Step 1 - What kind of car do you need?
If you examine your needs rather than wants, you will quickly discover what the right car is for you. Take a moment to think about what you use your car for. How many people do you need to transport? What kind of driving do you most often do? How long is your commute? Is it important that your next vehicle get good gas mileage?
In too many cases people choose a car because it has an eye-catching style or it is a trendy favorite. If you go in this direction, you may either break your budget or have to go car shopping again soon. Let your needs, not your wants, drive your decision.
Here are a few other questions to keep in mind when you begin your car-buying process:
Do you want a automatic or manual transmission?
Do you need four-wheel drive? Or all-wheel drive? Or front wheel drive?
What safety features do you need and want?
Do you require a lot of cargo-carrying capacity?
Will you be doing any towing?
Will the car easily fit in your garage or parking area?
Step 2 - How much can you afford?
Regardless of whether you decide to buy or lease your next car, establishing a realistic monthly payment that will fit into your budget is a crucial first step. How much can you afford monthly?
A rule of thumb is your total monthly car payments — whether you own one car or more than one — shouldn't exceed 20 percent of your monthly take-home pay.
Step 3 - Should you buy or lease your next car?
A lease requires little, or no money up front, and offers lower monthly payments. But when the lease ends you are left without a car and a need to replace it.
Buying a car is more expensive initially and the monthly payments are higher. But at the end of the loan, you will own a car you can still drive or sell.
Other key factors that differentiate leasing and buying include:
Advantages of Leasing
- You can drive a better car for less money You can drive a new car every few years
- No trade-in hassles at the end of the lease
Advantages of Buying
- When interest rates are low, it makes more financial sense to own a car rather than lease it No mileage penalty
- Increased flexibility — you can sell the car whenever you want
Step 4 - Have you considered all vehicles in that class?
Today's new car (and truck) market is filled with great products. Most shoppers have difficulty keeping up with all of the vehicles manufacturers introduce and the changes they are making to their older vehicles, so it's important to do your research. The internet is filled with sites for your researching pleasure.
Step 5 - Have you considered all the costs of ownership?
Here is an often overlooked fact of car ownership: one car might be cheaper to buy, but more expensive to own. Why? Even if two cars cost about the same to buy, one can depreciate at a different rate or cost significantly more to insure or maintain. Before you commit to one car, you should estimate the long-term ownership costs of the vehicle you are considering. These include depreciation, insurance, maintenance and fuel costs. There are huge savings and expenses to compare.
Step 6 - Research Options.
By completing steps one through five, you should now have a good idea about what car will work for you. Maybe there are a few cars that fit your criteria. It's time to narrow it down.
Car buyers have been trained to visit local dealerships to find the car they want. In the Internet age, this is a waste of time and money. You can quickly cover more ground by shopping on-line. Car dealers are waking up to this new breed of shopper and have created Internet departments within their dealerships to serve the educated buyer who already knows what he wants and what he's willing to pay. The only thing you have to do in person are test drive the car and sign the contract. And in some cases, you can even have the car "delivered" to you by the salesperson.
Step 7 - Schedule an appointment fo a test drive
It's a good idea to make your initial contact with a dealership by phone before going there in person. This can give you some sense of the business atmosphere you will be dealing with throughout the buying or leasing process. Additionally, if you can establish a rapport with the Internet salesperson, it can boost your confidence before you visit the lot. Call the Internet department (sometimes also called the fleet department) and ask if the car you're looking for — in the right color and trim level — is actually on the lot.
You make your initial contact with the Internet manager either with an e-mail message or over the telephone. You can also send multiple dealer requests and narrow your search based on the tone of e-mail responses. If you called the Internet department, tell the salesperson that you want to set up a test drive — but that you won't be buying right away. However, assure them that you will buy there if you decide to purchase this particular make and model, and if they can offer the vehicle at a fair price.
Keep in mind that if you deal with the standard salesperson, he or she will try to start the negotiations at a high price with the expectation of being negotiated down. However, the Internet manager will often quote you a "rock-bottom" price as soon as negotiations begin. A few minutes taken to set up an appointment with the Internet manager can save you both time and money.
Step 8 - How to test drive a car.
The goal of a test drive is to experience — as closely as possible — the same type of driving conditions the car will be used for after purchase. If you commute, drive the car in both stop-and-go traffic and at freeway speeds. If you frequently drive into the mountains, try to find some steep grades to climb. Drive over bumps, take tight corners at aggressive (but not dangerous) speeds and test the brakes in a safe location, such as a deserted parking lot. Get in and out of the car several times and be sure to sit in the backseat, especially if you plan on carrying passengers. In short, ask yourself what it will be like to live with this car for a number of years.
While you are evaluating the car, don't be distracted by the salesperson's pitch. Don't drive with the radio on — you can evaluate that later. A new car is a big investment; make sure you spend enough time really looking at it. And then, consider one last thing: your intuition. If you are uneasy about this car, follow your instincts. A vehicle purchase decision is too important (and expensive) to undertake without total confidence.
Step 9 - After the test drive.
After the test drive, you should leave the car lot. Why? Because you will probably need to drive other types of cars at other dealerships. It's a good idea to do all of your test driving in one morning or afternoon. Driving the cars back to back will help you uncover even minor differences, which will lead to a more educated purchase decision.
So, how do you get out of the clutches of the salesperson? Generally, Internet salespeople are pretty mellow and won't pressure you to buy on the spot. Besides, you can remind them you still have other cars to drive and you can't make a decision yet. Most good salespeople will respect that. If they don't, you probably won't be coming back to make a deal with them anyway.
Step 10 - Getting ready for the buying cycle.
At this point you should have considered all the cars in the class that interest you. You should have a good idea what you can afford and what you want. You should know if you want to buy or lease your next car. You should have test driven your top choices.
Now it's time to narrow your choices down to one car and make a deal. If you
plan on leasing, read the "10 Steps to Leasing a New Car." If you are going to buy your next car, read "Tips for buying a new car." In either case, take a moment to congratulate yourself. You have done your homework to find the right car for you. Now you can move forward with confidence.
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