Buying a car often comes with the signing of a contract, especially if it is a new car - it is uncommon to purchase a vehicle without some sort of purchase agreement.
It is important that you understand how to read the contracts so that you have an understanding of the terms you are signing and don’t just agree to anything without checking.
The car purchase agreement, or car loan, is a legally binding contract between you as the buyer and the seller of the car.
The contract contains important details regarding the car and your exact status as owner or leaser of that car.
There are some important things included in most car contracts.
The contract will refer to two ‘parties’. This is a legal term to refer to the seller of the car (one party) and yourself as buyer (the other party).
It is important that both parties are properly described in the contract and you should make sure that the seller has put their name (or business name), address and contact details clearly on the contract.
As the buyer, you should make sure your details are accurate as well.
Details about the vehicle should also be clearly stated on the contract. This should include:
If any of the details regarding the car are incorrect, be sure to question this and have the contract amended accordingly.
The larger part of the contract should include details including the transfer of ownership date, the agreed price of the car, payment method and an appropriate space to sign and agree to the document.
Read over this information and make sure you are confident that it is all correct. Once signed, the contract will be legally binding.
There are often clauses regarding the cancelling of a car purchase – this is especially true if the contract is a hire purchase or personal contract purchase.
Read carefully to understand your total liability and any additional fees that may occur should you wish to end the contract early.
While at the time of purchase you will understandably feel that it is the right decision and you can easily afford the repayments, circumstances may change and you need to know what you have agreed to should you want to voluntarily terminate the agreement at a later date.
If there is anything which makes you sense that the contract is missing information or is in some way fraudulent, be sure to query it before you sign, and if you are still uncomfortable with the answers then simply do not finalise the agreement.
You are under no obligation to sign a contract you are unhappy with.
Once signed, however, the contract becomes a legal agreement and you must uphold your side of it.
Let sense overcome enthusiasm and make sure you have properly understood the contents of the document before making it legal.