Conditions of Buying a New Car

Several financing or lease options may exist for your new car purchase, so you may need good to excellent credit for approval depending on the lender or method of purchase you choose. If you want to pursue manufacturer discounts, restrictions may also apply. Expect to also pay various fees and your taxes when purchasing a new car from a dealership.

Auto Loan or Lease Conditions

Conditions for auto financing or leasing differ by bank or lender. If you plan to pursue low-rate financing or a lease, expect to apply to the manufacturer's bank. Good to excellent credit is required for special offers. If you want to pursue a traditional loan through your own auto loan provider, loan conditions may differ. Some lenders may require a certain credit score, employment history or income for loan approval. Many lenders also require three to five references. Have the names, addresses and phone numbers of several people ready to offer your lender.

Insurance Coverage

Finance and lease contracts require that you maintain collision insurance for your car. You must provide proof of coverage at the time you initiate your contract and maintain it until the vehicle loan is paid off or the lease contract expires. Aside from requiring collision coverage, expect to also increase your bodily injury and property damage limits to the lender's required amount. Your lender may also require that your deductible, or the amount you pay out of pocket for repairs, remain low, such as $500 or less. Lease contracts often require gap insurance, which pays your bank for the vehicle's loss if it is damaged beyond repair.

Signatures and Social Security Number

Expect to provide your Social Security whether you are paying cash for your purchase, financing or leasing. You'll include your Social Security number on your credit application if using the dealer for your loan or lease, but must provide it even if you use an outside lender. Your dealership must report all cash payments, so your Social Security number is required. You'll also sign paperwork with your dealer. Some forms are required by the new car manufacturer to confirm that the dealer followed its sales process correctly. You'll sign any state-required paperwork, your buyer's order and loan contracts if using the dealer for financing.

Fees and Charges

New car dealerships must abide by its state's rules. Inspection and emissions requirements are completed at the dealership, which you can expect to pay for. However, you'll pay the same fees you would if completing the inspections on your own. Many dealerships charge a documentation fee, which differs by dealer and state. Find out your dealer's documentation fee prior to purchase, as some states cap the cost at $100 while others allow dealers to maximize profit from the fee. Your dealer must collect your sales tax, title application and registration fees, as well.