Guide to Purchase Orders for Cars

Q: 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.

Q: 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 walking away.

Q: 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 the buyer’s order.

Q: What are the steps of the car buying process?

Here are 12 steps you can take if you want to finance the purchase of a car with an auto loan : Set your budget Check your credit score Consider whether you’ll need a co-borrower or cosigner for a car loan Look at multiple lenders Consider getting preapproved for a car loan Read the fine print on your financing options Consider overall cost as well as monthly payments Shop around, explore different venues, and test drive as needed to find the right vehicle that meets your needs Negotiate a down payment and car sale price Buy a new or used car that’s right for you Obtain car insurance (required in most U.S. states) Register the vehicle in your name

Buyer’s Order for a Car: Everything You Need to Know

Sulaiman Abdur-RahmanUpdated January 10, 2024

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

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.An unsigned buyer’s order is a nonbinding agreement that typically identifies the make, model year, vehicle identification number, and body style of the car, as well as the vehicle sale price and any down payment the buyer makes as part of the transaction.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. Below we provide more information about a vehicle purchase order and the purpose it serves.

What Is a Buyer’s Order?

A buyer’s order for a car — also known as the car purchase order — is a business document that highlights 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.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.

4 Items Can You 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.

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, but car buyers 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.

What Other Documents Are Involved in a Car Purchase?

Other legal documents a car buyer may sign include the following:

Retail Installment Sales Contract

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. Below we highlight the differences between a vehicle purchase order and bill of sale.

Buyer’s Order vs Bill of Sale

What’s the difference between a buyer’s order and 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 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.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

Other car financing options you may consider include the following:

Private Party Auto Loans

A private party auto loan can provide you with financing to buy a used vehicle from a private seller. Banks, credit unions, or nonbank financial institutions may offer these loans.

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.

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.

The Takeaway

A buyer’s order is one of the top documents you may sign when buying a vehicle. It includes key details about the transaction negotiations between you and a car dealer. 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.

3 Auto Loan Refi Tips

Here are three auto refinancing tips:

Refinancing your auto loan could lead to lower monthly car payments and more money in your budget. Lantern by SoFi can help you find the right auto refi loan for you.
Lengthening the term of your auto loan can decrease your monthly payments and free up funds for other financial goals. You may pay more interest over the life of the loan if you refinance with an extended term.
You may have trouble refinancing the loan on a car that is worth less than what you owe. For more info, check out When Is the Right Time to Refinance a Car?

Frequently Asked Questions

What is a buyer’s order?

How does a buyer’s order work?

What other legal documents are involved in the purchase of a car?

What are the steps of the car buying process?

Photo credit: iStock/Denis_Dryashkin

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About the Author

Sulaiman Abdur-Rahman

Sulaiman Abdur-Rahman writes about personal loans, auto loans, student loans, and other personal finance topics for Lantern. He’s the recipient of more than 10 journalism awards and served as a New Jersey Society of Professional Journalists board member. An alumnus of the Philadelphia-based Temple University, Abdur-Rahman is a strong advocate of the First Amendment and freedom of speech.

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