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How to buy a car: Tips and tricks
Drive away in the right car for the right price.
Buying a car is a big investment, one you’ll be paying off for years to come. There are a number of steps that come with the purchase from finding the dealership, the car and the financing. Take your time to make sure you’ve made all the right choices before signing the paperwork
How to buy a car in 7 steps
Start by determining how much you want to pay and the car models you’d like to look at. This makes comparing prices and features easier as you start to narrow down your search and come to a final decision.
Shopping for a car locally?
Where can I buy a car?
Many people choose to go to a dealership or buy through a private sale, but you have more options to explore.
|Where to buy||How it works||What it’s good for|
|Dealership||Visit a car lot and shop for your next car||You can examine a large selection of vehicles, test drive a few and get advice from experts on your selection. Since there are both new and used dealerships, you should be able to find a car within your price range.|
|Private seller||Buy a used car directly from a private seller, typically the previous owner||If you’re after the best price possible, buying from private sellers is often the way to go. Make sure you know how to check the car thoroughly before making your purchase.|
|Demo cars||Find a lightly-used car used for test drives and demos by a car dealership||This might be a good option if you want to buy almost-new car and want to get a good price on a recent make and model. However, the savings can vary and your options are limited. In addition, demo cars might be fitted with extras that you don’t necessarily want but will pay for anyway.|
|Imported cars||Import a car from overseas||It’s safe to say that this will never be the cheapest option as it involves a range of additional taxes and expenses.|
However, sometimes it might be the only way to get a vehicle not available in the US.
|Car auctions||Bid on car at an auction||This can be one of the most affordable ways of buying a car. In fact, car dealers often buy stock at auctions. The downside is that the quality of auctioned vehicles and the quality of their discounts vary, so research to find what that car is worth and inspect it to get a good price.|
To find a good price on the car you want take your time to compare dealerships, private sellers and other options.
Decide whether you should shop online or visit a dealership
What should I keep in mind when buying a new car?
Once you decide on what kind of car you want, its features and the price, consider the price, loan and amount of insurance you’ll pay.
- The price. Your price should reflect something you can afford either to pay for upfront, through your trade in or with monthly payments.
- Secured vs. unsecured financing. Secured loans tend to cost less and have lower monthly payments because the lender uses your car as collateral. Unsecured loans can be more expensive, but you can often use it to cover other expenses.
- Insurance rates. Car insurance is based on lots of factors and the features and model of the car will impact your premium. Find out if your new car’s safety features can lower your insurance rates.
- Its history. Getting a used car? Check its VIN history or have it looked at by a mechanic to make sure you aren’t paying more than your car is worth.
Tips for haggling and paying less
Before you visit a dealership or contact a private seller do your research. First, look on sites like National Automobile Dealers Association (NADA) or Kelly Blue Book to see what the car you want is worth. You can search for make, model and year of a car and find the market rates.
Another way to be prepared is to apply for preapproval online. There are a number of lenders that offer preapprovals with competitive APRs and terms to bring into a dealership. If the dealer wants your business he’ll try to beat that deal.
How can I pay for my car?
There are a few financing options available and can depend on your financial situation. Often, deciding on your financing is just as important as deciding your car.
Compare car loans
What extra costs should I budget for?
The sticker price of the car is the main expense, but not the only one. When deciding whether you should buy a car, make sure you have enough to cover all of the related expenses — both during and after the purchase.
- Sales tax. A percentage of the cost of your car. How much sales tax you pay depends on where you live.
- Documentation fee. The fee that the dealership charges for filing your contract, which also varies by state.
- Registration fee. A fee you pay to have the dealership register your car. You can often get an estimate of your sales tax and fees by visiting your state’s DMV website.
- Extras and modifications: The price you get at the dealer will depend largely on which features and extras are thrown in. This can turn the price thousands of dollars either way. If you don’t care about the modifications, skip them and avoid overpaying for something you won’t use.
- Increased insurance premiums: When you add a new car to your policy, you should be prepared to pay more on your insurance each year. Contact your provider before you purchase a car to see how much the make and model might impact your premiums.
- Registration: For new cars you’ll have to pay a fee to register it. And if you’re buying used, you’ll need to pay a fee for the transfer of registration/ownership. The cost of renewing your registration or registering a new car depends on your state, whether you can get any concessions and other factors.
- Maintenance and fuel: It’s worth planning for operating costs. The cost of fuel and routine car maintenance depends on the type of car and how much you drive.
- Car loan repayments: If you’re not careful these might become a major headache. You should know how much the repayments costs before taking on a car loan.
Are cooling-off periods legal?
While there is a federal cooling-off period for many purchases, cars aren’t covered. This means that when you buy a new car and drive off the lot, you’re stuck with the deal you’ve made.
If you do get cold feet and want to return a used car, you may have more luck. Depending on the dealer, you may be able to return your car. Each lender is different, so if you research this aspect before you finalize your purchase.
Getting behind the wheel of a new car is a long process that can be stressful and confusing — especially if it’s your first time buying a car. But you can make it more simple by knowing what type of car you want beforehand and learning about your financing options.
Frequently asked questions
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