A buyer’s order for a car is a business document that highlights key details about the dealer, buyer, and motor vehicle being sold if all parties agree to the transaction. A dealer prepares this document whenever a prospective car buyer wants to purchase a specific car off the lot.
A car buyer who signs a buyer’s order is making a formal commitment to purchase the vehicle under the terms specified in the written agreement. The buyer’s order becomes a binding agreement when all parties sign the document. Read on to learn more about a vehicle purchase order and its purpose.
Key Points
• A purchase order for a car formalizes the interest in a purchase by listing vehicle details, buyer and seller information, and price breakdown.
• The document becomes legally binding once signed by all parties involved in the transaction.
• Car buyers may negotiate the selling price, document fees, trade-in credit, and additional features to optimize the deal.
• Legal documents in car purchases include the retail installment sales contract, bill of sale, and promissory note for financing.
• Alternative financing options vs. dealer financing include bank loans, private party loans, leasing, and personal loans.
What Is a Buyer’s Order?
A buyer’s order for a car — also known as the car purchase order — is a business document highlighting key details surrounding the sale and purchase of a motor vehicle. A dealer prepares this document whenever a prospective car buyer wants to purchase a specific car off the lot.
A buyer’s order may include the following information:
• The vehicle identification number or VIN
• The make and model of the car
• Information about the customer or buyer
• Information about the dealership or seller
• An itemized breakdown of the vehicle’s sale price and related fees
• Customer down payment details
The dealer may give you a copy of the buyer’s order before finalizing any sales agreement. A buyer’s order includes details about the parties involved in the buyer-seller negotiations. It also highlights the sale price of the vehicle and any related fees.
A buyer’s order becomes binding if and when all parties sign the document. A signed buyer’s order means the dealer intends to sell the vehicle to a customer who agrees to buy the vehicle.
Once signed, the buyer’s order cannot be canceled unless the buyer applies unsuccessfully for dealer-arranged financing. For example, dealers may cancel the buyer’s order if a financial institution does not approve the retail installment sales contract between the buyer and seller.
The Purpose of the Car Buyer’s Order
The purpose of the car buyer’s order is to put everything in writing concerning the potential sale of a vehicle. The buyer’s order provides a detailed description of the vehicle and an itemized breakdown of the vehicle’s total sale price, including taxes and fees. This captures how much you’ll spend on a car.
The business document lets a prospective car buyer see whether any add-ons or ancillary products would contribute to the vehicle’s total sale price. Ancillary products can include guaranteed asset protection or GAP insurance. The buyer’s order also lists the balance due on delivery.
Rebates, down payments, and the value of any trade-in vehicle can lower your balance due on delivery. A car purchase order may include the full details of any trade-in vehicle involved in the transaction negotiations between a car buyer and car dealership.
Recommended: What Is a Finance Charge?
4 Items You Can Negotiate on a Buyer’s Order
Prospective car buyers may negotiate the following items upon seeing the unsigned buyer’s order:
1. Vehicle Selling Price
You may negotiate the vehicle selling price upon seeing the unsigned buyer’s order. The dealer may be willing to lower the sale price if you make a compelling case for a price reduction or are simply savvy at bargaining.
2. Document Fees
You may negotiate document fees before signing a buyer’s order. Dealers may charge document preparation fees, processing fees, or customer service fees to maximize their profit in selling a new or used vehicle. However, as a prospective car buyer, you could ask for a document fee discount.
3. Trade-in Credit
You can negotiate trade-in credit before signing a buyer’s order. Some dealers may undervalue your trade-in vehicle, but you may persuade them to reconsider the appraised value by presenting market research. One of the key tips for selling a car is researching the market, and that tip can also be applied when trading in a vehicle.
4. Add-ons
You may negotiate add-ons before signing a buyer’s order. You have no obligation to buy GAP insurance or any other add-ons, but dealers may receive a kickback if they sell you ancillary products.
Recommended: Gap Insurance Refund After Refinancing
What Other Documents Are Involved in a Car Purchase?
Other legal documents a car buyer may sign include the following:
Retail Installment Sales Contract
Many buyers get car loans. A retail installment sales contract is a written agreement between the dealer and buyer outlining the financing terms of the negotiated transaction. This document may list your annual percentage rate (APR) and monthly repayment obligations on the finalized car loan financing arranged by the dealer.
Bill of Sale
A bill of sale is a legal document describing a specific vehicle and the terms and conditions of buying that vehicle from a dealer. A signed buyer’s order may constitute a bill of sale, or a bill of sale can be an additional document issued after all parties sign the buyer’s order. The differences between a vehicle purchase order and bill of sale are highlighted below.
Recommended: How Soon Can You Refinance?
Buyer’s Order vs Bill of Sale
What’s the difference between a buyer’s order and a bill of sale? A buyer’s order and bill of sale in some cases, can be the same document, but differences can vary across states.
One of the differences between a buyer’s order and a bill of sale is that the buyer’s order may have a comprehensive line-item breakdown of the transaction, including the base price of the vehicle, down payment, and sales tax.
A bill of sale, meanwhile, typically lists the purchase price of the vehicle without including an itemized breakdown of the costs or credits.
However, it may be more detailed. Some state Department of Motor Vehicles (DMVs) may require or recommend a bill of sale whenever a motor vehicle transaction occurs in the state.
Similar to a buyer’s order, a bill of sale can include the following information:
• A full description of the vehicle being sold
• The date of sale
• The name, address, and signature of the person buying the vehicle
• The name, address, and signature of the person selling the vehicle
• The purchase price
• The vehicle identification number
Other Car Financing Options
While many dealers offer car loans, there are other car financing options you may consider:
Bank Car Loans
Bank car loans can help you buy a new or used car from a dealer without having to sign a retail installment sales contract at the dealership. The way how a car loan works is you borrow money from a lender, purchase a vehicle from a seller, and then repay the loan over a set period under the terms and conditions of a loan agreement. Commercial banks can provide you with direct loan financing and a promissory note for buying a new or used car.
Private Party Auto Loans
A private party auto loan can provide you with financing to buy a used vehicle from a private seller. The seller may offer this kind of loan, or you can do a search for other options. You may find personal loans you can use for this kind of auto purchase.
Leasing vs Buying
When considering the option of leasing vs. buying a car, you could finance a vehicle through a standard three-year contract with a leasing company. Car leases typically include lower monthly payments than new car loans, but again, you’re renting vs. purchasing.
Recommended: Does Financing a Car Build Credit?
The Takeaway
A buyer’s order is one of the documents you may encounter when shopping for a car. It includes key details about the transaction negotiations between you and a car dealer, as well as information about the car itself. You can further negotiate the vehicle selling price and other items before signing a buyer’s order, or you can walk away without signing anything.
A signed buyer’s order can serve as a binding agreement once you’ve agreed to the details and have secured financing.
If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.
FAQ
What is a buyer’s order?
A buyer’s order is a business document that a car buyer can sign if interested in buying a vehicle from a dealer. It highlights key details about the car dealer, car buyer, and the motor vehicle for sale. It also includes information about the sale price of the vehicle and becomes legally binding if all parties sign it.
How does a buyer’s order work?
A car dealer produces a buyer’s order whenever a consumer expresses interest in buying a particular vehicle. A buyer’s order describes the vehicle and itemizes the expenses that would become binding if all parties sign the document. Prospective buyers can negotiate items on the buyer’s order before signing the document or can walk away.
What other legal documents are involved in the purchase of a car?
You may sign a retail installment sales contract and bill of sale if you buy a vehicle from a dealer using dealer-arranged financing. A buyer’s order could constitute a bill of sale if signed by all parties, or a bill of sale could be an additional document issued after all parties sign.
What are the steps of the car buying process?
Among the key steps of the car buying process are setting your budget, looking at lenders, getting preapproved for a car loan, and then shopping around for a vehicle. Once you decide on a car and a price (a buyer’s order is typically involved), you’ll need to execute the paperwork, obtain car insurance in most U.S. states, and register your vehicle.
Photo credit: iStock/Denis_Dryashkin
SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SOALR-Q225-027