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Car Buying

Buying a New Car: 9 Steps Every Buyer Should Take

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author photo by Doug DeMuro April 2014

Thinking about buying a new car? Not sure if you're going about it the right way? Have no fear: Our latest list includes nine steps every buyer should take before signing the papers.

1. Read Reviews

Choosing the right car can be difficult, and it's even more complicated when you're thinking about interest rates, monthly payments, color choices and options. That's why you should begin to narrow down your choices before you even set foot in a dealership, even before you look for financing.

The best way to do this often involves reading reviews from experts, who can help you eliminate mediocre cars and focus on the best ones. You should also talk to friends and family to find out their views on various cars. Interested in a Honda Civic, for example? Ask a friend who owns one.

2. Figure Out What Your Trade-In Is Worth

If you're trading in your current car, this is an important step. Because you want to be armed with as much knowledge as possible before setting foot in a dealership, you'll want to know what your trade-in is worth before a dealer ever makes you an offer on it. To do this, we highly recommend using Kelley Blue Book's website (kbb.com). We also recommend searching AutoTrader to find asking prices on cars that are comparable to yours. But remember, since you'll be trading in your car, don't expect the dealer to offer you its full retail value.

3. Figure Out What You Can Afford

Once you've decided on a few cars worth considering, it's time to find out what you can afford. If you're interested in financing or leasing your next car, this means you need to figure out what monthly payment is acceptable without breaking the bank. Different shoppers have different strategies for budgeting car payments, and we certainly wouldn't want to impose our own, but we strongly suggest creating a budget before heading to the dealership or the bank.

4. Secure Financing

The next step in the process is to secure financing, and we wouldn't suggest waiting until you're at the dealership to do it. Trying to negotiate a car's price while simultaneously working out an interest rate and loan terms can be very time-consuming, and the dealer knows that the more time you spend on a car, the less likely you are to walk away.

Securing financing beforehand -- from a bank or credit union, for example -- gives you more power in the negotiating process. It also lets you know where your credit stands before you visit a dealership. Remember that if you secure financing before visiting a dealership, you should get a little extra money to pay taxes and fees often associated with a car purchase. Otherwise, you could be stuck paying those sometimes-costly items after the purchase.

5. Find The Cars You Want

The next step may seem simple, but it's more crucial than you might think. In fact, this is some of the most important advice we can give you: Don't just find one car you want. After you've read reviews and set a budget, visit AutoTrader's listings and find several cars available locally. That way, you'll have several backup choices if your original plan falls through. Additionally, you'll have some other options if you have a bad experience at one dealership, or if a few cars are sold to other customers before you're able to check them out.

6. Take a Thorough Test Drive

For many shoppers, this step is possibly the most important of them all. Unless you have a lot of experience with the make and model of car you're considering, don't just settle for a short 5- or 10-minute test drive around the block. Take a long, thorough drive, no matter how persistent the salesperson is that a shorter route is better. Remember that you're the one buying the car, and it's a huge purchase. As a result, you shouldn't feel rushed into any part of the decision. If you do feel rushed, it might be a sign to consider one of the other cars you've selected.

Beyond a test drive, shoppers interested in a used car might want a mechanical inspection. While this is often not necessary for certified pre-owned cars sold with a manufacturer-backed warranty, mechanical inspections can be money well spent for drivers interested in used cars with no warranty. At this point, we also suggest that you ask the dealership for a Carfax or AutoCheck vehicle history report to find out whether the car has been in an accident or suffers from any other issues.

7. Negotiate a Lower Price

It's very rarely true that the dealership is advertising its best price. Usually, car dealers advertise one price, but they're willing to come down from that figure if shoppers negotiate. This is especially true on a sales close, which is almost always the last day of the month.

When it comes to negotiating, don't be a jerk. Be firm, but remember that this is a business transaction, and it's not personal if the dealer doesn't meet your price. Still, we strongly suggest that you don't agree to any figure you aren't comfortable with. Since you have your financing in order and a long list of other cars to consider, you can always walk out the door at any time. That gives you the ultimate bargaining chip in the world of car sales.

8. Thoroughly Read the Buyer's Order

Before you agree to any transaction, read over the buyer's order. This is a document that lists the price of every single thing on the vehicle, from its base cost to dealer fees and taxes. If you have any questions, be sure to ask the dealer about everything before signing the order. This includes items like documentation fees and taxes. If you aren't sure what an item is, now's the time to ask, and if anything makes you uncomfortable, this is your last chance to back out.

Around this time, dealers will also offer to sell you various automotive add-ons, such as tire warranties, alloy wheels or alarm systems. We suggest that you be very careful here, as these items can become expensive quickly, and they can increase your monthly payment.

9. Enjoy Your New Car

If you follow our advice, the process of buying a new car doesn't have to be so intimidating. Sure, it's a lot to keep in mind, but don't let all that stop you from enjoying your new car as you drive it off the lot for the first time.

This image is a stock photo and is not an exact representation of any vehicle offered for sale. Advertised vehicles of this model may have styling, trim levels, colors and optional equipment that differ from the stock photo.
Buying a New Car: 9 Steps Every Buyer Should Take - Autotrader