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 mission is to help you make better financial decisions by offering interactive financial calculators and tools as well as publishing objective and original content. This allows users to conduct research and compare data for free and help you make informed financial decisions. Bankrate has agreements with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are displayed on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including for instance, the sequence in which they be displayed within the listing categories, except where prohibited by law. Our loan products, such as mortgages and home equity, and other home loan products. But this compensation does affect the content we publish or the reviews appear on this website. We do not cover the entire universe of businesses or financial offerings that might be accessible to you. Caiaimage/Martin Barraud/Getty Images
5 min read published October 21, 2022
Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers in understanding the ways and pitfalls of borrowing money to purchase an automobile. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are committed to helping readers feel confident to take control of their finances through providing concise, well-researched and researched facts that break down complex subjects into digestible pieces. The Bankrate promises
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If you have questions about money. Bankrate has the answers. Our experts have helped you understand your finances for more than four years. We are constantly striving to give our customers the right guidance and the tools necessary to be successful throughout their financial journey. Bankrate follows a strict policy, which means you can be confident that our information is trustworthy and precise. Our award-winning editors and reporters create honest and accurate information to assist you in making the best financial decisions. The content created by our editorial staff is objective, factual and is not influenced from our advertising. We’re transparent about how we are in a position to provide quality information, competitive rates and practical tools for you , by describing how we earn our money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for placement of sponsored products and, services, or when you click on certain hyperlinks on our site. This compensation could affect the way, location and when products appear within listing categories, except where prohibited by law for our mortgage home equity, mortgage and other home lending products. Other elements, like our own proprietary website rules and whether or not a product is available in your region or within your personal credit score may also influence how and where products appear on this website. We strive to provide a wide range offers, Bankrate does not include details about each financial or credit item or service. If you’ve spent the past few months dreaming of an upgrade to your driveway, chances are you’re considering different models, comparing deals and looking at what accessories you can afford. Car purchases are an expensive purchase so you’ll need to think about costs as well as financing options and negotiation tactics before heading to the dealer. 7 steps to buy an auto when you’re ready, follow these seven to maximize your car buying experience. You’ll walk away with the car that you’ve always wanted for a price that won’t break the bank. 1. Find out what you can afford You may be tempted to set your sights on a specific car, but you won’t be able to take it home unless you . Take into consideration the monthly installment along with other . One good guideline is to limit yourself to spending less than 20 percent of your household’s monthly earnings on a new vehicle. This amount should comprise your monthly car loan payments and all other costs, including fuel, , maintenance, repairs and registration fees. For the monthly payment alone, suggests that you should aim for no greater than 15 per cent of the earnings. Utilize this calculator to obtain an accurate estimate of what you will be expected to pay each month and in interest over the course of the loan. This is equally important as it will determine the interest rate you will receive. 2. Decide whether you want to lease or purchase the vehicle Do you plan to drive your car for so long as the wheels can stay on? If yes, then buying is the best choice, and you’ll be able to sell or trade in the vehicle whenever you’d like to get a new set of wheels. However, if you want a new car every three years . leasing can help you find a better car for your money as they typically come with less down payment requirements and lower monthly payments. But you’ll not own the car outright and you’ll need to look for lease conditions that are specific including mileage restrictions and wear-and tear fees to avoid costly penalty charges. Take a look at the cars that are on your radar, and then weigh the one of them. Bankrate’s will provide you with an estimate of the potential savings from buying or leasing so you can make an informed choice. Take into consideration certified pre-owned
Certified pre-owned vehicles can be the perfect way to save money on buying a new car with lower costs. You’ll get reassurance of the warranty of the manufacturer that you can’t get from a private dealer.
3. Research Once you have established your budget and determine the best kind of ownership to suit your driving style, begin researching the vehicles that have been awe-inspiring to you. First, visit automaker websites as well as independent auto information websites to evaluate the features that are important to you. Keep track of the MSRPs (manufacturer’s recommended retail price) and invoice prices. Check local inventory listings to see what’s available in your region. Also research any possible discounts. Many automakers offer discounts to military members, students, as well as members of certain credit unions. These discounts can be stacked together with cash-back incentives on the vehicle that should be taken after you negotiate the price. Check the automaker’s website for the incentives prior to going to. 4. Determine the true cost The price of owning a car is significantly more than the initial payment. Use websites like or to get a general idea of gas, insurance, repair and maintenance costs in your area — although these figures will be contingent on your driving habits. To get even more precise you can calculate your own cost to calculate the cost of fuel based on the amount of miles you take in each year and then get a price estimate for the cars you’re thinking of buying. You’ll need to inform an insurance agent the exact model, trim level, engine, and any add-ons in order to receive an accurate estimate. It is important to keep in mind that additional fees, such as taxes on sales, registration fees and other documentation costs are not included in the price that dealers advertise. Bankrate tip
Request a full breakdown of the quote so that you know what fees to expect
Bankrate tip: Think about the cost of fees like registration, tax, and document fees, that aren’t included on the price offered by dealers. Request a detailed price breakdown of the quote so you can know what charges to expect for five. Secure your financing prior to going to the dealer Dealers don’t only want to sell you a car -they’re also looking to coordinate the car loan as well. Dealers usually receive an uncapped fee or commission on car loans they facilitate regardless of whether or not the loan originates either from a manufacturer or local lender. Instead of having your dealer take care of the job, check at banks and credit unions prior to going to the dealership. Being preapproved by a bank, credit union or an online lender doesn’t mean you need to sign up for the offer however it could aid you in determining which financing option is cheapest. It could also give you bargaining power if give the preapproval for your lender and they agree to beat out the cost to gain your business. In order to obtain a preapproval letter you’ll have to submit your employment, personal and income information for the lender. They can also inquire about other outstanding debt obligations you’re currently facing to figure out how much of an auto loan you can afford. 6. Test drive Most car shoppers keep their new vehicles for around six years, so make sure you take your time during the test drive. Make sure that you really enjoy the car, particularly in the event that you frequently drive to work or travel. Don’t hesitate to ask for additional time at the steering wheel. Take time when it’s stopped to adjust the seats, experiment with the controls, and decide if passengers would be comfortable and if your regular items would fit in the. 7. Negotiate When you’re ready to meet and discuss about pricing, come prepared by completing your research. Find out if other dealerships are offering better deals on your car, and then ask for an offer to match the price from the sales representative. If you’re interested discuss this, you should do it when you’re negotiating the sale cost of your new vehicle. Separately discussing these issues will help you get the best deal for the car you currently own and you’ll do better if you’ve conducted some research on your current car’s value on the internet. Before signing the contract, you should go over all the details carefully. Check any fees that are proposed and check that everything you agreed to verbally is written down in writing. You should also be willing to decline the nice extras may not be necessary, or the whole package in the event that it isn’t working your way and the person selling it refuses to change his mind. The current state of the automobile market. Purchasing a new car requires some additional considerations. The average transaction price for new vehicles (ATPs) reached record-breaking levels at over $48,000, for the fifth straight month in August 2022, according to . The price hikes you’ll likely face are due to a simple problem of demand versus supply. There are fewer vehicles available in car dealerships because of lingering supply chain issues, and drivers in need of vehicles, costs are increasing. Along with the increase in demand and supply, choices in the fight against inflation have made the cost of borrowing higher too. This increase is reflected clearly in the amount of money that people are borrowing, an average of $40,290 for the second quarter of 2022 versus $35,587 by 2021, according to . This all means that you should prepare to spend some more money on your new car. Next steps Buying a new car is an exciting processand there’s no better feeling than leaving the dealership knowing you got the best deal. Before you begin your look for that perfect car make sure the finances of your family are on track, and your credit score is up to the mark. It’s equally crucial to review your budget and determine the amount of car you can afford. Once you’ve worked out the financial details look around for the best financing deal so you can bargain with confidence. Ahead of time, a dealership visit can help you choose the most affordable option that fits your budget. Find out more
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Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers with the ways and pitfalls of borrowing money to purchase a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers to take control of their finances through providing precise, well-studied information that break down complex subjects into digestible chunks.
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