NY Car Insurance: Purchasing and Insuring a Used Vehicle in New York
Buying a used automobile to insure under your NY car insurance policy? There are a number of questions to consider. One of the more important questions may be whether you want to purchase from a dealership or if you prefer a private sale. Just like with any decision, you will have to weigh the pros and cons of each side for yourself. Of course, if you don’t go through this process often, or know a lot about cars, you may not know what to look for. This short guide will help you through the process, right up until you add the vehicle to your NY car insurance policy.
Unlike a car that is sold privately, a car that you purchase from a licensed dealer is often going to come with a warranty. This will help to assure a buyer that any defects will be covered after the purchase for a certain period of time. In some cases, for an additional fee, you may be able to extend this warranty. This option alleviates any immediate issues or unexpected repair expenses after buying a used car.
Many dealerships will sell CPO vehicles, or certified pre-owned. This means that they have gone through a process of thorough inspection and repair. Dealers have a reputation to uphold, so they are not looking to send you out the door in a vehicle that will encounter a lot of issues. Before certifying the vehicle, the dealership will find and fix any issues, only selling you the vehicle after they are resolved. This does not mean, however, that you shouldn’t have the car inspected by your own personal mechanic as well.
When you purchase your car from a dealer you have a guarantee you will be inheriting a car with a clear title. That is, a car with no money still outstanding that is owed to a bank or lien-holder. If you buy from a private seller, it is possible they may still be making payments on their loan.
Because dealers have an overhead and are quite literally in the business of selling cars they may have a higher price tag then what is offered from a private seller. However, the professionalism and service provided may compensate for this cost.
Some people feel uncomfortable when dealing with a salesperson. Since making the sale is their livelihood they can be very pushy and make you feel as though you need to make the purchase now.
Since a private seller is just an everyday person like you or I, it is likely they will give you a better price on the vehicle. Being that the sale is not their primary source of income there is often more room for negotiation with a private purchase.
As opposed to a dealer, the actual owner of the car will be able to give a detailed account, hopefully accompanied by proof, of the service done to the car, proof of the mileage, as well as accident and owner history. A dealer may be able to provide some general info, but no one will know the car better than the owner.
While there are plenty of private sellers that do their diligence before putting their vehicle on the market, there may also be some who can fail to mention issues with a car in order to push forward the sale. In other cases, due to lack of knowledge, a seller may be completely unaware of an issue with their car. This makes it of utmost importance to have the vehicle inspected by a trusted mechanic and ask about its history.
If you are purchasing a car second-hand (or third, fourth…) it is always possible that a loan from the bank is still outstanding. This is normally called an encumbrance, and you should certainly check if the vehicle you are interested in placing on your NY car insurance policy has one. If money is owed on a loan and the original owner defaults on the loan, the bank reserves the right to repossess the car to make up the difference. Though you may be the rightful owner of the car, it is still considered a collateral in the agreement. For this reason, it is very important to know if the car has a lien.
Need to check if the vehicle you’re planning on purchasing has an outstanding loan? The NY DMV website has a helpful tool that can be found here.
Sometimes banks will not finance a vehicle obtained through a private seller. Since the seller doesn’t have anything to lose in the situation, they are liable to fabricate the condition of their car. If, down the road, you experience issues with the vehicle and decide to default on the loan, the bank is left with a potentially worthless vehicle. As a result of situations like this, many banks only work with reputable dealers.
At the end of the day, this decision is a personal one. It all depends on what factors are important to you and what type of vehicle you are looking to get. Do you need a car that you know is going to be reliable and remain operable for a long time? Perhaps working with a dealer is your best bet. Do you need a vehicle that is a steal for the price and functions purely to get you from point A to B? Then finding the right private seller with whom you can work out a deal may be your best option
For questions regarding how adding a used vehicle to your insurance policy may affect your NY car insurance, contact your insurance carrier.
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