It can be hard to know what questions to ask when you're borrowing money to buy a car from a motor vehicle trader (car dealer).

Take the TrueCost Checklist and tips with you to help you make sure the car you want comes with a loan you can live with.

About the car

• Get the car checked by your own mechanic to make sure you are buying a good car.
• There must be a window notice on the car. This notice is called a Supplier Information Notice. It tells you important information like the year the car was first registered, if there is money owing, the name and business address of the car dealer, the cash price, and whether the dealer is registered.
• If the window notice says "there is a security interest registered over this vehicle", this means that there is money owing on this car by the previous owners and you could end up paying it – don't buy the car.
• Don't buy an extended warranty or breakdown insurance unless you want to, e.g. if buying the car for a taxi business. This is because you already have rights to get the car fixed under the Consumer Guarantees Act if the car is of poor quality. Why pay more for rights you already have?

About the finance

Ask the dealer to fill in the TrueCost Checklist.

• It will help you decide if the finance is a good deal.
• Take the Checklist home and talk about the deal, the car and the finance with someone you trust, a law centre or budget advisor.
• Look at other cars on other dealers' yards. Take the Checklist to them and ask if they can give you a better deal on the finance.
• Take the Checklist to a bank or Credit Union or other finance companies; ask if they can give you a better deal.
• Fees have to be reasonable. Ask the dealer what the fees are for.
• If there are insurances or warranties added, ask the dealer what they cover. If you are not in paid employment, insurance for redundancy is of no use to you.

The paperwork

• If you decide to get a loan to buy a car, read the whole contract before you sign, especially the part of your contract that is headed "What could happen if you fail to meet your commitments". This will tell you what the penalties are and what can be repossessed from you if you don't pay.
• If you buy the car on finance then you should be given one contract for buying the car and another contract for the loan.
• Check that the cash price of the car on the window notice is the same as the cash price on the loan contract.
• You must be given a copy of your loan contract and "disclosure statement" when you sign (or within five working days of signing it). You must also be given copies of any insurance policies. If you're not given all this information within the required time, you are entitled to some money back.
• If you haven't taken the car home yet, you can change your mind about buying it. You have three working days from the day you get your contract to cancel the whole deal.

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