the credit for the trade in is being counted.
- Check the paperwork for any charges that look unfamiliar or that you have not talked about with the dealer. If there are, ask what they are for. You do not need to buy anything that you did not agree to buy.
- Compare the prices on the different papers, like the buyer’s order and the finance agreement. Are they the same?
- Ask if the vehicle comes with a warranty – not an ‘extended warranty’ that costs extra, a regular warranty.
Remember, you can negotiate. Until you sign the paperwork, you can walk away at any time. You do not have to agree to anything that you do not want or cannot afford. It’s never a good idea to agree to a higher payment than you can afford on the promise that you can refinance later – you usually cannot.
What should I do after I buy a car from a dealer?
When your sale is complete, make sure that you get copies of all the paperwork. This should include a copy of:
- Any advertisement you found for the car before you bought it, with the original advertised price
- The used vehicle buyer’s guide, also known as the window sticker
- The purchase agreement or buyer’s order
- The finance installment contract if you are financing the vehicle through the dealer
- A copy of the service contract if you bought one
- Any other paperwork showing receipts of payments you made, if there are any
- Any other documents or paperwork, including copies of any promises the dealer has made to you in writing.
It is important that you keep all this paperwork in a safe place, in case you need it later.
After you have bought the car, it is always a good idea to take it to a mechanic separate from the dealership to go over it, especially to double-check the Maine State Inspection items – even if it already has a valid sticker. If you find any problems, be sure to let the dealer know immediately. If the dealer is responsible, you may have limited time to alert them so that they will make the repairs.
Buying a car from another person
Not everyone gets their used car from a dealer. Maybe you see a car on someone’s front lawn that you’re interested in. Or maybe in the latest Uncle Henry's or on Facebook Marketplace. As we said above, selling your car to another person instead of trading it in at a dealership has advantages – but there are things you should know if you are the buyer.
Sometimes buying a used car directly from another person may be a better option for you. But it is important to know that there are very few legal protections for buyers when buying a used car from someone who is not a licensed car dealer. We call this scenario “buyer beware,” because if something does go wrong with the car, there usually isn’t much we can do. Under some very limited circumstances, like if the seller specifically lied about the car and those lies caused issues that cost you money (this is called “actual damages” in legal speak), it may be possible to file a lawsuit. If this happens, you can talk to a lawyer to find out what your options might be.
I bought a car and now I can’t afford the payments. What can I do?
Voluntarily surrendering a car is an option. But it is very important to remember that even if you give the car back, the finance company may still come after you for a 'deficiency' on the car. A 'deficiency' is the difference between what is owed on the car loan account and what the finance company sells the care for once you give it back. These deficiencies can be very high.
The price of used cars has increased by a lot recently and even some dealerships are buying used cars in private sales, so you may have the option to sell the car yourself. You could try to sell it to another person or to a dealership in a private sale. If you can sell the car for more than what you owe on it, this may be your best choice. Then you can pay the loan off.
But, if you owe more on the car than it is worth it may be harder. You can still sell the car for as much as you can if you can afford to pay what is left. If you cannot sell it yourself and you wish to voluntarily surrender the car, you should talk with a lawyer who may be able to negotiate for a better deal on your behalf.
If you want to learn more about your rights when buying a used car, you can also review Chapter 9 of the Maine Attorney General’s Consumer Guide.
Published July, 2022