Buying a car can feel like navigating a maze, whether you’re a first-time buyer or upgrading your current ride. Knowing where to start and what steps to take can make the entire process smoother and more successful. This guide breaks down the essential stages of car buying, ensuring you’re well-prepared to drive away with the perfect vehicle for your needs.
1. Secure Pre-Approved Car Loan for Smart Financing
Getting pre-approved for a car loan is a powerful first step in your car buying journey. It gives you a clear understanding of your budget and the interest rates available to you before you even set foot in a dealership. Many banks, credit unions, and online lenders, like Capital One and Nationwide, offer convenient online loan applications. Researching different lenders is key to finding the best terms for your financial situation.
When planning your financing, consider loan terms carefully. While 72-month loans are increasingly common due to rising car prices, aiming for a shorter term like 60 months is generally recommended by financial experts like Edmunds. A 20% down payment has long been considered ideal, but it’s not always feasible. A practical approach is to aim for a 10% down payment combined with gap insurance or new car replacement coverage. This strategy balances keeping your initial costs manageable with protecting yourself from owing more than the car is worth if it’s totaled early in the loan term.
To start the pre-approval process, gather your employment and salary details, along with information on any existing debts. It’s wise to apply for pre-approval only when you’re ready to start car shopping within a couple of weeks. This minimizes the impact of credit inquiries on your credit score. For more in-depth information on securing financing, explore resources like “How to Get a Car Loan.”
2. Consider Buying a Car with Cash
For some buyers, paying cash for a car is an attractive option to avoid loans and interest charges. While paying cash might not always guarantee a lower purchase price, it certainly simplifies the transaction. However, be aware that cash transactions exceeding $10,000 require reporting to the government and involve additional paperwork. To delve deeper into the specifics of cash purchases, refer to “Buying a Car With Cash.”
3. Evaluate Your Trade-In Car Value
If you have a car to trade in, determining its trade-in value before visiting a dealership is a crucial step. This knowledge sets realistic expectations and provides a benchmark for evaluating trade-in offers. Current market conditions might even mean your car is worth more than you anticipate. The Edmunds appraisal tool is an excellent resource for quickly assessing your car’s value. Using your smartphone while in your car allows you to accurately input details about its options, such as heated seats or a sunroof, which can affect its value. Be honest in your assessment of your car’s condition; most vehicles fall into the “clean” or “fair” category.
The Edmunds appraisal tool will present you with three key values: trade-in value (what a dealer might offer), private-party value (potential sale price to an individual), and dealer retail value (price for a similar used car at a dealership). Focus on the trade-in value when negotiating at the dealership.
An even quicker alternative to traditional trade-ins or private sales is obtaining an instant offer from Edmunds. These offers are valid for seven days, giving you the option to either challenge your local dealer to beat the price or sell your car directly to a participating dealership. For a comprehensive guide to trade-ins, consult “How to Trade in a Car.”
4. Locate Your Ideal Car
By this stage, you likely have a few car models in mind. Seeing them in person is essential before making a final decision. Edmunds hosts extensive car inventories from dealerships nationwide, often allowing you to filter by specifics like color, trim, and features. This method of shopping is often more effective than relying solely on automaker websites, as Edmunds listings represent real, available cars with diverse options and Edmunds suggested pricing for comparison.
While filtering by dealerships near you is convenient, consider expanding your search radius. Dealerships in neighboring towns or counties might offer better pricing or have the exact model you’re seeking.
4A. Explore Out-of-State Car Buying
For those seeking a very specific car configuration, buying from out of state can broaden your options. However, it’s important to be aware of potential complications. While you might consider out-of-state purchases to avoid sales tax, often the tax is determined by your registration state, not the purchase location. “Should I Buy an Out-of-State Car?” provides detailed insights into these considerations.
5. Master the Test Drive: Dos and Don’ts
Using Edmunds to locate a car often connects you with a dealership salesperson to schedule a test drive. If you find a vehicle elsewhere, contact the dealership’s internet sales department to arrange a test drive. Keep these essential do’s and don’ts in mind for a productive test drive:
- Do verify car availability: Confirm the car is still in stock, as online inventories may not be perfectly up-to-the-minute.
- Do inquire about dealer-installed options and markups: Ask about add-ons like nitrogen tire fills, floor mats, or theft protection, and be aware of “market adjustments.” These can significantly increase the final price. “Dealer-installed options” offers more information on this topic.
- Don’t visit during peak times without an appointment: Avoid busy weekends or evenings to ensure adequate salesperson attention and shorter wait times.
- Do schedule a test drive appointment: Weekday mornings are ideal. Appointments ensure the car is ready and you receive dedicated service. You can even request a test drive at your home.
- Don’t just drive around the block: Conduct a thorough test drive on varied roads to assess handling and suitability for your needs.
- Do evaluate practicalities: Assess control ergonomics, cargo space, and child seat compatibility (bring your child seat to test).
- Don’t feel pressured to buy immediately: Take time to consider your decision.
For a more detailed guide to effective test driving, see “How to Test-Drive a Car.”
By following these steps, you’ll be well-equipped to navigate the car buying process with confidence and make informed decisions. Enjoy the journey to finding your perfect car!
