If you’re considering a new vehicle, you’re likely wondering what’s involved in the process. Whether you’ve purchased a car in the past or not, it can feel overwhelming to choose the right car for the right price.
It doesn’t need to be complicated. Here are the 5 steps in the car buying process you need to know about:
1. BUDGET
Budget is one of the biggest considerations when buying a vehicle. Not only do you want to think about what you want in a car (safety features, age, size, add-on features, etc.), but the final cost of the vehicle (or monthly payments) should be affordable.
Smart buyers should always purchase a vehicle well within their means — there are often more cars in your price range than you think.
How to Calculate What You Can Afford
Here’s what to consider when you’re purchasing a new or preowned vehicle:
- What is the trade-in value of your current vehicle?
- How much do you owe on your current vehicle?
- How much additional money do you have to put down on the car?
- What other payments will you need to consider budgeting for (taxes, license, gas, insurance, maintenance, etc.)?
If you want to pay in full for your vehicle, these questions will be as far as you need to go to determine the top of your spending limit. If you plan to finance your vehicle, you’ll also need to know:
- How much can you budget on a car payment per month?
- What is your credit score?
2. RESEARCH & SHOP AROUND
Now that you have a good sense of budget, you can start the research process. (However, for some, it might be helpful to switch the researching and budgeting steps.)
Start narrowing down your ideal car list by your wants and needs. Some questions to ask yourself include:
- What is your top priority in your next vehicle?
- Is there a certain make or model you’re looking for?
- What safety features are you looking for?
- Is there a particular style you’re looking for?
- Do you have a preference with vehicle performance?
- What vehicle ratings matter the most to you (or not at all)?
- How many passengers do you need to drive? Do you need 2 seats? 5? 6? 7?
- Do you need a particular cargo capacity?
- Do you need to haul and tow? Or do you prefer something small and sporty?
Head Online to Research
More than likely, you’re going to start your search online. Whether you start with a general vehicle search or you go straight to your local dealership to shop the inventory, most of us are heading to the Internet first.
Do your due diligence during the research process and consider checking out:
- Detailed car information to compare your top choices
- Owner and expert reviews on vehicles
- Local dealerships (or owners) that have the make and model you’re looking for
3. GET PREPARED
As you prepare to buy a car, there are a few important steps to take that will save you both time and money in the long run.
Understand Trade-In Value
As we mentioned during the budgeting phase, knowing your current vehicle’s trade-in value will affect the purchase price of your new vehicle. The more you know about your trade-in, the better you can prepare.
Get Approved for Financing
If you plan to finance your vehicle, getting pre-approved can save precious time at the dealership and ensure you get the best possible rates. Shop around for potential car loans based on your vehicle options.
Consider interest rates and terms of the loan, as they will both have a big impact on how much you ultimately pay for your vehicle. Then, get pre-approved for the best option for you.
Shop for Car Insurance
Believe it or not, you can also get ahead of the game with your car insurance. Since it’s a requirement for most states, you already know this is a must-have. Consider choosing a plan prior to purchasing your vehicle to save time and acquire the best possible car insurance rate.
4. UNDERSTAND YOUR OPTIONS
At this point in your car buying process, you’re clear on your budget, you’ve done your research, and you’ve done your work to prepare to purchase a vehicle. But you’re not quite there yet — there are still a few steps before making the purchase.
Here are a few more considerations and options that you need to make:
- Leasing vs. buying: Depending on your unique situation and how often you plan to drive your new car, consider buying options. Leasing can be advantageous for some car owners, while buying is better for others.
- New vs. pre-owned: Pre-owned vehicles can often have just as many features (and more cost savings) as new vehicles; but if you prefer having the most recent model and no prior driver, a new car is the right fit for you.
- Warranties: You’ll undoubtedly be offered extended warranties, service contracts, and other warranties if you work with a dealership. Again, depending on your unique situation, you might consider a warranty that fits your needs.
There are seemingly countless factors that will affect your vehicle purchase. Do your homework to research potential options or put together any questions that may come up.
GET SERIOUS
Now you’ve completed the hard work to assess your budget, research, prepare, and understand options, it’s time to get serious about your vehicle purchase.
Negotiate a Price
No matter whether you’re working with a dealership or a private owner, there’s room for negotiation on car price (just like a home). Gather as much information as you can about the vehicle you hope to buy in order to understand the fair market value. Then, stick to your budget; even if a dealer can’t go as low as you’d like, it’s crucial to stay true to your financial boundaries.
Vehicles that are out-of-season (like a convertible in winter), overstocked, and purchased at the end of year are a few examples of ways you can save. Consider the car you want to buy and when is the best time to purchase it based on your budget.
Spend Time Test Driving
Get a real sense of the top vehicle options you like by giving a thorough inspection and test drive. Spend time exploring the car and imagining whether it will fit well in your day-to-day life. A good salesperson will be able to walk you through critical points about each vehicle you’re considering.
And that’s all there is to it! To close the deal confidently, follow these five steps for buying a car and you’ll be satisfied with the vehicle you choose.
If you need help finding the best car insurance coverage for the best price, start by speaking to a SimplyIOA agent at 833.872.4467 or get an auto insurance quote online now.
