The New Car Buying Guide

(Everything you need to know - and more)

Woman in the showroom enjoying new car

Buying a new car is exciting. But there are a lot of new cars to choose from. It can be overwhelming. If you don't do your homework, it can also be stressful. But it doesn't have to be any of those things.

In an ideal world, you'll find the perfect car, and the perfect car insurance, at a great price. Doing your homework and making the right decision means you can avoid buyer's remorse. Luckily, there's a lot of information at your fingertips. On the flip side, there's a lot of information to go through.

We've talked to dealers and reviewed a variety of tips from different experts to compile the list below. Review it before you go out searching for your next new car, and buying will get a whole lot easier. 

Step 1: Figure Out What You're Looking For

Narrowing down your new car search is the first step. The best way to do so is to separate your needs from your wants.

Ask yourself questions like:

  • Do you need all-wheel drive? (This will depend on where you live and what you will use the car for.)
  • What kind of driving do you  do: freeway or city miles? (This will affect how important gas mileage and efficiency are to you.)
  • How many passengers will you be carrying? (This will affect size.)
  • Do you want an automatic or manual transmission? (This will affect the driving experience.)
  • What safety features do you want? (This  might depend on who is using the car.)
  • Will you be hauling anything with your vehicle? (This will affect how versatile your car needs to be.)

This should point you to a certain size of car, with an eye toward what the car can and should be able to do. Then you can consider things like budget to narrow your selection down further. That's the second step in the process.

Something to remember here is that you don't want to start your new car search with a particular make or model in mind. Experts find that too many buyers are fixated on a particular model even though that might not be the best choice. Start the process with an open mind, answer the right questions, and you'll be off to a good start.

Step 2: How to Create Your New Car Budget

Once you have some cars in mind, price is the next step in narrowing your options. 

Remember, price isn't about just the price of the car. You have to think about:

  • Payments
  • Insurance
  • Gas
  • Repairs 
  • Parking (depending on where you live) 

But let's not get ahead of ourselves. The starting point when you're thinking about price is car payments. 

Here's the general order of how budgeting will go:

  1. Financing vs. Large Down Payment vs. Buying Outright: This is the first question to answer. If you have to finance, explore options. There is dealer lending, then there is personal banking or lending options. Figure out which has the best rate based on your credit score.
  2. Manufacturer Financing: Manufacturers offer low- or no-interest financing to qualified buyers. If you have good credit, you might want to explore this option.
  3. Manufacturer Rebates: Rebates are available to all buyers, even if you have poor credit. You should take the rebate if you aren't able to take advantage of manufacturer financing.

Keep in mind that these factors will differ depending on how you pay or how much you pay. You will have more options available if you put more money down or have better credit. All of these factors depend on what car you purchase and what options are available because of that, too.

Step 3: Strategies to Find Your New Car

Now that you have a few cars in mind, and a rough budget sketched out, you should go to a dealership. You should really go to several dealerships. You can look online, too. The best strategy is to explore any and all options available in your local area.

You should compare asking prices from dealership to dealership. The more flexible you are with color and other cosmetic features, the more options you will find. The more willing you are to walk away, the more you'll get dealers coming to the bargaining table with you.

You might also want to look at websites for the dealers you plan on going to before you go. Sometimes car dealers don't have the best websites, but it can save you some of the time and hassle of going to too many places.

Step 4: Test Drive!

This is less important for new cars than for used vehicles. But driving a new car may alert you to  unforeseen problems. Maybe you hate the handling. Maybe the seat is uncomfortable. Maybe the features aren't intuitive or user-friendly. You won't know until you're in the driver's seat.

This is why keeping your options open to various manufacturers is important. The cars may have everything else in common: horsepower, safety features, storage capacity, etc. But the feel of the car while driving and the different comforts vary from maker to maker.

You can set up a test drive with the Internet manager or director, or you can do that at the dealership.

Step 5: Decide What To Do with Your Old Car

The easiest way to get rid of your old car is to trade it in to the dealer you purchase your new car from. This means you'll get a discount on your new car. The benefits of this are simple. It:

  • Saves time
  • Saves hassle (of selling your car to a private buyer)
  • Saves money (on advertising your old car for sale and taxes on your new car)

This doesn't mean that you just go to the dealership unprepared. Instead, check the Kelley Blue Book for the value of your old car. Then you'll know whether the dealer is offering you a fair trade-in price. Shop around: One dealer may offer you much more for your old car than the next.

If you do decide to sell on your own, do it cautiously. While you may be able to get a better price for your car, you'll have to market it and meet with potential buyers, and it could take time to sell your car. Many consumers opt for the trade-in based on convenience - but it's not for everybody.

Step 6: Negotiate a Fair Purchase Price

You'll focus on monthly payments when you're budgeting for your new car. But you aren't negotiating on the monthly payments, you're negotiating on the sticker price.

Dealers are tricky. They'll have you focus on the monthly payments, but space them out for longer. This means you're paying more, even if it doesn't seem that you are.

To get the best deal, request a variety of price quotes from the dealers in your area, online marketplaces, and private sellers. One may have the exact car you're looking for, but at a higher price. You can tell them you'd rather give them your business if only they'd match the lower price. 

Most will do just that.

Step 7: Review the Purchase Agreement

New car purchases come with fees.  Some of these are negotiable, and some dealers will eat the cost just to have you drive that car off the lot. Others are not, so don't be surprised if they stay firm on a certain fee.

While you're in the finance manager's office sealing the deal, remember that this person is also a sales rep. The plaque on the office door may read "Finance Manager," but the manager's job is to keep selling. They'll try to convince you to buy:

  • "Extra warranty" protection
  • Alarm systems
  • Other "perks" 

The dealer will often offer these overpriced perks that you can install elsewhere at a much lower price. Consider "extra warranty" protection in the context of how long you'll keep the car and what it covers. Often, it isn't worth the money.

Step 8: Sign on the Dotted Line

Once you've tracked down the perfect car, compared features and cost, taken it for a spin, received the best price on your trade-in, negotiated a fair offer, decided how to pay for the car, and withstood all the marketing and sales pitches to "improve" the deal, you're ready to sign the paperwork. 

It's the last step, and the most rewarding. But make sure you read what you're signing - you never want to take someone's word for what's in the contract.

Well technically, it's not the last step. Your real last step is insurance protection.

Step 9: Insure Your New Car

Here are some of the things you should consider when insuring your new car:

  • Lenders often require a certain amount of comprehensive and/or collision insurance for the life of the loan. 
  • Your state has liability insurance requirements you'll have to meet - whether that means you pay a minimum fee or buy an insurance policy with certain bodily injury and property damage minimum coverage limits. 

When the time comes, make sure you're prepared by getting auto insurance quotes from a variety of sources.

The easiest way to make this happen is with an independent agent. Unlike captive agents at big brand companies, independent agents work with several different insurance carriers. This means that with one quick call, email, or meeting, you could have several quotes in hand instead of shopping around by yourself. This is a huge savings in time and money in the end. 

Our insurance agents are independent, local, and ready to help you seal that deal on your new car with affordable car insurance.

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