Buying a car is a very serious investment. Car ownership is not always the most
cost effective mode of transportation. In this section, you will find information
regarding what kind of car to buy, where to buy a car, how to finance a car, and
how to register your car.
What Do I Need to Know When Buying a Car?
Before buying a car, you need to know:
? What kind of car to buy? (new, used, lien sale, or salvage)
? Where to buy a car?
? How to finance a car?
? How to register a car?
? How to get smog check?
? How to get insurance?
New or Used Cars
When buying a car, you need to decide if you are going to buy a new or used car.
You should know that there are advantages and disadvantages to both.
The benefit of buying a new car is that it’s new – No one else has owned that car
and you put the miles on the car and know how it’s been driven and maintained. In addition, a new car is covered by a warranty for at least 3 years. Which covers
workmanship, parts, and labor. Warranties do not cover wear and tear from
regular use. You are responsible for regular maintenance on your car, such as oil
changes and tune-ups. If you do not keep up the maintenance, you run the risk of
your warranty being void.
The biggest drawback to buying a new car of course is the cost. New cars run
from $15,000+ depending on what options your choose to get on your car,
depends on how expensive the car will be. For example, if you buy a new car
without a radio or air conditioning, the car is going to be cheaper. If you buy a
car with power windows, air conditioning, and a radio it will be at least $3,000
Used Car: When deciding to purchase a used vehicle, you should be aware that you are buying it at your own risk. When buying a used car from a car dealership or an individual person, you need to know that you are purchasing the car “as is.” One of the first things you
should do after purchasing a used car is to take it for a diagnostic test at an auto shop to see whether there is a major problem or not.
Many people dread going to buy a new car, because of the horror stories they have heard. First, you need to remember that you are in control at all times. You have the right to choose your own sales associate, one that you feel comfortable with or that has been recommended. You have the right to walk away at anytime. Don’t feel trapped or pressured into signing anything if you feel unsure. If you are trading-in a car, do not turn your keys over to the dealer until you seriously ready to negotiate. Never surrender the vehicle registration card; a copy will suffice. You don’t want to be put in any position where the dealer has control of you or your time. If a salesperson asks what you want to pay for your car, give him a dollar number, not a monthly payment.
In return, the dealer has the right to expect certain terms from the customer. You should be honest about your intent to buy. If you are just there to comparison shop let the sales people know. They will probably let you shop around the lot at your leisure, but ask you to contact them if you have any questions.
If you are trading-in a car, be honest in your evaluation response. If you know of any accident damage that has occurred, you must disclose this to the dealer. Likewise if the vehicle has had a new engine or transmission installed.
About Purchasing a Car from an Individual?
If you have purchased a vehicle, registered in California, you will need to transfer the ownership within 10 days from the date of purchase.
Part of the transfer is to properly endorse the title, also know as a pink slip, with the previous owner’s signature on line one. If the vehicle is or was financed, line two of the title will also require a releasing signature.
If the title is lost, an Application for Duplicate Title (REG 227) must be completed and signed. There is an additional fee of $7.00 for a duplicate title and signatures of the legal owner and lien holder must be notarized. If the vehicle was not purchased from the owner whose name appears on the title, you will need a bill of sale from each in-between buyer.
If the vehicles if less than 10 years old, the odometer mileage is required for registration. If the title does not have designated space for this information, an Odometer Disclosure Certification REG 262 signed by both the seller and the buyer, will be required.
? A smog certificate, smog certificates are good for 90 days from the
? A $15.00 transfer fee
? Pay the use tax that is a percentage of the purchase price and varies from
county to county.
If you purchase a vehicle from a private party, you have 10 days from the date of sale to record the change of ownership to DMV. Transfer fees must be paid to DMV within 30 days of the purchase date, even if you do not have all of the required documents. Failure to pay your fees to DMV within 30 days will result in transfer and use tax penalties.
Lien sale A lien sale can be an option for some people. However, there are drawbacks and benefits to purchasing a lien sale vehicle. When a service has been provided or a car has been towed/stored and payment has not been received for the services that were performed on the vehicle; the service provider can place a lien on the vehicle.
For example, if you had your car towed to an auto mechanic and was getting your car repaired; when it was done, you found yourself unable to pay for the services you received; at that time, your car would be put up for sale to pay for the debt you have acquired. However, it is not a given that your car will become a lien sale, it is just an option for the service provider.
If a public agency or private towing company tows the vehicle, the lien occurs when the vehicle is towed or transport. Selling the vehicle through the lien sale process may satisfy the lien.
One of the advantages to buying a lien sale car is that it can be a fairly inexpensive. By buying a lien sale car, you can sometimes purchase it for a very reasonable amount and sometimes far below what the car is worth. The company that holds the lien on the vehicle only wants to get paid for the services that they rendered. The only drawback to buying a lien sale vehicle is that you do not get a warranty with the purchase and is sold “as is.”
To conduct a lien sale, the person/lienholder must have possession of the vehicle and have lien sale authorization from DMV. Interested parties, including the registered and legal owners of record will be notified before the sale occurs.
The registered and legal owners of record will be notified by the party conducting the lien if the vehicle’s value is $4,000 or less. If the vehicle’s value is greater than $4,000, DMV notifies all interested parties.
A salvage vehicle is a vehicle that has been wrecked, destroyed, or damaged, to such extent that the insurance company considers it to be totaled and that it is not worth it to make the repairs to the vehicle. In California, the title will contain a notation identifying the vehicle as a salvage vehicle.
You must apply for a salvage certificate from the DMV when you retain possession after a total loss settlement. If the vehicle is inoperable, file a certificate of planned non-operation to avoid penalties.
To apply for a salvage certificate, you will need to:
Visit a DMV Office
Complete an application for salvage certificate
Surrender the title and license plates.
How to get Financed to Buy a Car? You should first do some shopping around before applying for a loan to make sure that you get the right loan for you. You may be able to get a loan from your banking institution. However, if you do not have a banking institution, you could get financed at the car dealer. In terms of the loans available and whether or not they are good or bad depends on the interest rates associated with the loan. For example, if you qualify for a loan at an interest rate of 10% it is not going to be in your best interest to take that loan. You would want to get a loan at an interest rate lower than 10%.
After the Loan is paid
After you have paid off your loan, the title will be mailed to you with the lien holder’s releasing signature.
You are required to submit your title to DMV within 30 days to remove the lien holder’s name and have new title issued showing you as the new legal owner. The fee to remove or change a legal owner is $15.00.
If you have lost the title that was sent to you, an Application for Duplicate Title (REG 227) must be completed with the lien holder’s releasing signature notarized. There is an additional $7.00 fee for the duplicate title.
How I Can Register my Car?
All cars must be registered with the Department of Motor Vehicles within 10 days
of purchase. You can do that by going to your local DMV. To get your car
registered, you will need to bring with you the following items:
? The bill of sale
? The title to the car (the title is the proof of ownership for the car)
? Application for registration
? Applicable Registration fees
? License Fee (This is the fee that may be an income tax deduction)
? Weight Fee
? Special Plate Fee
? County/District Fees
? Owner/Responsibility Fee
In California, there is no grace period for your car’s registration. Be sure to pay
your renewal fees on or before the date of expiration shown on your current
registration card. Even though your plates have only the month and year, your
registration expires on a specific day. Be sure and check the registration card for
the actual day of expiration.
Penalty fees on expired registration are:
? 10% if 1-10 days late
? 20% if 11-30 days late
? 60% if 31 days – 1 year late
If your registration is expired more than 1 year, the penalty fees will be:
? 60% for the first year
? 80% for the second year
? 160% for the third year
The filing fee may be paid up to 60 days prior to the expiration date. If you file
up to 90 days after the expiration date, you will be liable for penalties on the full
Smog Checks In the Bay Area and most areas of the state, Smog Checks are required every two
years as part of renewing vehicle registrations with the Dept. of Motor Vehicles.
In addition, smog checks are required when vehicles are sold and when they are
initially registered in California.
For more information on the purpose and frequency of the Smog Check, contact
the Department of Consumer Affairs/Bureau of Automotive Repair toll-free at 1-
800-952-5210 or by visiting the smog check website at www.smogcheck.ca.gov
Not all vehicles in California are required to get Smog Check inspections.
Whether or not a vehicle needs a Smog Check depends on its type and model year.
At this time, all 1973 and older vehicles are exempt from the Smog Check
Program, but owners of these vehicles are required by law to keep their emissions
systems intact. There is a 30-year rolling exemption to the smog check. This
means that every year the car gets older, the closer you get to being exempt from
the smog check. In 2003, cars that are 30 years old are exempt from having a
The following types of vehicles are also completely exempt from the Smog Check
Any two-cylinder vehicle
Vehicles with two-cycle engines
In addition, vehicles four years old and newer are not required to have Smog
Checks. Once the car is 5 years old, a smog check is required every 2 years.
However, when the car is 5 years old registered in California, before the 5
the car must pass smog to be legally registered.
Assistance with smog check car repairs
If your car does not pass its required smog test, you must repair your car so that it
will pass. Some options to help with the cost of the repair are:
1) Repair Assistance program
2) Vehicle retirement program
3) Repair cost waiver
Repair Assistance: This option allows qualified motorists to receive up to
$500.00 in emissions-related repairs from the state. All participants must take
their vehicles to Smog Check repair stations specifically authorized by the state to
perform repair assistance services.
Through the repair assistance program, you can get up to $500 in emissions
related repairs if you qualify. To qualify, your household income cannot be more
than 185% of the Federal Poverty guidelines.
Income-Eligible – Motorists whose household income is at or below 185% of the federal poverty guidelines qualify for repair assistance. For example, a family of
four whose income does not exceed $2,629 per month, or $31,543 per year, would
qualify for repair assistance. Qualified consumers must pay the $20 towards
diagnosis and/or emission-related repairs before the state makes it contribution of
up to $500.
Test-Only State Referral – Certain vehicles are required to have their Smog
Check inspections at stations that perform only tests, and no repairs. This
requirement is indicated on the vehicle’s DMV registration renewal notice.
Motorists whose vehicles fall under these criteria also qualify for repair assistance.
Qualified consumers must pay the first $100 towards diagnosis and/or emissions-
related repairs before the state makes it contribution of up to $500. (Note: test-
only referrals that qualify should apply for Income Eligible assistance.)
Vehicle Retirement: This option is available to motorists who want to voluntarily retire their vehicles to the state rather than repair them. Eligible
consumers can receive $1,000 in exchange for their vehicles. Vehicle are retired
at one of the state’ authorized dismantlers.
Repair Cost Waiver: This option is available to motorists who either do not qualify for repair assistance or choose not to retire their vehicles. It allows a
vehicle to be registered without passing its Smog Check inspection by providing a
temporary (two-year) extension of time to complete all emissions-related repairs.
To qualify, at least $450 is emissions-related repairs must be made to the vehicle
at a licensed Smog Check station. Motorists may only use the waiver once during
ownership of the vehicle.
The phone number is 1-800-952-5210.
How to get Insurance for Your New Car?
In California, your car must be insured to drive to it legally. Evidence of valid
liability insurance must be provided to the DMV when registering your car. The
DMV will acceptable proof is a current insurance identification card, issued by
your insurance company; or a bond as proof of insurance; However, you must
contact DMV Please contact your local DMV for information regarding this
You can get liability insurance from almost anywhere. Many insurance brokers
have insurance companies that they work with all the time. As a broker, they will
charge you a fee for their services. The purpose of the broker is to find you the
best deal on car insurance according to your driving record. You must bring the
following items to the insurance broker or insurance company
? Your current registration with your name on it.
? Your driver’s license
? The mileage on your odometer
? An estimate of the number of miles you travel a week, and
? Fill out paperwork regarding the purchase of insurance. Your initial
insurance payment, which may include deposit and first month’s payment.
In addition to the materials and information listed, you will also need to estimate
the number of miles you travel each week and complete the insurance company/
broker’ application for insurance. You can usually get the application in advance
of your request.
? Low-Income Families’ Empowerment through Education 2004