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How To Buy A Car

How To Buy A Car

By PattyKay Lilley

Are you in the market for a new car? Purchasing a vehicle can be an exciting experience, but it’s also one shrouded with lots of questions. Where do I find the best deal? How much should I pay? What type of car is best for me and my family’s needs? Don’t worry!

In this blog post, we’ll answer these common questions and provide all the information you need to make your next car purchase a smooth and hassle-free experience. From advice on negotiating price to guidance on researching vehicles, it’s all here – just keep reading!

How To Buy A Car

Buying a new car can indeed be a daunting process, especially in the current market. Supply chain disruptions and a shortage of semiconductor chips have led to inventory shortages, causing car prices to rise. This might make it more difficult to find the exact car you’re looking for. If you urgently need a car, considering a used one could provide more available options.

Despite these market conditions, there are certain tried-and-true steps to ease the car-buying process. One of these steps is determining how much you can afford to spend on a car. By setting a budget, you can narrow down your search and avoid the risk of financial strain.

Set Your Budget

The first step in how to buy a car is setting your budget. Begin by deciding whether you wish to pay cash or take out a loan for your new car. If you’re paying cash, the budgeting process becomes rather straightforward, but it’s crucial not to deplete all your savings. Keep in mind that other expenses like sales tax, registration, and insurance will also need to be covered.

For many, taking out an auto loan is the more common option. If this is your preferred route, be sure to research financing options ahead of time. This pre-emptive step can give you an advantage during the negotiation process and help you secure the best deal. Utilize a car payment calculator to determine a monthly payment that aligns with your financial situation.

A good rule of thumb is to allocate no more than 15% to 20% of your total take-home pay towards car-related expenses. However, the ultimate objective should be selecting the best interest rate and the shortest loan term you can comfortably manage.

Before applying for a loan, it’s important to review your credit score. If your score needs improvement, consider postponing your car purchase until it’s at a level that qualifies you for favorable financing terms.

If your credit score is hearty, proceed with applying for preapproval on an auto loan. If the dealer can surpass the rate and terms of the preapproved loan, opt for theirs. But remember, always give them a goal to surpass.

Identify Car’s Must-Have Features

After establishing your budget, the next step in how to buy a car is to identify and prioritize your car’s must-have features. This will significantly narrow down your options, making it easier to find the car that best suits your needs.

Consider how you plan to use your car. If you have a family, for instance, you might need plenty of seating and cargo space. Making a list of necessary features can further refine your search. If safety is a priority, consider consulting crash test ratings from resources like the Insurance Institute for Highway Safety.

It’s crucial to seek out models renowned for their reliability as well as their low cost of ownership. Resources such as J.D. Power and Consumer Reports (which requires a paid membership) collect maintenance reports from owners and rate cars for reliability. They can provide invaluable insights to guide your decision-making process.

Another crucial factor when researching is to evaluate each model’s total cost of ownership. Some cars may seem like a bargain at the initial purchase, but costs associated with insurance, maintenance, repairs, and depreciation can add up, making them more expensive in the long run.

Tools like Kelley Blue Book’s Five-Year Cost to Own or Consumer Reports’ Cost of Vehicle Ownership offer estimates of these expenses. It’s often wiser to pay more for a car upfront to avoid high maintenance costs down the line.

Once you’ve established your criteria, start searching for models that meet them. Numerous automotive websites and car-buying apps offer car finder tools that can help you identify suitable options, as well as detailed rankings and research guides.

Filter your search according to your budget and must-have features. Identify three to five target models to research in more detail. This approach will ensure you find a car that meets your needs without straying from your budget.

See more: How Much Does It Cost To Paint A Car?

Test-Drive the Car

The next step in how to buy a car involves getting behind the wheel. Test-driving potential vehicles is a crucial part of the car-buying process. This gives you a chance to experience how each model feels on the road and ensures you are comfortable with your choice.

When you’re ready to test-drive, allocate a block of time, preferably a morning or afternoon, and aim to do it during the mid-week when dealerships are less crowded. To ensure a smooth process, call the dealership to schedule an appointment. This guarantees the car you’re interested in will be ready for you when you arrive.

As you embark on the test-drive, choose a route that encompasses various driving conditions. This could include hills, rough pavement, curves, and even a stretch of highway. You want to get a comprehensive feel of the vehicle’s performance in different scenarios.

Given the current new-car shortage, you may find it challenging to locate the exact model you’re interested in at a dealership. You can browse dealership inventories online or use an app or website that allows you to search inventories of multiple dealerships at once. Ensuring you test-drive all the cars you’re interested in will help you make an informed decision when it’s time to buy.

Find the Right Price

The fourth step in how to buy a car is finding the right price. Pricing guides such as Kelley Blue Book and Edmunds allow you to cut to the chase and find out what other people in your area are paying for the car you want. To see prices on either company’s website, input the car options you want. Be mindful that factors such as color, for instance, can affect a car’s price.

Additionally, it’s important to investigate what, if any, incentives and rebates are available for the car you’re considering. Most manufacturer websites list current offers, which typically change each month. These incentives can significantly reduce the cost of your new car, making your purchase more economical. By leveraging these tools and keeping an eye out for potential savings, you can ensure you’re getting the best deal possible on your new car.

Get Dealer Quotes

The fifth step in how to buy a car is to procure dealer quotes. This can be achieved by sending an email to the dealership or employing a third-party tool like TrueCar, which allows you to request quotes from multiple dealerships quickly. The process of requesting dealer quotes via email can considerably alleviate negotiation stress.

Compare the seller’s asking price with the average market price you have established through the pricing guides. Most often, the seller’s price will be higher than the market average.

If you choose to negotiate in person, here are some tips you can use on the car lot:

  • Don’t be a monthly payment buyer: If you have a preapproved loan, you are treated akin to a cash buyer. Your goal should be to negotiate the price of the car, not the size of the monthly payment.
  • Negotiate slowly: The negotiation process can easily become confusing. Therefore, it’s advisable to take it slow, and even note down the numbers the dealer offers. Ensure you understand whether the discussion is about the “out-the-door” cost which includes all taxes and fees, or solely about the sale price of the car.
  • Ask about fees before agreeing to a deal: Some dealers may include unnecessary fees. So, it’s vital to ask for a detailed breakdown of additional charges before you consent to any deal.
  • Be prepared to walk away: If the deal isn’t progressing as expected, or if you’re not comfortable with how you’re being treated, don’t hesitate to walk away.

Maximize Trade-In Value

If you have a car to trade in, the sixth step in how to buy a car is ensuring you’re getting the best price for it. Utilize an online pricing guide’s appraisal tool to ascertain what your car is worth. It’s crucial to fill everything out accurately, as specific features and options can add more value to your vehicle.

There are certain terms you might encounter during this process:

  • Trade-In Value: This is the amount you would receive when trading in the vehicle at a dealership.
  • Private-Party Value: This is the amount you would receive if you sold the vehicle on your own to another individual.
  • Dealer-Retail Value: This is the amount the dealer will attempt to sell the vehicle for to the next customer.

You also have the option to sell your car online through various car-shopping sites. These platforms can offer you an instant quote for your vehicle, regardless of whether you choose to purchase a vehicle from them. Having this as a reference point will put you in a stronger negotiating position at the dealership. If the dealer is unable to beat the offer, you always have the option to fall back on the better one.

Seal the Deal

The seventh step in how to buy a car involves finalizing the transaction. If you’re negotiating by email or phone, you may ask the dealership to deliver the car to your location, although not all dealerships offer this service. Most buyers typically sign papers in person at the dealership.

Before signing the papers, consider the following:

  • Loan Terms: Even if you’ve been preapproved for a loan, the dealership’s finance manager may offer to beat the terms of the loan. There’s no harm in seeing if they can secure you a better interest rate. Just ensure that all the other terms of the loan remain the same.
  • Additional Products and Services: The finance manager may attempt to sell you additional products and services, such as an extended car warranty, before the contract is drawn up. While purchasing an extended car warranty at the right price can provide peace of mind, you should first check the terms of the warranty included with the price of your new car. Most new cars come with a bumper-to-bumper warranty covering at least three years and 36,000 miles, along with a powertrain warranty that typically lasts up to 60,000 miles. The powertrain warranty covers all the parts that make the car drivable, including the engine, transmission, and suspension.
  • Reviewing the Contract: Take your time when reviewing the contract, and avoid rushing or feeling pressured into signing. The contract will include the agreed-on sales price, as well as additional figures, such as state sales tax, a documentation fee (charged by the dealer for filling out your contract), and registration fees. It’s crucial to understand all the elements of the contract before committing to it.


As we conclude our guide on how to buy a car, it’s important to address some frequently asked questions. This process can be complex and overwhelming, with many elements to consider. Here, we aim to provide clarity on some of the most common queries prospective buyers often have.

Can I negotiate the price of a new car?

Yes, you can negotiate the price of a new car. Most dealerships anticipate negotiation and often list their cars at a higher price as a starting point. It’s crucial to do your research and know the average market price for the car you’re interested in. Be confident, stay firm on your price, and be prepared to walk away if the dealership doesn’t meet your terms.

Should I buy a new car or a used one?

Should I buy a new car or a used one?

The decision to buy a new or used car depends on your specific needs and budget. New cars come with the latest technology, full warranties, and the assurance of no prior mishandling. However, they depreciate quickly, and you’ll pay a premium for these benefits.

On the other hand, used cars are significantly cheaper and depreciate less rapidly. They may have higher maintenance costs and shorter warranty periods, if any.

How do I finance my car?

There are several ways to finance your car. You can apply for a loan from a bank, credit union, or online lender. Alternatively, you can use dealership financing, which might offer promotional interest rates or rebates. Regardless of the source, it’s important to understand the loan terms, including the interest rate, monthly payment, and loan duration.

What should I consider while trading in my car?

When trading in your car, the most important factor to consider is the trade-in value. This can be found using online pricing guides. It’s crucial to be honest about the condition of your car, as dealerships will inspect it before making an offer.

Additionally, make sure to remove all personal items and clean the car thoroughly before trading it in. If you’re not satisfied with the dealership’s offer, consider selling your car privately for a potentially higher price.

Final Thought

Buying a car, whether new or used, requires careful consideration and research. It’s not a decision to be taken lightly. The cost extends beyond the initial purchase price and includes ongoing expenses such as maintenance, insurance, and fuel. Therefore, it’s wise to ensure your budget can handle these additional costs.

Remember, negotiation is a key part of the car buying process. Don’t be afraid to stand your ground and ask for a better price. If the dealership is not willing to negotiate, consider looking elsewhere. There are plenty of options available, and you should never feel pressured into making a purchase.

Lastly, don’t rush the decision. Take the time to understand your needs and what you want from a car. Conduct thorough research on different models, compare prices, read reviews, and take test drives. The more informed you are, the better the decision you will make.

In the end, the goal is to find a car that fits your lifestyle and budget. With careful planning and patience, you’ll be able to navigate the car buying process with confidence. Happy car hunting!

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