How To Buy A New Car

Dustin Hawley | Sep 19, 2022

Buying a new car can be an adventure. Choosing the right vehicle and dealership are significant decisions, and you want to ensure you’re getting things right.

Here are some pointers for finding the right car at the right price.

How To Buy A New Car

Know What Kind Of Vehicle You Need

If you’re unsure exactly what type of car you are in the market for, now is the time to weigh your options. First, think about how you’re going to use this car. Is it a commuter? Do you have kids that you need to drive around? Do you need to carry cargo for work? The answer to these and other questions will help dictate the ideal choice.

It helps if you can come up with a few different options. For example, you’re looking for a four-door sedan with a five-star safety rating and a built-in navigation system. Several cars fit that description, and it would be wise to consider them all.

Determine Your Budget

After selecting a few potential vehicles, it’s time to figure out your budget. You can lease a car, take out a loan, or purchase it outright. Buying a car outright is the most expensive option upfront; because you’re paying for the whole vehicle at once. However, it’s the cheapest option because you’re not accruing any interest.

Because of the high dollar amount involved in an outright purchase, most motorists take out a loan for their car. You can usually save money on your monthly bill by taking a lease instead, but be warned: your vehicle will still belong to the dealership at the end of the lease period.

If you’re making monthly payments, try to keep those payments under 10% of your monthly take-home pay. Compare these numbers to what you’d pay for your cars of choice, and make sure you’re picking realistic options for your budget.

Consider A Loan Preapproval

Most car dealers will offer loans through their financing department, but if you want a lower interest rate, it helps to consider applying for third-party loans. Apply for a preapproval at various lenders, and see what offers you get. Doing this gives you a good idea of what you’ll pay, even before visiting any dealers.

When applying for preapprovals, stick with the shortest-term loans you can afford. Short-term loans have higher monthly payments, but you pay less in interest over the life of the loan. If possible, choose a loan with a term of no longer than 60 months.

Before applying for preapproval, prepare as much information as possible about your finances. Add up any other debt you have, and collect your bank balance and salary information for the lender. Doing this will ensure you get your loan offer as quickly as possible.

Be Prepared With Your Trade-In

If you own your vehicle and want to trade it in, remember that you don’t have to accept the dealer’s offer. Oftentimes, a dealership will give a generous offer on the vehicle you’re purchasing, only to provide you with a lowball trade-in value. At the same time, being honest with the dealer (and yourself) about your car’s condition is essential.

Before going into the dealership, look up your car’s current book value, and see what you can get on the private market. It can often be more profitable than accepting the dealer’s trade-in offer.

Test Drive

Now that you’ve finalized your preparations, you’re ready to check out a few cars in person. Visit your local dealership, and ask to go for a test drive. Unlike with a used car, there are little to no concerns about the car’s condition and maintenance history. Instead, you want to see how it handles, how well it accelerates, and how the brakes work.

Before you go in, it’s wise to call ahead and verify that the car is still in stock. Even if it shows as available on the dealership’s website, that information might not be entirely up to date. If the dealer will let you schedule an appointment, so much the better. Some dealers will even bring the vehicle to your home.

During your test drive, take the car on different roads and through various traffic conditions. Some vehicles perform well in stop-and-go traffic, but not on the highway. Some cars are great for high-speed driving but feel sluggish and awkward at slower speeds.

Along the way, don’t forget to perform a visual inspection. See if the trunk is as big as it is in the marketing material, and note how comfortable the seats are. And if you’re not 100% confident that this is the right car, go home and sleep on it. There’s no sense in buying a car you’re not entirely sure about.

Complete The Transaction

If you decide you want to move forward with the transaction, you’ll have to negotiate the price. Keep in mind that dealers will tend to offer better pricing upfront if they know you’re financing with them. Don’t tell them you’ve been preapproved for a loan until you’ve negotiated the price as low as possible. It doesn’t hurt to listen to their financing offers and ask them if they’ll beat your preapproval’s interest rate.

Finance managers will often try to sell you additional products like warranties, corrosion protection, and other add-ons. These are usually sold at an inflated price, and buyers can often get the same services for less from different vendors. However, extended warranties can provide real value if you keep the car for a long time.


Buying a new car is a significant purchase, and you want to be happy with the results. By choosing the right vehicle, getting a loan preapproval, and thoroughly inspecting the vehicle, you’ll have the best chances of finding the perfect car for your needs.

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