How to buy a car: The ultimate guide and check-list |
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Car buying guide

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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

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?

Test drive a new car in your area Test drive a used car in your area

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 buyHow it worksWhat it’s good for
DealershipVisit a car lot and shop for your next carYou 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 sellerBuy a used car directly from a private seller, typically the previous ownerIf 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 carsFind a lightly-used car used for test drives and demos by a car dealershipThis 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 carsImport a car from overseasIt’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 auctionsBid on car at an auctionThis 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.

Shop for new cars locally

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.

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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.

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Rates last updated December 15th, 2018

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Unfortunately, none of the personal loan providers offer loans for that credit score. If you are in urgent need of a small loan, you might want to consider a short term loan.
Name Product Product Description Min. Credit Score Term of Loan Requirements Car Loans
Apply with a simple online application to get paired with a local auto lender. No credit and bad credit accepted.
Varies by lender
Must be a US citizen with a current US address and employed full-time or have guaranteed fixed income.
Auto Credit Express Car Loans
Get connected with an auto lender near you, even if you have bad credit.
Typically 3 to 6 years
Must be employed full-time or have guaranteed fixed income of at least $1,500/month and be a current resident of the US or Canada.
LightStream Auto Loans
Quick car loans from $5,000 to $100,000 with competitive rates for borrowers with strong credit.
Good to excellent credit
Flexible terms
Good or excellent credit, enough income or assets to afford a new loan, US citizen or permanent resident, 18+ years old
RateGenius Auto Loan Refinance
Connect with a network of over 150 lenders to refinance your car loan.
Income of $2,000+/month, vehicle has less than 150,000 miles and is no older than 8 years, loan balance is between $10,000 and $100,000, debt-to-income ratio is less than 50%
LendingClub Auto Refinancing
Lower your monthly car payments and save on interest through a fast and easy online application process.
Fair or better credit
Minimum of 2 years
Car must be less than 10 years old with fewer than 120,000 miles. Current loan must have a balance between $5,000 and $55,000 and at least 24 months left in its term.
MotoRefi Car Loan Refinancing
A car loan connection service for borrowers looking to refinance.
1–6 years
Must have an income of at least $2,000/month and have a vehicle with less than 100,000 miles.
LendingTree Auto Loans
Compare multiple financing options for auto refinance, new car purchase, used car purchase and lease buy out.
Good to excellent credit
Typically 1 to 7 years
Must be a US citizen and 18+ years old. Must have good to excellent credit.

Compare up to 4 providers

What extra costs should I budget for?

The sticker price of the car is the main expense, but not the only one. Make sure you have enough to cover all the related expenses, both during and after purchase.

  • 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.
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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.

Bottom line

Buying a car is a long process that can be stressful and confusing, 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

Image source: Shutterstock

Kellye Guinan

Kellye Guinan is a writer and editor with and has years of experience in academic writing and research. Between her passion for books and her love of language, she works on creating stories and volunteering her time on worthy causes. She lives in the woods and likes to find new bug friends in between reading just a little too much nonfiction.

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