Money · Big purchases and negotiating

Buying a car without getting taken

Get a loan pre-approval and written out-the-door prices before you visit, and pay an independent mechanic to inspect any used car, even a "certified" one. Read the Buyers Guide on the window: if "As Is" is checked, the dealer won't pay for any repairs after the sale. Compare total cost (down payment plus every payment), not the monthly payment. Turn down add-ons you didn't ask for, and don't drive off until the financing is final. Federal law gives you no three-day right to cancel.

ModerateA few weeks of shoppingInspection fee, usually paid by youChecked October 2, 2026

You'll need

A budget that includes insurance, registration, gas and maintenance
A loan pre-approval from a bank or credit union
Written out-the-door price quotes
The car's VIN
An insurance quote for that exact car

What to know

Do your homework. Decide what kind of car you need and your budget, counting registration, insurance, gas and maintenance. Research models, repair records, safety tests and mileage. Source: FTC¹
Get pre-approved for a loan from a bank, credit union or finance company. You'll know your APR, loan length and maximum amount before you shop, and you can use it to negotiate with the dealer. Source: FTC² Loan terms are negotiable too, and negotiating can save hundreds or thousands over the loan. Source: CFPB³ See APR and interest.
Ask dealers for out-the-door prices in writing before you visit. That way you can confirm advertised prices and rebates are real, check that the car is actually on the lot, and spot last-minute add-ons. Source: FTC¹
Check out the dealer. Ask your state and local consumer protection agencies about complaints, and search the dealer's name with words like "scam," "review" or "complaint". Source: FTC¹
Read the Buyers Guide on the window. Dealers must post one on every used car, including when you buy online, and give it to you after the sale. It says whether the car is sold "as is" or with a warranty, and what percentage of repairs the dealer will pay. Source: FTC¹
Run the VIN. Get a vehicle history report and check NHTSA.gov/recalls for open safety recalls. Source: FTC¹
Pay an independent mechanic to inspect it. A history report may show accidents and flood damage but typically won't show mechanical problems. Do this even if the car is "certified." Ask for a written report with repair cost estimates, the make, model and VIN, and use it to negotiate. Source: FTC¹
Negotiate the price, then the APR. The dealer's APR usually includes a cut for the dealer and can be negotiated like the price. Compare it to your pre-approval's APR, length and amount financed. Source: FTC²
Before you sign, check the five numbers: the car's exact price, the total with financing (all payments plus the down payment), the finance charge, the APR, and the number and size of payments. Source: FTC¹ Don't let anyone rush you through a tablet signature. Source: FTC²

Watch out "Spot delivery": if the dealer says financing is still being approved, the deal isn't final. Consider waiting to sign, and keeping your old car, until it is. If you're called back to sign new terms you don't want, you can cancel and ask for your down payment and trade-in back, in writing. Source: FTC²

Questions to answer before you sign

What's the exact price of the car? Source: FTC¹
What's the total with financing: all monthly payments plus the down payment?
What's the finance charge in dollars, and what's the APR?
How many payments, and how much is each?
Is every add-on listed with its own price, and did I ask for it?
Does the contract match the out-the-door quote I got?
Is the financing final and fully approved?
What's the return policy, in writing?

Warranty words on the Buyers Guide

What the boxes and terms mean, from the FTC. Source: FTC¹

Term	What it means
As Is - No Dealer Warranty	The dealer won't pay for any repairs. You take on the risk of anything that goes wrong after the sale.
Implied warranty	An unwritten promise that the car will do what it's supposed to do, like run. It applies unless the car is sold as is. It can last up to four years, depending on the state.
Limited warranty	Covers only some systems or costs. Most used-car warranties are limited.
Full warranty	Free repairs for anyone who owns the car during the warranty period, with no time limit, and a replacement or refund if it can't be fixed.
Service contract	Sometimes called an "extended warranty," but it isn't a warranty. It's an optional product you pay extra for.

Long loans cost more

Loans of 72 or 84 months lower the monthly payment but may carry higher rates, and they cost more overall. Cars lose value quickly, so a long loan can leave you owing more than the car is worth. Source: FTC²

See it done

Video by Khan Academy Nonprofit

Car buying pitfalls

Watch on YouTube: Car buying pitfalls | Car buying | Financial Literacy | Khan Academy

Full title on YouTube: “Car buying pitfalls | Car buying | Financial Literacy | Khan Academy”2024 · Checked October 3, 2026

Video won't load at school or work? No problem. Everything you need is in the steps; the video's just a bonus. Watch it on YouTube later.

If it doesn't work

Dealer won't allow an independent inspection? Try a mobile inspection service, or ask the dealer to bring the car to a shop you choose. If they still refuse, consider another dealer. Source: FTC¹
Paperwork doesn't match the deal? Don't sign until it does. Compare what you're signing to what the dealer sent you beforehand, and make sure everyone has signed all the documents. Source: FTC CFPB²³
Add-ons you didn't ask for? It's okay to say no, and it's not okay for dealers to slip them into your deal. Ask for each price in writing. Source: FTC²
Problem after the sale? Follow the warranty or service contract instructions. If you can't work it out with the dealer, contact your state attorney general. Source: FTC¹

Good to know

The details, if you want them. Tap a line to open it.

No cooling-off period

Federal law doesn't give you three days to cancel. Some states require a right to cancel; in others, it exists only if the dealer offers it. Get the return policy in writing and check your state attorney general's rules. Source: FTC¹

Get promises in writing

If "As Is" is checked, have any verbal promises, like fixing something, written on the Buyers Guide. Changes on the Buyers Guide override the sales contract. Source: FTC¹

Credit insurance is optional

Federal law doesn't require credit insurance, and a lender can't sneak it into your loan without permission. Source: FTC²

Service contracts

Ask whether it duplicates a warranty you already have, what the deductible is, whether repairs must be done at the dealer, and whether you can cancel for a refund. Source: FTC¹

If you finance

The lender has a lien on the title until you pay it off. Late payments can lead to fees, repossession and credit damage. Ask whether the dealer is putting a tracking device on the car. Source: FTC²

Insurance is part of the price

Get an insurance quote before you buy. See Auto insurance basics.

Take it with you

Printable card Download card (PDF)

Sources

Federal Trade Commission Buying a used car from a dealer
Federal Trade Commission Financing or leasing a car
Consumer Financial Protection Bureau Auto loans
National Highway Traffic Safety Administration Recalls

Lesson M10.1 · Last checked October 2, 2026 against the sources listed.

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