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How to Buy a Car

couple being handed keys

If you want to get around town, to and from work, or just wherever you want to go, you are going to need to buy a car. Whether it is your first time or your fifth time, buying a vehicle is a big decision. Take your time with such an important task, and follow this guide to help you make the right choice.

Part 1 of 6: Deciding what type of vehicle you want

Step 1: Determine if you prefer new or used. Your first decision will be whether you want to buy a brand new car or a used model. You’ll find pros and cons with both options.

Pros and Cons New Used
Advantages -Comes with OEM Factory Warranty
-Able to choose features and options to get the exact model you want
-Latest technology and features
-Better financing terms
-Less expensive
-Less depreciation
-Lower insurance rates
Disadvantages -More expensive
-May have higher insurance rates
-No or little warranty
-Cannot choose all the features you want
-May be limited on financing terms

Step 2: Decide what type of vehicle you want. You must decide which type of car you want, and there are many options available. Vehicles fit into various categories.

Main Types of Vehicles and Their Main Features
Cars Light Trucks
Sedan: Has four doors, an enclosed trunk, and good space for passengers Minivan: Maximizes interior volume for passengers or equipment; often comes with seating for six or more passengers
Coupe: Has two doors, but sometimes four seats, with an emphasis on style and sporty driving Sport Utility Vehicle (SUV): Large vehicle with a high ride height and large interior volume for passengers and equipment; often designed to handle off-road driving and/or hauling loads
Station wagon: four doors like a sedan, but instead of an enclosed trunk has extra cargo space behind the rear seats, with a large lift gate at the rear Pickup truck: Designed for hauling and/or towing; open bed behind passenger compartment maximizes cargo volume
Convertible: Vehicle with a removable or folding roof; designed for fun, sporty driving more than practicality Van: Designed specifically for cargo space, usually focused on commercial use
Sports Car: Designed specifically for performance driving; has sharp handling and increased power but decreased cargo capacity Crossover: Resembles an SUV in form but built on a car chassis rather than a truck chassis; good interior volume and ride height but less off-road capability

Within each category are even further subcategories. Based on your needs, you will have to decide which types appeal to you.

Consider which features are most important as well. While you probably won’t get everything you want, you can narrow down your options according to the two or three features that are most important to you.

Part 2 of 6: Researching various models

Once you know what category of vehicle you want, begin searching for models within that group.

toyota site
Image: Toyota

Step 1: Check out manufacturers’ websites. You can visit the websites of various car makers, such as Toyota or Chevrolet, to see what models they have.

edmunds site
Image: Edmunds

Step 2: Read car reviews. You can find reviews on specific makes and models on sites such as Edmunds and Kelley Blue Book.

IIHS safety ratings
Image: IIHS

Step 3: Check safety ratings. You can get safety ratings from the National Highway Traffic Safety Administration and the Insurance Institute for Highway Safety.

Part 3 of 6: Determining your budget

Step 1: Project how much you can spend on monthly payments. Figure out how much money you have in your monthly budget for a car payment if you’re financing.

auto loan calculator
Image: Cars.com

Step 2: Estimate how much your monthly payments will be. Use an online calculator to estimate how much your monthly payments will be based on the price of the model you choose. Don’t forget to add in extra costs such as custom features if it’s a new vehicle and insurance.

auto loan form

Step 3: Apply for a loan. If you plan on financing the car, to find out what financing you qualify for, you will need to apply for a car loan.

Step 4: Project how much cash you can put down. Determine how much cash you have for a down payment or to pay the total amount if you choose not to finance.

Part 4 of 6: Researching dealerships and test driving models

Step 1: Check out the various dealerships in your area. Once you have all of your information gathered, you must find a dealership.

BBB site
Image: Better Business Bureau

Look at testimonials or reviews online and see their ratings from the Better Business Bureau.

Other factors that should be considered in your decision include in-house financing options, the availability of your preferred models, and warranty options for used vehicles.

cars lined up in lot

Step 2: Visit a few dealerships in person. Stop by one or two dealerships that seem to fit your needs and see what models are available. Ask about any incentives or special deals.

Step 3: Test drive a few vehicles. Select two or three different models and take them each for a test drive.

  • Tip: If you choose to buy a used car through a private party, you won’t go through a dealership. However, you can meet with two or three sellers to get a price comparison and test drive their models. It is also a good idea to have a qualified mechanic, such as one from YourMechanic, inspect any used car you are seriously considering purchasing.

Part 5 of 6: Determining the value of the vehicle

Once you have two or three models in mind that you’re interested in, you should find out their values. You want to know that you’re paying what the car is worth or less, but not more.

KBB site
Image: Kelley Blue Book

Step 1: Look up the value of each model online. Visit the Kelley Blue Book website to find the market values of the models you’re considering.

Step 2: Compare the value to the dealers’ prices. Compare the dealer’s price with what other dealerships are offering and the listed value on Kelley Blue Book.

Part 6 of 6: Negotiating the price

Once you have chosen a dealer and found your desired car, you are ready to negotiate the price.

Step 1: Ask about a trade-in. If you are willing to trade in your old vehicle for the new model, inquire about how much you can get for your trade-in.

Step 2: Ask about additional costs. Find out what additional costs have been included in the price. Some of these may be negotiable while others are required by regulations.

Step 3: Offer a price based on your research. Make sure you have data to back up the price you quote.

  • Tip: Know what the final price is that you’re willing to pay, even if this isn’t the price you quote initially.

Step 4: Negotiate other aspects of the sale. Be willing to negotiate on other aspects of the vehicle if the price is firm. You may ask for other options or accessories to be included at no cost.

Buying a car is a big endeavor, whether it’s new or used or whether it is your first or your fifth. But following the steps outlined above and thoroughly researching the various aspects of the process — different makes and models, dealerships, prices, etc. — will ensure that are successful in finding and purchasing the right car for you.

The statements expressed above are only for informational purposes and should be independently verified. Please see our terms of service for more details
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