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 aim is to assist you make better financial decisions by providing you with interactive financial calculators and tools as well as publishing objective and original content, by enabling you to conduct research and compare information at no cost and help you make sound 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 products that appear on this site are from companies that pay us. This compensation could affect how and when products are featured on this website, for example, for example, the order in which they may be displayed within the listing categories in the event that they are not permitted by law. Our loans, mortgages, and other home loan products. This compensation, however, does not influence the content we publish or the reviews appear on this website. We do not include the universe of companies or financial deals that could be available 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 navigating the ways and pitfalls of borrowing money to purchase an automobile. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping their readers gain the confidence to control their finances by providing clear, well-researched facts that break down complicated topics into bite-sized pieces. The Bankrate promise

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who ensure everything we publish ensures that everything we publish is accurate, objective and reliable. The loans reporter and editor are focused on the things that consumers care about the most — various types of loans available and the most competitive rates, the most reliable lenders, how to pay off debt and much more. So you’re able to be confident about making a decision about your investment. Integrity in editing

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There are money-related questions. Bankrate has answers. Our experts have helped you understand your money for more than four years. We strive to continuously give our customers the right advice and tools needed to succeed throughout life’s financial journey. Bankrate adheres to a strict code of conduct , so you can trust that our information is trustworthy and precise. Our award-winning editors and journalists provide honest and trustworthy content that will help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced from our advertising. We’re open about how we are capable of bringing high-quality information, competitive rates and helpful tools to our customers by revealing how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for placement of sponsored products or services, or when you click on specific links on our site. This compensation could influence the manner, place and when products are listed and categories, unless it is prohibited by law. This is the case for our mortgage home equity, mortgage and other products for home loans. Other factors, such as our own rules for our website and whether a product is available within your area or at your personal credit score may also influence the manner in which products appear on this website. While we strive to provide the most diverse selection of products, Bankrate does not include the details of each financial or credit item or service. If you’ve spent the past few months dreaming of getting a brand new car in your driveway, you’re probably checking out various models, looking at deals, and considering what additional features you can afford. The purchase of a car is an expensive purchase and you’ll have to consider the price as well as financing options and negotiation strategies before you head to the dealer. 7 steps to buy the perfect car. When you’re ready, adhere to these seven steps to maximize your car-buying experience and walk away with the car you’ve always wanted at a cost that doesn’t break the bank. 1. Figure out what you can afford You might have your eye on a certain car, but you won’t be able to take it home until you . Consider the monthly payment in addition to other . One good general rule of thumb is to not spend more then 20 percent of your household’s monthly earnings on a new vehicle. This figure should include your monthly car loan payments and all other costs, including maintenance, fuel repair, registration and maintenance fees. For the monthly payment alone recommends that you make sure that you are not paying less than 15% of your earnings. Use to get an accurate estimate of what you’ll be paying each month and in interest over the life of your loan. This is equally important as it will determine the interest rate you will receive. 2. Choose whether to lease or purchase the vehicle Do you plan to drive your car for as long as the wheels are on? If yes, then buying is the way to go, and you’ll have the ability to sell or trade in the car when you need a fresh set of wheels. If you’re looking for a new car each three years . Leases can let you find a better vehicle for the money, as they typically come with lower down payment requirements , and lower monthly payments. However, you will not own the car outright and you’ll have to search for lease conditions that are specific like mileage limitations and wear-and-tear charges, to avoid expensive penalties. Consider the vehicles you’re considering and consider the one of them. Bankrate’s can provide you with an estimate of the potential savings on the cost of purchasing or leasing, so you can make an informed choice. Consider certified pre-owned

Pre-owned certified options are the perfect way to save money on an upgrade to a brand new vehicle and lower costs. You’ll get reassurance of a manufacturer’s guarantee which you won’t receive from a private vendor.

3. Research: Once you’ve set your budget and decide on the right kind of ownership to suit your driving habits, start investigating the vehicles that caught your eye. The first step is to visit automaker websites as well as independent auto information sites to assess the features that matter to you. Take note of the MSRPs (manufacturer’s proposed retail price) and invoice prices. Check local inventory listings to see what is available in your local area. Also research any possible discounts. Numerous automakers offer discounts to students, military members as well as members of certain credit unions. These discounts can be stackable and paired with cash-back rebates on the model which must be taken when you negotiate the price. Check the automaker’s website for these incentives before heading into. 4. Find out the actual cost price of owning a car is far more than your initial payment. Use websites like or to get a rough idea of gas, insurance, repair and maintenance costs in your area — however, these figures will vary based on the driving habits you follow. To get even more precise, do your own calculation for fuel costs based on the number of miles you drive annually and request a quote for the cars you’re thinking of buying. It is essential to provide the insurance agent the exact model of the car, trim level, engine, and other add-ons for an accurate price. It’s crucial to note that the cost of fees such as sales tax, registration fees and document fees aren’t included in the price offered by dealers. Bankrate tip

Request a full breakdown so you can know what costs to anticipate.

Bankrate tip: Consider charges, such as registration fees, sales tax and documentation fees not included on the sticker price offered by dealers. Request a detailed price breakdown of the quote to know the costs to anticipate 5. Secure your financing prior to making a trip to the dealership. Dealers don’t want to just sell you a car -they’re also looking to manage the car loan as well. Dealers typically pay either a flat fee or commission for the auto loans they facilitate, no matter if the loan is directly from the maker or from an local lender. Instead of having your dealer do the work, in banks and credit unions and prior to going to the dealership, you can check with banks and credit unions before heading to the. Getting preapproved by the credit union, bank or online lender doesn’t mean you need to sign up for the offer, but it can help you determine which option for financing is the least expensive. It may also grant you the ability to negotiate if you present the preapproval to the lender and they offer to beat out the cost to gain your business. To obtain a preapproval form you’ll have to submit your personal, employment and income information for the lender. They may also inquire about other outstanding debt obligations you currently have to determine how much the auto loan you are able to afford. 6. Test drive The majority of car buyers maintain their new cars for around six years, so take your time with the test drive. Be sure you truly love the car, especially if you drive a lot for work or travel. Do not hesitate to request an extended time behind the car. Take time when it’s stopped to adjust the seats, experiment with the controls, and decide if passengers will be comfortable, and if your regular cargo would fit well. 7. Negotiate Once it’s time to sit down and talk about pricing, come prepared by completing your research. Find out if other dealerships offer better prices on your car and ask for price matches from your salesperson. If you’re looking to , save that discussion for after you negotiate the sale cost of your new vehicle. Separately discussing these issues can help you negotiate a better deal on your current car and you’ll do better if you’ve done research on your current car’s value on the internet. Before signing the final contract, go over all the details carefully. Examine any proposed fees and ensure that what that you had negotiated verbally is written down in writing. You should also be willing to decline the extras that you might not need or the whole package in the event that it isn’t working for you and the salesperson refuses to compromise. Current state of the new automobile market. Purchasing a new car requires some additional considerations. The average transaction price for new vehicles (ATPs) have surpassed record levels at over $48,000, for the fifth month in a row in August of 2022, according to . The high prices you will likely be met with are caused by a simple issue of supply versus demand. There are fewer vehicles available on car lots, because of lingering supply chain problems, and drivers in need of vehicles, costs are increasing. On top of supply and demand, choices in the fight against inflation has led to the cost of borrowing higher as well. This can be seen in the amount drivers are borrowing, an average of $40,290 in the 2nd quarter of 2022 versus $35,587 by 2021, according to . This means you should prepare to spend a bit more on the new car you purchase. Next steps Buying a new car is an exciting procedure, and there’s nothing more satisfying than leaving the dealership with the knowledge that you’ve got the most affordable price. But before you start your search for the perfect ride be sure that your finances are in order and that your credit score is at par. It’s equally crucial to review your budget and determine how much car you can afford. Once you have ironed out all the financial details, shop around to find the most affordable financing so you can negotiate with confidence. Making your way to the dealership with a plan can assist you in finding the most affordable solution that fits your budget. Find out more

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This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers in navigating the details of borrowing money to buy an automobile. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping their readers to take control of their finances with clear, well-researched information that breaks down otherwise complex subjects into digestible chunks.

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