So you're done taking Lyfts and bumming rides off friends. It's time to buy a new car, and that's a pretty big deal.
Besides a house, buying a car is the biggest outpouring of money most of us will ever encounter. Never fear, my friends. This guide should help make the process a lot less stressful.
Set your budget (and stick with it)
Before you do anything, decide on a budget. A good rule of thumb is to keep the purchase at or below 20 percent of your yearly salary. So, if you earn $65,000 per year, your max budget is $13,000. This number -- and what's important to you (that's next) will largely determine whether or not you buy a new or used car, which are two entirely different processes.
Once you set your budget, stick with it. If you're purchasing a first-time car buyer and plan on financing your new baby, many salespeople will encourage you to exceed your budget by trying to get you to focus not on the bottom line, but instead on monthly payments. For some buyers, the justification works, but don't let lose sight of the total purchase cost.
You're prepared. You won't back down. You got this.
What's important to you?
Maybe you want a vehicle with excellent gas mileage for your long commute. Live in the mountains? You'll probably want something with four-wheel drive -- perhaps even an SUV. If you know you'll be carpooling you'll want a car that seats at least four. Make a "must-have" and "nice-to-have" list. It might look like this:
Car needs vs. wants
|Large trunk||Adaptive cruise control|
|Good gas mileage||Android Auto/Apple CarPlay|
What's not important to you?
For folks living in warmer climates, all-wheel drive isn't really necessary. A navigation system might be cool, but you'll probably end up just using your phone anyway. And luxury features like massaging seats and a heated steering wheel? Super nice, of course, but save the scratch for a more valuable purchase. These incremental, but expensive, features can quickly force you out of your budget.
If you're shopping for new or preowned cars at a dealership, buying into unnecessary features is even easier, unfortunately. Here's why: Dealerships don't have every feature combo of every car. In fact, they might only stock models with features you don't need. If this happens, you have two options:
- Have the dealership order the model with the configurations you actually want.
- Find out if the dealership can transfer the right car to their lot.
These options often mean you'll have to wait a few days to a week to get your car, so be prepared for the wait. You might get excited while you're on the lot, which could tempt you to drive away with a model that exceeds your needs.
Do some recon
Now that you've set your budget and needs, it's time to narrow down your choices using comparisons and reviews. Aim for a top-three list that includes configuration details.
And before you go to a dealership, take the time to learn about the many features available, especially the nonmechanical ones. These new features are complicated and sometimes confusing. And while they can add a lot of value (especially with regard to safety) they're not always necessary. You don't have to know as much as a car salesperson, but you shouldn't be surprised by much on the lot.
There are plenty of Roadshow. We've got plenty of , and for you to look through to help you narrow down your search.right here on
Test drive. And then test drive again
For the love of the clutch pedal, drive the car you are thinking about buying. It may have all the features you want but be incredibly uncomfortable and the only way to know for sure is to try before you buy. Most dealerships have predetermined routes they take customers on. If you know the area, don't hesitate to ask the dealer if you can choose your own route, especially one that combines highway and street driving.
Find out what others are paying
Knowing how much others have paid for the car you want will make you a confident negotiator. TrueCar is a great website to see what folks have paid for a new car. It's easier to negotiate when you have context about what others are paying. To that end, don't be afraid to shop around with a few dealerships, then choose the one with the best deal.
Unless you're buying the car outright, you'll likely have to finance your purchase. This means you'll spread the total cost of the vehicle across a long period of time, usually two to four years. Often, dealerships offer zero percent financing, which means you don't have to pay interest on your loan. You can check out thisto see how much car you can afford.
If zero percent financing deals aren't being offered and you're in a rush to buy, shop around for a good interest rate and read the fine print. Those great rates may only be for folks with excellent credit or may just be the introductory rate -- a car loan that starts a 1.9 percent for the first year but then balloons to 13 percent is not a good deal. A car loan with an interest rate at 3 percent or below is good, but since it's not zero percent interest, consider putting money down to decrease the total interest paid. Here's an example of how much you can save:
Car payment comparison
|Car price ($)||Down payment ($)||Interest rate (%)||Loan term (months)||Total cost ($)|
Don't be afraid to walk away
I was really close to buying a usedfrom a dealership but was concerned about maintenance and insurance costs. When the salesman pushed the phone toward me and demanded I call Geico for a quote, I walked out. He was just too pushy.
The dealership will likely try to sell you an extended warranty, but remember, new cars come with a bumper-to-bumper warranty already, usually three to five years or anywhere from 36,000 to 50,000 miles.and have 10-year/100,000 mile warranties on their powertrains, which includes the engine and transmission. I'm not a fan of extended warranties, but if you're planning on keeping your car a long time or putting a lot of miles on it, it may be worth it. And, in some cases, a warranty that exceeds your ownership of the car can add value when you resell it -- just make sure it's transferable.
Buying a used car
If your budget just doesn't allow you to get a new car within your price range, consider buying an, ahem, "preowned" car. Many are available at dealerships, so all the aforementioned tips still apply.
As a car expert, I can tell you: used is often the best option. That's because, when you buy a new car, it depreciates significantly the moment you drive it off the lot. When you buy used, someone else has taken the hit, even if the car is just a couple years old.
I buy all of my cars used. My most recent purchase was through Craigslist, but there are a lot of different sites. You can buy a car on eBay or you can try CarsDirect or AutoTrader. Shift lets you browse cars on its site and will bring them to you to test drive, since, you know, you probably don't have a car to get there. There are also specialty sites like Bring a Trailer for classics or The Samba for all your vintage VW needs.
Once you've found your dream used car and taken it for a test drive (because you've done that, right?), it's time to CYA or Cover Your Ass. Regardless of the dealer or private party, the owner should be able to tell you the car's maintenance history, any mechanical problems or quirks, if the car was in an accident and the number of previous owners.
Then take that information and verify it. Get the CarFax report to find out the accident history, odometer readings and title history. Many dealers will provide this to you free of charge, but if not, it's the best $40 you can spend.
Don't make the mistake of signing anything that says, "As-is." Even though you're buying used, you should have 30 days to return the car if anything goes drastically wrong or if your mechanic lets you know it's a money pit.
An inspection from your mechanic will cost around $100 and should include at least:
- An overall visual inspection for rust and other body bugaboos.
- Checking for worn suspension components and leaky seals.
- Evaluating wear on belts.
- Checking spark plug wires.
- Brake inspection.
- Giving the electrical system a visual once-over.
- Checking the quality of the tires.
I can't emphasize that last bullet point enough. The tires may look fine but if they are more than five years old, the rubber components will have degraded, which could have deadly consequences.
Certified pre-owned programs
If you've got the extra money or aren't much of a financial planner and would find it easier to count on the same monthly payment instead of having to absorb the occasional repair bill, consider buying a car through an automaker's certified pre-owned program. It will cost you more, but it can be worth it in some cases, especially on more complex models. If nothing else, it's a potentially good piece of mind. If you consider a CPO program car, make sure you read the fine print -- these programs vary greatly in terms of cost, mileage allowances and term length, and many include deductibles and/or exclusions and exceptions that are worth paying close attention to.
Pro tip: Don't forget the car insurance
It may seem obvious, but don't forget to call your insurance company and get a quote before signing on the bottom line for your dream ride, whether it's factory fresh, pre-owned, or a bargain-basement hooptie. Your carrier of choice can give you a ballpark quote based on the year, make and model of your intended purchase, but for an even more accurate quote, get the VIN on the exact vehicle you're considering. Giving that information to your car insurance agent will get you the most accurate quote, accounting for variances that can crop up owing to optional safety gear, engine specifications and so on.
Before you go...
Despite all this practical advice, the best tip I can give is to buy what you love. Life is too short to drive something you don't absolutely adore. So what if it's not practical? If you want that convertible and you can afford it, go for it! Live in the city but if you've always wanted aI say, "Hell to the yeah!" Life is too short to drive a boring car.
Originally published June 2, 2017.