Car Sales Contract [English for Salespeople]

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In this edition of English for Sales People, we are going to discuss Car Sales Contracts and what to include in them. For more information on the essential points to add, please review our other article: Property Sales Contract [English for Salespeople].

Since cars are machines, the wording of the contract may be more technical and have specific vocabulary unique to vehicles and their moving parts. First, let’s talk about what a car sales contract may include and the meanings of the words used within them.

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Lease Agreements

Similar to a house purchase, one single payment or a series of payments can purchase a car.

However, in many countries, a third option called a lease is available to many people. It is not an outright purchase, but rather ongoing payments to use the car for a certain amount of time, similar to renting a house.

In most cases, while you own a vehicle under a lease agreement, you are responsible for the ongoing maintenance and care of the car.

Many leases give the option to purchase the vehicle outright at the end of a set period for another final payment, or another option offered is to exchange the car for another newer model.

One of the benefits of this arrangement, you will always have a newer car, the disadvantage is that you will continually be making repayments. Car Sales Contracts can also reflect this kind of lease ownership, purchase arrangement.

Car Warranty

Most new car contracts will include a warranty clause, stating that for the warranty to remain in effect, the new owner must follow the regular maintenance schedule provided with the car.

Usually, any maintenance must be carried out by the manufacturer or one of its authorized representatives. Failure to carry out the maintenance, or taking it to a mechanic who is not authorized, could void the warranty.

The cost of this maintenance is vital to take into consideration before purchasing the vehicle, as it may not be included in the purchase price, this too should be stated in the contract.

The maintenance schedule is commonly determined by a length of time or the distance the car has traveled. Based on that, the scheduled service will have a name like one of the following.

  • Three month Service
  • 5000 Kilometer Service
  • 10,000 Mile Service
  • Six month Service
  • And so on.

These names mean that when you have owned the car for three months, or it has reached 5000 Kilometers, you should have it serviced by the manufacturer or one of its approved representatives.

Car Licensing / Vehicle Registration

Most countries legally require all vehicles to be registered\ before used on public roads. This registration process has costs involved, and it is the responsibility of the owner to cover the cost unless they have another arrangement.

One arrangement is when the dealership that sells the vehicle will offer to pay for the registration during the first year of ownership as an incentive to buy the car. This should arrangement should be included in the purchase contract.

Unique Vocabulary

VIN/Vehicle Identification number

A series of numbers and letters mixed together that is unique to one vehicle and serves to identify it. This number is often printed on many different parts of the car to limit theft of the car or its individual parts.

Make

The brand of the car, for example, Ford. Chevrolet, BMW

Mechanic

A person who repairs or maintains a vehicle – like a doctor, but for cars!

Model

The type of car and the year when it was built. For example:

  • 7 Series 2018 (BMW is the make.)

Service

The maintenance of a vehicle by a mechanic, which can include changing the Oil, Spark Plugs, and other mechanical parts.

Registration

The legal document that allows the car to be lawfully used on the road.

Wear-and-tear

This phrase is used to describe the everyday use of an item and the usual effect it will have on it, such as small scratches, bumps, and other marks.

Sample Contract

Now that we have covered some of the more unique things found in a Car Sales Contract let’s take a look at a brief example of one we have created.

  • Please note, this Car Sales Contract is not a legal document to be used in the actual purchase or sale of a vehicle. We encourage you to speak with your own legal and / or financial advisor to assist you with any contract requirement you may have.

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CAR SALES CONTRACT

 

Date:                                                                                                     1 Febuary 2018

 

Seller Name:                                                                                      Sun City Mercedes Dealership Ltd.

 

Buyer Name:                                                                                      Thomas Edward Jordan

 

Vehicle Identification Number:                                                 FOI5461JOUB65493EPQNFB7132

 

Make and Model:                                                                            2018 Mercedes SLR

 

Vehicle Value / Purchase Price: :                                               $27,798.00

If entering into a lease agreement, this price will be used to calculate the monthly repayments.

Inclusions:

The Seller has agreed to pay for the first year of registration and Licencing fees for the vehicle from the date of this contract.

Once expired, the Buyer is responsible for all costs related to the future registration of the vehicle.

Exclusions:

The Buyer is responsible for any and all Maintenance costs relating to the tires and interior accessories otherwise not covered by the warranty.

This contract does not include fuel or any fluids required for the smooth and normal operation of the vehicle.

Special Conditions:

The Seller has agreed to upgrade the vehicle with a built-in GPS system and Air Conditioning system before delivery.

Warranty:

The Seller has provided a One Year or 60,000 Kilometer Warranty – whichever comes first.

Under the conditions of this warranty, the Seller is responsible for repairing or replacing any mechanical or body failure of the vehicle not caused by an accident or misuse by the Buyer.

The warranty will not cover normal wear and tear of the car body and its interior accessories.

The Seller will assess any claim regarding damage or faultiness within these areas of the car. ONLY after determining the damage and its cause may the Seller choose to repair the damage under warranty.

Warranty Conditions:

The Buyer is responsible for bringing the vehicle to the manufacturer, or one of it’s authorized mechanics for the scheduled maintenance while under warranty.

Any defect or failure discovered during these inspections and services will be repaired and covered entirely by the Seller under the conditions of the warranty.

Failure to have the required servicing performed at the given time and by someone authorized by the manufacturer will void the Warranty. In this event, any future repairs or replacement parts will become the financial responsibility of the Buyer.

Damage caused by nails or other sharp objects to the tires are not covered by this warranty. The Buyer is responsible for repairing or replacing any flat tire or tire damage caused by driver negligence.

ONLY, if a tire should fail due to a manufacturing fault or other cause outside of Sellers control will these be replaced or repaired without charge to the Buyer.

All Interior Accessories subject to wear and tear and will not be covered by the warranty unless a manufacturing fault has occurred, including and is not limited to, driving controls and display, window controls, seat adjustment controls and so forth.

Optional – Lease Agreement

The Seller and Buyer have agreed to a two-year lease agreement, during which time the Buyer is required to make monthly payments as stated below and have the car regularly serviced by a manufacturer authorized mechanic.

At the conclusion of the two year period, the Buyer can choose to:

  • Continue the payment arrangement with no change of vehicle or repayment amount.
  • Continue the payment arrangement and exchange the vehicle for a newer model with a one-time Switching Fee.
  • Make a final payment calculated on the Vehicle value at the time by the Seller and take complete ownership of the current vehicle with no further monthly payments due.
  • Any other arrangement must be set out in writing between the Buyer and Seller.

Monthly Lease Repayments:                      $211

Lease Expiration / Renewel:                       Two years from contract date.

 

Form of Payment

The Buyer is to provide a valid Credit Card or Bank Account for Direct Debit of the monthly amount.

 

Bank Name:                       World Wealthy Bank

Account Name:                 Ilove Cars

BSB / Swift Code:             123-456

Account Number:            12345678

 

Credit Card Details

Name on Card:

Card Number:

Expiration Date:

Security Code:

Buyer declaration:

I authorize the Seller to withdraw the monthly Lease repayments from my account above.

I understand that failure to make payment promptly or after repeated reminders will result in repossession of the vehicle by the Seller.

Buyer Signature:

Contract Declaration & SIgnatures:

By Signing below both the Seller and Buyer acknowledge and confirm that they understand their contractual obligations set out in this agreement and are in accord with the terms set out within it.

Buyer Signature:

Date:

Seller Signature:

Date:

Please remember that this contract is an example only and that each country will have its own unique laws and requirements.

If you are purchasing a car privately, that is a pre-owned car; you may find a much more straightforward contract is all that you will need. Some countries even have standard forms

Although we have based our article on a brand new car purchase, the guidelines we have outlined can apply and be adapted to second-hand car purchases also.

We sincerely hope that this article has made it easier to understand some of the more complex ways of buying or owning a car and what to look for when you are going shopping for your new ride!

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