1. Research Vehicles and Features
Not sure what car you want? Car-making sites are useful for viewing more photos and learning more about features and options on cars. Once you have a short list, it's time to find out how you will pay for the car.
2. Get Preapproved for a Loan
A preapproved car loan starts you on the right foot. You get an idea of how much you can afford, and you'll have an interest rate that you can then compare to the dealership's financing, which might actually have the lowest annual percentage rate. Look for a loan application on the mobile web pages of your bank, credit union or other lenders such as Capital One or Nationwide. It's a good idea to do your own research on which lender works best for you.
As you plan your financing, Lifestyle do more recommend a loan term that's no longer than 60 months. We also recommend combining a 10 percent down payment with gap insurance or new-car replacement coverage. That lets you keep more money in your pocket without the risk of being underwater on your car loan.
To begin the loan approval process, have at hand your employer and salary information and balances of other debt you may have. Make sure you will be ready to shop within about two weeks of seeking pre-approval. This will reduce the number of "hard" inquiries to your credit history.
3. Plan Your Trade-In
You can skip this step if you do not have a trade-in. If you do, keep reading.
It's important to get your trade-in value before you go to the dealer. This will help set your expectations for what a car is worth and give you a reference point for each offer you'll receive. Most cars are categorized as "clean" or "fair". Very few cars are "amazing," no matter how many owners take care of them.
When you finish assessing, you will see three numbers. The trade-in value is what the dealer has to offer you - it's a number to keep in mind when you're at a dealer. The value of private parties is what you might expect if you sell your own car. Retail dealers are a little different: This is what you expect to pay for a car if you buy it at a dealer.
There is an alternative to trading in cars or selling it yourself: Have used car retailers, CarMax, rate cars and offer you deals. This offer is good for seven days, at which point you can ask the dealer to beat that price or you can sell your car to CarMax.
4. Locate and Test-Drive the Car
Now, you have assigned several car candidates. You should see it in person before making a decision. Hundreds of dealers across the country are registering their car inventory, and in many cases, you can sort by color, trim level and features. This is a better way to shop than to set up a car on a car maker's website and hope you'll find one with a series of real-world options. All the lists you find on the page are original cars with various options. Most will have a locked price that should be comparable to what others paid.
If you found the vehicle on another site, call the dealership's internet sales department to request more information. In either case, keep these do's and don'ts in mind:
To verify that the car you want is still in stock. It might have been sold recently, and online inventories can take a while to catch up.
Do ask the salesperson if there are any dealer-installed options. Many new vehicles are sold with add-ons such as nitrogen in the tires, all-weather floor mats or theft protection packages. These can easily add $1,000 to the sale price.
Don't just show up at the dealer on a busy weekend or late at night. Waits may be long and you may not get the salesperson's full attention.
To schedule an appointment for a test drive. Early in the week and in the morning are good times. Having an appointment means the car will be waiting for you when you arrive.
Don't just drive around the block. Take the time to see how you and your family fit in the car and see how it handles on a variety of roads.
Do ask yourself the following questions: Are the controls easy to use? Is there enough cargo space? Will a child seat fit? (Bring it with you and test it.)
Don't feel obligated to buy the car the same day. Feel free to take a night to think it over.
5. Check Sale Price and Warranties
Once you have a target car, it's time to focus on getting a price. We recommend using one of these two ways to get a price quote on a car:
- Call, text or email the internet sales department of three dealerships that have the car you want. Ask each for the total selling price, including any additional accessories that may have already been installed on the car. The best price will be obvious. You also can take that quote and ask the other dealerships to beat it. If you plan on leasing, this is the way to go.
- You can save time and trouble by using Edmunds to get a locked-in price that's designed to be comparable to the average price that others are paying in your area. Make sure you ask the salesperson to email or text you a breakdown of the "out-the-door price," with all the taxes and fees factored in. That lets you see the total amount you'll be spending.
You also should ask for a preview of products the dealership plans to offer you after you buy a car — such as paint protection, an extended warranty and possibly a prepaid maintenance plan. Usually, you won't hear about these extras until much later in the shopping process, but we suggest you get some information now to relieve pressure later.
Here's how you do it: Call the dealership finance manager and ask about these products and services. They may be of value to you, but just know that the price is often negotiable and you don't have to buy them when you buy the car unless you intend to hold their price into the purchase contract.
6. Review the Deal and Dealer Financing
It's important to keep in mind that an average price paid is exactly that. Some people have paid more and others paid less. Some shoppers are only happy if they grind their way to a rock-bottom price. But for most shoppers, that usually isn't worth the hassle and frustration. If your price quote is above the average, it's not necessarily reasoning to walk away from a deal. Here's why:
A car's price isn't the only factor that determines a good car deal. You also should look at the interest rate, the loan term and the value of your trade-in, if that's part of your deal. There are even some intangibles, such as how the salesperson and the dealership treat you and the time you save in the shopping process. Those are all factors in a good deal. In fact, at this point in the process, you may be able to improve parts of it.
In Step 2, you got preapproved for financing. Now that you're close to purchasing, there's a chance that you can get a better interest rate at the dealership.
To see if that's possible, let the dealership run a credit report and assess your interest rate. Or, if you know your credit score, tell the finance manager what it is and the rate for which you'd qualify. You can give your information to the finance manager over the phone. Some dealerships have credit applications on their websites and you can fill one out. If the interest rate is lower than the one in your pre-approved loan, go for it. If not, you already have a good loan locked in.
7. Close the Deal
If the price, financing, and fees look right, it's time to say yes to the deal. From here, you can proceed in one of two ways: Buy at the dealership or have the car and paperwork delivered to your home.
Most people tend to wrap up the sale at the dealership. Once you've agreed on a price, the salesperson will take you to the finance and insurance office. Here, you'll sign the contract and purchase any of the additional products we discussed earlier, such as an extended warranty.
The alternative is to make the sale contingent on having your new car delivered to your home or office. This is a great time-saver and allows you to close the deal in a relaxed environment.
Wherever you finalize the deal, review the contract carefully and make sure the numbers match the out-the-door breakdown. Be sure there are no additional charges or fees. A good finance manager will explain each form and what it means. Don't hurry. Buying a car is a serious commitment. And remember: There is no cooling-off period. Once you sign the contract, the car is yours.
8. Take Delivery
Whether you take delivery of your car at the dealership or at your home, it should be clean. The gas tank should be full. Give the car a final walk-around, checking for any dents or scratches that might have occurred during transport.
Finally, let the salesperson give you a tour of your new car. The rundown should include showing you how to pair your smartphone via Bluetooth and demonstrating other important features and safety devices. All of this information is in the owner's manual, but let's face it, very few people ever read the manual, which can be hundreds of pages long. If you don't have time for a complete demonstration when you sign the contract, set up an appointment a week or so later. With the amount of technology that comes in most new cars, that walk-through is important and very useful. You'll learn tricks and shortcuts you might not find on your own.
And now there is only one more thing to do: Enjoy your new car.
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