How to Buy a Car in 6 Steps

Looking for your first set of keys? Before you hit the road, learn the ins and outs of the car buying process to get the best deal.

1. Set your budget

The best way to shop for a new vehicle is to know what you can afford. A few factors go into this. When you’re setting a budget, determine what your current car is worth, how much of a down payment you can allow, and how much can you afford for monthly payments. Be honest with yourself. Putting away $500 a month in your savings account does not mean you can afford $500 car payments. This leaves you no wiggle room for unexpected expenses and halts your savings.

Going car shopping without a budget in mind leaves you susceptible to shopping for vehicles outside of your means or applying for extended auto loans that lead to trouble in the future. Before you go car shopping use an auto payment calculator, like this one, to help you set your budget.

2. Determine your must-haves

What do you need a car for? Do you need more of a work truck to haul a trailer? Or is space important due to the size of your family? These are questions you need to ask to figure out what kind of vehicle you need: sedan, SUV, truck, etc.

From there you can determine the must-have features, like a sunroof, two-wheel drive or four-wheel drive, heated seats, safety features, and more. Also, figure out what things you can live without, like leather seats. Oftentimes, leather seats are a part of a higher trim package, increasing the cost of your vehicle.

3. Research, research, research

Once you’ve set a budget and determined what kind of vehicle you want, you may be surprised by the options available to you. Narrow down your search to a few select models and years. From there, compare dealers; go to the dealer that is least likely to pressure you into something you don’t want. Other things to research for your next vehicle are:

  • Passive safety vs. active safety
  • Quality
  • Expert opinions
  • Side-by-side comparisons

Don’t buy a vehicle just because it looks cool or you can afford it, choose a vehicle that is dependable and known for its low cost of ownership.

4. Consider your buying options

Leasing – You don’t have to buy your next car. Instead, you can lease. Consider it renting a vehicle for a period of time. The payments are lower than buying and you don’t need much of a down payment. Just be aware of the restrictions that come along with it, such as mileage limits and upkeep.

Financing – No one expects you to have the total cost of the vehicle upfront. Especially if you’re deciding to buy new. Financing is another avenue to look into. You can get pre-approved by your bank or credit union, or you can get financed through the dealership. It might be smart to get pre-approved first, so you know what kind of money you have to work with. If the dealership offers you something better, great! It’s better than getting swindled into a loan with a high interest rate and monthly payments before you’ve explored all your options.

Selling or trading in your vehicle – Selling your old car is a great way to come up with a down payment for your new vehicle. Usually when you sell the car on your own, you get more money out of it. When you trade it in at a dealership, expect a low offer. But trading in is a quicker, easier option that can go automatically toward your new vehicle.

5. Maximize your test drive

Don’t forget the test drive! This could make or break how you feel about a vehicle. You can do all the research in the world, but until you get behind the wheel, you don’t have a feel for it. A test drive is the best way to see your final picks in action. You shouldn’t feel rushed, so make sure you dedicate a good chunk of time to these final steps. When you’re driving, you should be testing how the car rides, listening to its noise levels, getting a feeling for its handling and braking systems, and how the vehicle responds when you accelerate. Test drive on city streets, test drive on the highway. Don’t rush the process.

6. Seal the deal

You found it. You found the best vehicle for your needs at a great price. Now it’s time to seal the deal and hit the road. You should walk away from the deal confident knowing you purchased a well-built vehicle at a price you can afford. Read the final paperwork carefully and ask questions. Don’t sign until you’re comfortable with the transaction. Once you’ve done that, you can drive off in your brand new car.