How to buy a new car Part Of Buying a Car In this series Buying a Car Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling users to conduct studies and compare information for free to help you make financial decisions with confidence. Bankrate has partnerships with issuers such as, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this website come from companies that pay us. This compensation can affect the way and where products appear on this site, including for instance, the sequence in which they appear within the listing categories and other categories, unless prohibited by law. This applies to our loan products, such as mortgages and home equity and other products for home loans. However, this compensation will affect the content we publish or the reviews you read on this site. We do not contain the entire universe of businesses or financial offerings that might be open to you. Caiaimage/Martin Barraud/Getty Images
5 minutes read. Published October 21, 2022
Written by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the ways and pitfalls of taking out loans to purchase cars. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are passionate about helping readers to manage their finances by providing clear, well-researched information that breaks down otherwise complex subjects into digestible pieces. The Bankrate promises
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At Bankrate we aim to help you make smarter financial decisions. We adhere to the highest standards of journalistic integrity ,
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Bankrate adheres to a strict code of conduct , so you can trust that we put your interests first. Our award-winning editors, reporters and editors produce honest and reliable content that will aid you in making the best financial choices. Key Principles We respect your confidence. Our mission is to offer readers reliable and honest information. We have established editorial standards to ensure that happens. Our editors and reporters thoroughly check the accuracy of editorial content to ensure the information you're reading is accurate. We keep a barrier between advertisers as well as our editorial staff. Our editorial team does not receive direct compensation through our sponsors. Editorial Independence Bankrate's editorial team writes on behalf of YOU the reader. Our aim is to provide you the best advice that will assist you in making smart financial decisions for your personal finances. We adhere to strict guidelines in order to make sure that the content we publish is not in any way influenced by advertising. Our editorial staff receives no directly from advertisers, and our content is checked for accuracy to ensure its truthfulness. So, whether you're reading an article or a report, you can trust that you're getting reliable and dependable information. What we do to earn money
There are money-related questions. Bankrate can help. Our experts have been helping you manage your finances for more than four decades. We are constantly striving to provide consumers with the expert guidance and tools required to succeed throughout life's financial journey. Bankrate adheres to a strict code of conduct , so you can trust that our content is truthful and precise. Our award-winning editors and journalists produce honest and reliable content to help you make the right financial decisions. The content created by our editorial staff is objective, truthful, and not influenced through our sponsors. We're transparent regarding how we're capable of bringing high-quality content, competitive rates and practical tools for our customers by revealing how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for the placement of sponsored products or services, or by you clicking on certain hyperlinks on our site. Therefore, this compensation may impact how, where and in what order items appear in listing categories and categories, unless it is prohibited by law. This is the case for our mortgage or home equity products, as well as other products for home loans. Other factors, like our own proprietary website rules and whether or not a product is available in your area or at your self-selected credit score range may also influence how and where products appear on this site. While we strive to provide the most diverse selection of products, Bankrate does not include details about every credit or financial product or service. If you've spent the past couple of months dreaming about a new ride in your driveway, chances are you're looking at various models, looking at deals, and looking at what accessories you are able to afford. Buying a car is an expensive purchase and you'll have to consider the price as well as financing options and negotiation strategies before you head to the dealership. 7 steps to purchasing an auto when you're ready, adhere to these steps to make the most of the car buying experience. You'll walk away with the vehicle you've always wanted at a cost that won't be a burden on your budget. 1. Figure out your budget might have your eye on a specific car, but you won't be able to take it home unless you . Think about the monthly payments in addition to other . A good guideline is to not spend more that 20 per cent of the monthly household earnings on a new vehicle. This amount should comprise your monthly car loan payments as well as all other expenses, like fuel, , maintenance, repairs and registration fees. For the monthly installment alone, suggests that you should make sure that you are not paying greater than 15 per cent of the earnings. Use to get an accurate estimate of how much you'll be paying each month and in interest over the life that you will be paying for the loan. It's equally important since it will determine the interest rate you will receive. 2. Decide whether you want to buy or lease Do you intend to drive the vehicle as long as the wheels are on? If so, buying is the best option, and you'll be able to sell or trade in the vehicle when you want to get a new set of wheels. However, if you want a new car at least every 3 years . Leases can let you find a better vehicle for the money, as they typically have lower down payment requirements , and a more affordable monthly payment. But you won't have the vehicle for a long time and will need to check for lease conditions that are specific, such as mileage restrictions and wear-and tear fees to avoid expensive fines. Look at the cars that are on your radar and weigh the one of them. Bankrate's will help you estimate potential cost savings of buying or leasing to help you make an informed choice. Think about certified used
Certified pre-owned options can be the perfect way to save money on a new car and lower costs. You'll be able to rely on a manufacturer's guarantee which you won't receive from a private vendor.
3. Research After you set your budget and decide on the best kind of ownership to suit your driving habits, you can begin looking into the cars that have caught your eye. First, visit the websites of automakers and independent information sites to assess the features that are most important to you. Take note of MSRPs (manufacturer's recommended retail price) and invoice prices. Check your local listing of inventories to determine what is available in your area. Additionally, research discounts. A lot of automakers offer discounts for military members, students, as well as members of certain credit unions. These discounts can be stacked and combined with any cash-back incentives on the vehicle that should be taken when you negotiate the price. Check the automaker's website for such incentives prior to stepping to. 4. Calculate the real cost cost of car ownership is much more than just your initial payment. Utilize websites such as or to get a rough idea of gas, insurance repairs and maintenance expenses in your area -- though these numbers will depend on your driving habits. For greater accuracy, do your own calculation for fuel costs based on the amount of miles you take in each year and request a quote for the vehicles you're considering. You'll need to give an insurance agent the exact model and trim level, as well as the engine, and any add-ons in order to receive an accurate price. It is important to keep in mind that fees, like taxes on sales, registration fees and other documentation costs are not included on the sticker price that dealers advertise. Bankrate tip
Request a full breakdown of the quote to know the charges to expect.
Bankrate tip: Think about fees, like sales tax, registration fees and documentation fees not included on the sticker price that dealers advertise. Get a full breakdown so that you know what fees to expect five. Make sure you lock in your financing prior to making a trip to the dealership. Dealers don't only want to sell you a car -- they want to coordinate the car loan too. Dealers typically receive an uncapped fee or commission for the auto loans they facilitate regardless of whether or not the loan is directly from the maker or from an local lender. Instead of having the dealer do the work, in banks and credit unions and prior to going to the dealership. Getting preapproved by a bank, credit union or online lender doesn't mean you have to take that deal, but it can assist you in determining which option for financing is the least expensive. It could also give you negotiating power if you provide the preapproval letter for your lender and they promise to beat the cost to gain your business. To secure a preapproval letter you'll need to supply your personal, employment and income information for the lender. They might also ask about other outstanding debt obligations you're currently facing to figure out the amount of an auto loan you can manage to pay for. 6. Test drive Most car shoppers keep their new cars for about six years, so make sure you take your time when you test drive. Be sure you truly enjoy the car, particularly if you drive a lot to work or for travel. Don't be afraid to ask for additional time at the car. Spend time in the car when it's stopped to adjust the seats, play around with the controls, and decide if the passengers are comfortable and if your regular items would fit in the. 7. Negotiate When you're ready to sit down and talk about pricing, be prepared with the information you've gathered. See if other dealerships are offering better deals on your vehicle and seek price matches from the sales representative. If you're considering it discuss this, you should do it when you've negotiated the purchase price of your new car. Having those conversations separately will allow you to negotiate an even better price for your current vehicle and will be better if you've done some research on the value of your current vehicle online. Before you sign the final contract, go over all the details carefully. Review any fees proposed and make sure that anything you negotiated verbally is also written down in writing. Be willing to decline the nice extras aren't necessary or even to the whole deal if it doesn't work with you, and the seller doesn't want to budge. The present state of the car market . Buying a new car requires some additional considerations. New vehicle average transaction prices (ATPs) have surpassed record levels over $48,000 for the fifth straight month in August of 2022 according to . The prices you will likely face are due to a simple issue of demand and supply. There are fewer vehicles available in car dealerships because of lingering supply chain issues, and drivers in need of vehicles, costs are rising. On top of demand and supply, the choice in the fight against inflation has made the cost of borrowing higher too. This is evident in the amount drivers are financing, an average of $40,290 in the second quarter of 2022 versus $35,587 in 2021, according to . It's a sign that you'll need to budget some extra money for the new car you purchase. Next steps Buying a new car is an exciting procedure, and there's nothing more satisfying than driving off the lot knowing you got the most affordable price. However, before you begin your look for that perfect car, ensure you have your financials in check, and your credit score is on par. It's equally important to assess your spending plan to determine what car you are able to afford. After you've figured out all the financial details look around for the best financing deal so you can make a decision without fear. Making your way to the dealership with a plan will help you find the most affordable financing option which fits within your budget. Find out more
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This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers with the ins and outs of securely taking out loans to purchase an automobile. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping their readers to control their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites.
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