Next to a home or a 100-foot yacht, a vehicle is the most important purchase most people make. Many folks not only remember the first time they stepped onto a dealer's lot, but they also fondly remember taking their first car for the initial spin around town. Of course, nowadays, some people buy or lease a new automobile every couple of years, so the process isn't quite as nostalgic―but they have to do it more often.

Whether purchasing or leasing, buying a car can be intimidating. Stories abound of people being taken advantage of. Those whacky used car commercials lure us onto a lot where we find volumes of fine print and confusing contracts. And then all those acronyms and funky phrases―APR, UAC, same-as-cash―make us think "SOS!"

But in this day and age, with the wealth of information available to us, there is no reason to walk into a car-buying situation unprepared.

Buying From a Dealer

Dealerships are in business to make money. That is the bottom line. Despite every good intention in the book, dealers are not going to mess around with their profit margins too much, and where they do, you can bet they will find other ways to inch the price of a car up.

This is where you need to be extra cautious. Pursue all the paperwork with an eagle eye and ask questions where you see fit or are confused about an added cost. In New Mexico, tacking on unnecessary costs to a vehicle (beyond what is determined as fair and reasonable) is illegal.

What a Dealer Can Legally Add to the Cost

These fees are fair, and you should expect to see them on the itemized list:

• Excise taxes (in New Mexico this is usually around 5% of the vehicle sale price)

• Title fees

• License fees

• Transfer fee, but only if the vehicle was paid for up-front and the dealer is transferring the title directly into your name

Fees That Require Your Approval

These are items the dealer may try to sell to you in addition to the car you came in to buy. Review these carefully:

• Extended warranties

• Credit life insurance

• Preparation fees

• Handling fees

• Inventory adjustments

• Security systems

• Credit disability insurance

If you see any of these charges on the contract and you did not either seek them out or rightly agree to them, raise a red flag. You may not find yourself being swindled, but the fees may tread murky legal waters under New Mexico's Unfair Trade Practices Act. If you notice any of these charges after the fact, you need to contact the state attorney general's office and file a complaint.

Savvy Buying Tips

• Do plenty of research. With racks of magazines available for dissecting and comparing models, there is really no reason not to study up before heading to a dealership―even for the initial test drive. It is a good idea to be ready to do battle, if that is how you look at buying a car (many people do).

• Then there is the almighty Internet. With this tool, you can comparison shop to no end without ever leaving the sofa or office chair. You can peruse local dealerships for the best prices and develop an approach for test-driving each car choice or checking them out in person.

• If you have done plenty of pretrip research, you should have a price in mind and be thinking of negotiation strategies. Unless you are heading to a "no haggle" dealership, you can figure you have a cushion of 10% to 20%, depending on the salesperson's willingness to part with his or her profit.

• If you do not see what you were looking for, do not let yourself be pressured into buying something you do not want. Options cost a ton, and if you do not need them and they are cramping the price you wanted to pay, don't give in. You can always have the dealership order the vehicle you want directly from the factory. It may take longer, but it is definitely an option.

• Compare lenders. You may not get the best deal from the dealership's financing partner. Look around; it may save you a ton of cash in the long run.

• If you are offered a service contract, analyze it closely to make sure it is well over and above the warranty that comes standard from the manufacturer.

• If you are trading in a vehicle, make sure you are aware of its value before heading to the dealership. This gives you more negotiating power and prevents you from getting completely taken. Kelley Blue Book and the National Automobile Dealers Association (NADA) are good resources, and they cost nothing.

Buying From an Individual

Although buying a vehicle from an individual who has placed an ad in the paper is a bit less overwhelming than dealing with a salesperson at a dealership, it is not without its stresses. But this also goes for the seller of the vehicle. Perhaps the biggest concern for those involved in this type of transaction is simply making sure the appropriate paperwork changes hands. That way, the seller is released from the title and the registration of the vehicle, and it is transferred to the new owner.

Requirements for Seller and Buyer

• Complete a bill of sale if the certificate of title is either lost or all of the reassignment boxes have been filled out already. Regardless, it is good to have a bill of sale simply to note the agreed-upon price. It also allows the seller to establish the current odometer reading. Both the seller and the buyer will need to sign the form.

Requirements for the Seller

• Remove the license plates from the vehicle being sold. You will have 30 days from the sale date of the vehicle to either register the plates on a new vehicle or drop them off at a Motor Vehicle Division office for termination.

• Provide an odometer disclosure statement, if necessary, or if the space is already filled out on the title.

Requirements for the Buyer

• Take the bill of sale and/or the certificate of title to a MVD office to complete the title transfer and registration.

• Fill out an Application for Vehicle Title and Registration.

• If the vehicle title is from out of state, you will need to have a vehicle identification number inspection.

Buying or Selling Without Paperwork

It is possible to buy or sell a vehicle without the certificate of title or registration papers, but the MVD doesn't advise it. For the buyer trying to register and title a vehicle without a previous title, the required paper trail is almost endless. Call the title information line at (888) 683-4636 for details.

A buyer should be aware of a transaction from a seller with no paperwork; this could be a red flag signaling that the seller doesn't really own the vehicle.

If the seller has the title but not the registration, the process for the buyer to transfer ownership is not as difficult or as fraught with pitfalls. The seller should just provide the buyer with the documents available, including the title and a copy of the bill of sale, to complete the transaction.

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