The sale contract, start to finish
Everyone who buys a car here signs a purchase contract. If you pay cash it is a purchase order. If you finance, it is a Retail Installment Sale Contract, which is your purchase and your loan in one document. Cash buyers should read all of it too, because the pricing, the as-is terms, the no-cancellation rule, and the arbitration section apply to you as well. Here is what every part means.
What you are paying for (the itemization)
The contract breaks the price into separate lines so nothing is hidden:
- Cash price of the vehicle: the agreed price of the car itself.
- Document processing charge: a fee for preparing the paperwork. It is not a government fee (about $85 in California).
- Emissions / smog testing charge: the cost of the smog certificate.
- Sales tax: California sales tax on the taxable items.
- DMV fees: registration, title, and license fees paid to the state.
- Down payment and trade-in: your cash down plus the net value of any trade, which lowers what is financed.
- Amount financed: everything above, minus your down payment and trade-in. This is the number the loan is built on.
Every fee is on its own line. If a line does not apply to you, it shows as zero or N/A.
If you finance: the loan terms (Truth in Lending)
- APR (Annual Percentage Rate): the yearly cost of the loan as a percentage. Lower is better. The contract states the APR may be negotiable.
- Finance Charge: the total dollar amount the credit will cost you over the life of the loan.
- Amount Financed: the amount being loaned to you.
- Total of Payments: what you will have paid once every scheduled payment is made.
- Total Sale Price: the Total of Payments plus your down payment. The full cost of buying on credit.
- Payment Schedule: how many payments, how much each one is, and when the first is due.
- Late charge: if a payment is more than 10 days late, a late charge applies (5% of the late amount in a typical contract).
- Prepayment: you can pay the loan off early at any time. A small minimum finance charge ($25 to $75, depending on the amount financed) may apply.
- Interest is figured daily, so paying early saves you money and paying late costs a little more.
Example figures from a sample deal: $20,000 vehicle price, 7.00% APR, $6,000 down (including a $2,000 trade-in), $16,395.25 financed, 48 monthly payments of $392.60. Your deal will be different.
Optional products (never required)
- None of these are required to buy the car or to get financing. Each is added only if you sign for it, and its price appears on its own line.
- Service contract (extended repair coverage), GAP (explained next), theft-deterrent device, and surface protection are all optional add-ons.
- If you do not want an add-on, it should be blank or zero. Check the totals before you sign.
What GAP is, and the GAP notice
- If your vehicle is stolen or totaled, insurance usually pays only its current market value, which can be less than what you still owe on the loan. That difference is the "gap."
- The contract states plainly that you are responsible for the gap amount. Standard car insurance does not cover it.
- GAP (Guaranteed Asset Protection) is an optional, paid product that can cover that difference. You can buy it or decline it. It is your choice, and it is not required for credit.
Your promises in the contract
- Keep collision and comprehensive insurance on the vehicle until the loan is paid off, and name the lender as loss payee.
- Do not take the vehicle out of the U.S. or Canada, and do not sell, rent, or transfer it without written permission while the loan is open.
- You still owe the full balance even if the vehicle is later damaged, destroyed, or missing.
- Security interest: the vehicle is the collateral for the loan. The lender holds a lien on the title until you pay in full.
What happens if you fall behind (default and repossession)
- Default means missing a payment, giving false information on the application, letting the vehicle be lost or destroyed, or breaking any promise in the contract.
- If you default, the lender can demand the entire balance at once and can repossess the vehicle, as long as it is done peacefully and the law allows. If the car has a GPS device, they may use it to locate the vehicle.
- You have the right to get the car back (redeem), and in many cases to reinstate the loan by catching up past-due payments and late charges and showing proof of insurance. The lender must send you the legal notices telling you how and by when.
- If the car is sold after repossession, the money goes toward what you owe. Anything left over comes back to you; if it is not enough, you owe the difference (the deficiency).
- You may also owe reasonable collection costs and attorney fees, plus a fee up to $15 for a bounced check.
- Late or missed payments can be reported to the credit bureaus.
Your rights as the buyer
- You never have to sign a contract with blank spaces, and you are entitled to a completely filled-in copy of everything you sign.
- You can pay the loan off early at any time.
- The APR may be negotiable with the dealer.
- After you sign, the seller cannot change the financing or payment terms unless you agree in writing. A one-sided change is not allowed and is against the law.
- If you have a complaint about the sale, raise it with us first. You may also contact the city attorney, the district attorney, or a DMV investigator.
- Under the federal Holder Rule printed in the contract, if you buy for personal or household use, any lender who buys your loan is subject to the same claims and defenses you could raise against the dealer.
The dealer's rights
- Seller's right to cancel (financed deals only): we deliver the car when you sign, but it can take a few days to finalize your financing with a lender. If we cannot place your loan within 10 days, we may cancel the sale. You return the car and we return everything you gave us, including your down payment and trade-in. If you do not return it promptly, you may owe our costs to recover it. This applies only if you sign the "Seller's Right to Cancel" line.
- We may assign (sell) your loan to a bank or finance company. Your terms do not change.
- We may report your payment history to the credit bureaus.
Right to cancel: the sale is final
- California has no cooling-off period for vehicle sales. You cannot cancel later just because you changed your mind, decided the car costs too much, or found a different vehicle.
- The one exception is the optional two-day Contract Cancellation Option, which by law we must offer on used vehicles priced under $40,000. It is a paid, optional add-on with a mileage limit and a deadline. If you buy it, you can return the car within the window for a refund minus the restocking fee. If you decline it, the sale is final at signing.
- Once signed, the contract can only be changed in writing signed by both sides. Spoken promises are not binding, so get everything in writing (see the Due Bill below).
Arbitration and class-action waiver
- The contract includes an arbitration provision. If a dispute comes up, either side can choose to resolve it through a neutral arbitrator instead of going to court or having a jury trial.
- It also waives class actions, so disputes are handled individually rather than as part of a group lawsuit.
- Small claims court is still available for disputes that qualify. This section affects your legal rights, so read it carefully before you sign.
As-is: no dealer warranty
- Unless you receive a written warranty or buy a service contract within 90 days, the vehicle is sold as-is, with no dealer warranty and no implied warranties of merchantability or fitness. A certified used vehicle is treated differently.
- Any manufacturer warranty still in effect is not affected.
- The Buyer's Guide on the window is part of the contract. If the window form and the contract ever disagree, the window form wins.
Buyer's Guide (the window sticker)
- Tells you the warranty status of the vehicle. Our vehicles are sold "AS IS," with no dealer warranty unless something different is written down.
- "As is" means repairs after the sale are your responsibility. This is why we encourage a pre-purchase inspection.
- You have the right to have the vehicle inspected by your own mechanic, and to check the vehicle history and open safety recalls before you buy.
Due Bill
- Lists any work or accessories we promised to do or add, in writing. If nothing was promised, it says so.
- Any promised work must be completed within 30 days of the contract date, and you call to schedule it.
- If it is not written on the Due Bill, it is not part of the deal. Spoken promises are hard to enforce, so ask for everything in writing.
Pre-Contract Disclosure
- Lists any optional products and their prices before you sign the contract, so you can see them separately from the vehicle price.
- Examples of optional add-ons: a service contract, GAP, a theft-deterrent device, or surface protection. None of these are required.
- If you do not want an add-on, it should show as zero or blank. Check that the total matches what you agreed to.
Contract Cancellation Option (optional)
- A paid, optional add-on that gives you a short window (typically two days) to return the vehicle for a refund, minus a restocking fee.
- It has a price, a mileage limit, and a deadline in date and time. You must return the vehicle and all documents by then.
- You choose to accept or decline it. If you decline, you sign the decline line and pay nothing for it.
Agreement to Provide Insurance
- If you finance, you agree to carry collision and comprehensive coverage on the vehicle until the loan is paid off.
- You can buy that insurance from any company you choose. You are not required to buy it through us.
- You provide proof of the policy, usually within 30 days. Letting coverage lapse is a default under the contract.
If you are financing: credit forms
- Credit Application: your name, address, income, and employment, so lenders can consider you. Bring proof of income and residence to fill this out accurately.
- Consent to Obtain Credit Report: your permission for us and the lenders we submit to, to pull your credit.
- Credit Score Disclosure: shows the credit score a lender used and where it came from. It also explains your right to a free annual credit report and to dispute errors.
Vehicle records and language
- Vehicle History Report receipt: confirms we gave you the vehicle history report (from an approved NMVTIS provider such as AutoCheck), as California requires.
- Language Acknowledgement: confirms the language the deal was negotiated in. If we negotiated in Spanish, Chinese, Korean, Tagalog, or Vietnamese, you get a translated copy of the contract before you sign.
Before you come in
- Read the actual forms filled in with sample data, so you know what each page looks like.
- See what to bring so we can finish your paperwork in one visit.
- Have a question about any line? Call or text Tim before you arrive. There is no pressure and no obligation.