New Car Buying Guide

If you’ve never bought a new car before, it can seem like an overwhelming and confusing process. Even if you’ve already decided what your budget is and what type of car you’re interested in purchasing, the specifics of how to buy a new car can often feel intimidating and unapproachable to first-time buyers. Luckily, there are a few car buying tips to follow to ensure that purchasing a new car goes as smoothly and successfully as possible.

In this article

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    New car buying tips

    Buying a new car doesn’t have to be as complicated or overwhelming as it seems. If you’re looking to purchase a new car, you should:

    • Set a budget: Knowing how much you can comfortably afford to spend on a new car can help you narrow down your options and ensure that you don’t accidentally overspend.
    • Decide on a car type: You may want to test drive the cars of friends and family members or try several different cars at the dealership before you make your choice.
    • Review prices: Resources like Kelly Blue Book can help you see what the going rate is for a particular type of car in your area, and ensure that you get a good deal when it’s time to make your purchase.
    • Get quotes online from different dealers: Even before you visit a dealership, you can get quotes online or through email.
    • Decide if you want to trade in your old car: Trading in your old car can be a great way to save money on a new vehicle, but it may or may not be the right move for you depending on your circumstances.
    • Think about extras: Most cars come with standard features like radios and air conditioning, but cars purchased off the lot may not come with extras like roof racks or other additional features.
    Lending Partner
    Min. Loan
    Fixed APR
    Term
    • Auto Credit Express
      Min. Loan
      N/A
      Fixed APR
      N/A
      Term
      24 – 72 months
      Learn More
      on lender’s secure website
    • CarsDirect
      Min. Loan
      N/A
      Fixed APR
      3.00% – 12.90%
      Term
      24 – 72 months
      Learn More
      on lender’s secure website
    • LightStream
      Min. Loan
      $5,000
      Fixed APR
      2.49% – 9.49% w/AutoPay
      Term
      24–84 months
      Learn More
      on lender’s secure website
    • MyAutoloan
      Min. Loan
      $7,500
      Fixed APR
      3.49%–21.08%
      Term
      24–72 months
      Learn More
      on lender’s secure website
    • PenFed
      Min. Loan
      $500
      Fixed APR
      Starting at 1.39%
      Term
      36–84 months
      Learn More
      on lender’s secure website
    • Auto Credit Express
      Min. Loan
      N/A
      Fixed APR
      N/A
      Term
      24 – 72 months
      Learn More
      on lender’s secure website
    • CarsDirect
      Min. Loan
      N/A
      Fixed APR
      3.00% – 12.90%
      Term
      24 – 72 months
      Learn More
      on lender’s secure website
    • LightStream
      Min. Loan
      $5,000
      Fixed APR
      2.49% – 9.49% w/AutoPay
      Term
      24–84 months
      Learn More
      on lender’s secure website
    • MyAutoloan
      Min. Loan
      $7,500
      Fixed APR
      3.49%–21.08%
      Term
      24–72 months
      Learn More
      on lender’s secure website
    • Penfed
      Min. Loan
      $500
      Fixed APR
      Starting at 1.99%
      Term
      36–84 months
      Learn More
      on lender’s secure website
    • LightStream
      Min. Loan
      $5,000
      Fixed APR
      2.49% – 9.49% w/AutoPay
      Term
      24–84 months
      Learn More
      on lender’s secure website
    • LightStream
      Min. Loan
      N/A
      Fixed APR
      2.49% – 9.49% APR w/AutoPay
      Term
      24–84 months
      Learn More
      on lender’s secure website
    • MyAutoloan
      Min. Loan
      $7,500
      Fixed APR
      3.49%–21.08%
      Term
      24–72 months
      Learn More
      on lender’s secure website
    • PenFed
      Min. Loan
      N/A
      Fixed APR
      N/A
      Term
      N/A
      Learn More
      on lender’s secure website

    What to watch out for when buying a new car

    When buying a car, you should be wary of any salesperson who tries to persuade you to spend more than your budget or to add unnecessary additional features or warranties on top of your purchase. You should also be sure to read the fine print in order to make sure that you’re comfortable with every aspect of the purchase. If you plan on trading in an older vehicle, you might want to consider getting it inspected by a reliable mechanic in order to have a better sense of what price you should accept from the dealership for a trade-in.

    Buying new vs. used cars

    For both new and used cars, you should decide how much you’re willing to spend, what type of car you’d like to buy and what a good deal for that car would be. If you’re interested in buying a used car, you should do your homework and make sure to work only with reputable dealers who know the full extent of a used car’s history. Make sure to check the vehicle history report for any accidents or significant repairs in the car’s history before making a purchase. For used cars, it’s usually a good idea to inspect the car in person and give it a test drive to make sure that it’s in good working order.

    Negotiating price for a new car

    Negotiating a new car can be intimidating, especially for first-time buyers. Luckily, there are a few simple steps you can take the make the process as painless as possible.

    • Decide what medium you’d like to negotiate in: These days, you can buy a car over the phone or even entirely online, with minimal in-person interaction.
    • Decide how much you want to spend: Once you come up with this number, it’s important to stick to it. Keep the big picture in mind and try not to budge from your initial budget.
    • Don’t fall for predatory sales tactics: If you’re dealing with salespeople in person, be sure to negotiate slowly and clearly and make sure that all costs and fees are out in the open.
    • Don’t be afraid to go to another dealer: If you’re not able to get the deal you were hoping for, or if you’re feeling overwhelmed by unfriendly sales tactics, don’t be afraid to take your business elsewhere.

    How much car can you afford?

    How much car you’ll be able to afford depends on several factors, including how much money you have saved up, your monthly income, and any additional factors, such as whether you plan to trade in your current vehicle. You should make sure that your monthly payment is manageable under your current budget. If possible, you should try to save up as much money as you can for a down payment in order to avoid paying additional interest over time.

    How to finance your new car

    There are several options when it comes to financing the purchase of a new car. Financing usually takes the form of an auto loan. You can get preapproved for an auto loan from your bank or from another lender, and dealerships can also help you get approved for financing on their end. When looking for an auto loan, be sure to compare the rates of a variety of different lenders in order to ensure that you get the best price possible. Some lenders or car salesmen may try to persuade you that their financing option is preferable because of a lower monthly payment; however, this can sometimes cost you more money over time if the term length of the loan is longer.

    Auto loan options

    There are a variety of auto loan options available from banks, credit unions and online lenders. When shopping around for auto loans, you should try to secure the best rates possible that will save you money in the long term. Keep in mind that you should choose a term length that allows you to pay off a loan as quickly as makes sense for your particular situation. This is because cars depreciate over time, which means that you can end up owing more than the car itself is worth if you choose a loan with a long term length.

    Check Your Auto Loan Rates

    View our top-rated lenders and find the best rates today. It’s quick and easy.

    How to buy a car with bad credit

    Some lenders require borrowers to have a minimum credit score in order to approve them for an auto loan. However, there are several options available for borrowers with bad credit. If you don’t have enough saved to purchase a car outright, you may qualify for auto loans specifically targeted to borrowers with poor credit. Paying your auto loan on time each month can also help you build good credit in the future.

    Purchasing car insurance for a new car

    If you already have car insurance for your old vehicle, you should contact your insurance provider in order to provide them information about your new car. Your insurance rates may go up if your new car is more valuable than your old car. It’s important not to let your coverage lapse even for a short period of time on the off chance that you get into an accident. You’ll need to already have purchased car insurance before you’re able to drive your new vehicle home.

    Margaret Wack

    Contributing Writer

    Margaret Wack writes about personal finance, health, wellness, arts and culture, among other topics.

    Reviewed by

    • Courtney Mihocik
      Courtney Mihocik
      Editor

      Courtney Mihocik is an editor at The Simple Dollar who specializes in insurance, personal finance, and loans. Previously, she wrote and edited for Interest.com, PersonalLoans.org, Ballantyne Magazine, Thread Magazine, The Post, ACRN, The New Political, Columbus Alive and the Institute for International Journalism.