How to Buy a Car

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Finding and buying the perfect car is no easy task. There are many decisions to make and many options to weigh, not to mention many colors to choose from. The price, of course, has to be a deciding factor, as well as how often you drive the car. Whether you're buying new or used, from a private seller or a car dealership, knowing what you want ahead of time and being able to walk away are two of the most important things you can do when buying a car. Read on for more information on how to buy a car.

Steps

Part One: Doing Your Homework

  1. 1
    Make a list of what you're looking for in a car. Doing your homework, like most things in life, is a good idea, especially when purchasing something as expensive as a car. Often, this means knowing what you want to get out of your car. Make a list of what you're looking for in your new car.
    • Some criteria include appearance, performance, safety, reliability, size, comfort, fuel efficiency, cost, resale value, transmission type, engine size, kilometers, miles per gallon, mileage (if car is used), as well as color.
  2. 2
    Organize the list in terms of how important the criteria are to you. What aspects of your would-be car are you willing to budge on, and which aspects do you need to find in your would-be car? Many people say they want safety, reliability, and mileage in their car, when in fact they're looking for performance, comfort, and appearance. Be honest with yourself; it will make the buying process much easier.
  3. 3
    Consider the advantages and disadvantages of buying a new car. The smell. The feel. The touch. Buying a new car can be like a religious experience, but it can bore a hole in your wallet if you're not careful. Carefully weigh the advantages and disadvantages of buying new based on your situation:
    • The advantages:
      • Freedom of choice. You can buy the car of your dream vs. being limited to the cars that are available.
      • Better financing. If you do decide to finance on a new car, your financing rates could be better than if you bought a used car.
      • Getting new features. New cars are stocked with new cutting-edge features.
      • Knowing what you're buying. When you buy new, you have an excellent idea of exactly what you're getting; there shouldn't be any uncertainty lurking the background about the car's history.
    • The disadvantages:
      • Spending more money. This one's a no-brainer. You spend more money on a new car than you do on a used.
      • Immediate depreciation. As soon as you drive the car off the lot, it loses about 11%[1] of its value. This is informally called the "lemon effect."
      • Higher insurance costs. It'll cost more to insure that brand new convertible.
      • Ambiguous information for model year. Is the model your buying a workhorse or a defective wreck? You can't really know until later on — sometimes much later on.
  4. 4
    Consider the advantages and disadvantages of buying a used car. Used cars are a great deal for many people: they're relatively cheap and the consumer has idea of what to expect out of the car. Still, there are some disadvantages associated with buying used. Know them before you pull the trigger.
    • The advantages:
      • Cost. Buying that car fresh off the lot sure can be expensive; buying a similar car from a classified listings can be drastically cheaper.
      • Better insurance rates. Insurance companies know that drivers of used cars tend to be more cautious and price their insurance accordingly.
      • Less depreciation. Your car will depreciate less if you buy used, because the initial depreciation was so drastic.
    • The disadvantages:
      • Higher dealer markup. Dealers know that they can make a killing on used cars. Buying a used car usually means a significant dealer markup.
      • Higher financing. It usually costs more to finance a used car.
      • Higher/more maintenance. Used cars usually need to be maintenanced more often and for more money.
      • Unknown mechanical and accident history. When you buy a used car, you don't necessarily have any information on who drove it, how often it was serviced, or whether it got into significant accidents.
  5. 5
    Decide on a budget. Give yourself a budget, regardless of how much you're spending or what kind of car you want to get. Your budget will keep you from overspending and will tell you when and why to walk away from a bad deal.
  6. 6
    Look for models that fit your criteria and budget. Take your criteria identified above and the budget that you've made for yourself and start looking. You can look at dealerships, car websites, or classified postings, among others. A couple things to remember as you begin shopping:
    • Use the internet. A car salesman's worst dream is an educated buyer: a buyer who knows what s/he wants, does not want to be impulsive, and is aware of what's available based on their budget. Searching around on the internet can help you achieve this.
    • Save your preliminary results. Saving the results of your research will give you a reference point as you continue to shop, especially if you choose to go into a dealer. Dealers will have artificially high prices that you can spot if you've done your homework.

Part Two: Shopping Around

  1. 1
    Go to dealerships with no intention of buying. If you can, try to go on a day/time when the dealership is closed so you can browse freely and not be bothered by any sales pitches or arm twisting. If salespeople do approach you, tell them you have no intention of buying, are just doing research, and would prefer to look undisturbed. If they continue to hound you, walk away and go to another dealership: you probably don't want to buy from a dealership that doesn't respect the customer's wishes.
  2. 2
    Figure out what the dealership paid for the car(s) you're looking at. This is called the "invoice price," and it's relatively easy to get on the internet. Arming yourself with the invoice price lets you haggle starting low and going up, as opposed to starting high and going down. It's a much better position to be in.
    • Make sure you find the invoice price with all the available features you want. The invoice price doesn't mean much unless it actually matches the features of the car you're trying to buy.
  3. 3
    Get online price quotes to use as bargaining chips. Use websites such as Autobytel.com and PriceQuotes.com to shop for quotes that you can use as bargaining chips when you actually decide to negotiate in person. Many dealerships will also have an online branch that will get you a quote in a couple days; use them!
  4. 4
    Get your finances in order before you go to the dealership. For the best possible bargain, it's essential to have your financial game plan laid out before you step foot on the dealership. This includes:
    • Knowing your credit score if you intend to finance. You can get a free report once a year from each of the three major credit reporting agencies. If you haven't done so already, get your credit score.
    • Shopping around for a loan from a bank or credit agency. Getting a loan directly from the dealership can be a bad idea. Get a loan secured before you walk into the dealership; the dealership might be able to beat the price, and if they can't, you know you'll be able to finance your car another way.

Part Three: Deciding on Your Dream Car

  1. 1
    Be willing to walk away at any point in time. A smart buyer knows that they have the inherent bargaining edge if they choose to use it: being willing to walk away. A person who isn't willing to walk away from a deal — at any point in the negotiation process — is likely a person who will overpay for their car.
    • A smart dealer may try draw out the process, making you feel like you've invested a good amount of time in a car, and that walking away is the same thing as abandoning that investment. Don't fall for that trap. Know that any time you spend researching or negotiating, even if the negotiation falls apart, is an investment in itself and will eventually pay off.
  2. 2
    If you plan on keeping the car for a good while, forget about leasing. Car dealerships know that they can generally make money off of people who decide to lease a car. The prevailing myth that leasing a car is always bad isn't quite accurate; if you plan on keeping the car for less than three years, it's an okay deal. But if you want to hold onto your car for a good deal of time, paying that lease will usually leave you worse off than if you negotiated to buy the car.[2][3]
  3. 3
    Ace the test-drive test. If you do decide to take a car on a test drive, keep your emotions in check. Dealers know that people get emotionally attached to cars when they take them for test-drives. When a customer is emotionally attached to a car, they are far likelier to overspend because they are less willing to walk away from a bad deal. Some things you can do in a test-drive to temper your enthusiasm:
    • Ask the salesperson for quiet, if necessary. In a test drive, a good salesperson will keep talking about all the features and amenities of a car, trying to convince you it's a sweet deal. S/he's trying to get you emotionally attached. If the salesperson won't give it a rest, ask them for quiet point blank.
    • Bring your spouse with you on that drive. Your spouse will help you remain analytical and focused on the task of extracting the best possible value for the car. S/he could also be another BS radar, if the salesperson tries to pull a fast one.
    • Take your time and nitpick. If you're going to buy this car, you should very well feel comfortable in it. Don't rush the drive and ask questions that you want answered. Wait for clear answers.
  4. 4
    Walk away if the salesperson brings out a four-square worksheet. Better yet, tell the salesperson up front that you're prepared to walk away if they bring out a four-square worksheet. A four-square worksheet is a clever mechanism the dealership uses to massage the numbers, getting you to agree on an inflated price. It's a three-card monte trick the dealer uses. Don't get scammed.
  5. 5
    Negotiate on the final out-the-door price. Dealers will try to "sweeten the deal" (ostensibly for you, but really for them) by adding on services, perks, etc. onto the price that you initially agreed on, making you feel bad about or guilty about not accepting because it's "agreed on." Don't get fooled by this.
    • You can say something like: "I'm only prepared to negotiate on the final out-the-door price. If we can agree on a number, I expect that number to be the final number, not the starting point for another negotiation."
  6. 6
    Know the salespeople's tricks of the trade. Not all salespeople are slimy and wily, but a lot are in the car industry. Knowing the tricks of their trade will help you be prepared when you sit down to negotiate.
    • Don't fall for the guilt trick. Don't feel guilty for refusing an offer that you know if bad. A salesperson might make you feel guilty for "wasting his time" after taking a test-drive. This is their job. Don't feel guilty. They certainly don't.
    • Know that salespeople will start negotiating with an achingly, ridiculously high number. It's their way of "breaking" you, and making you feel like the number they're willing to come down on is actually a good one. If you know the invoice price (the price the dealer paid for the car), don't be afraid to walk away from an insultingly high bid.
    • Know the commission structure. After a "holdback," the salesperson gets about a 10% to 25% cut of the difference between the sales price and the invoice price. The higher the total sales price of the car, the more money the salesperson makes in commission.
  7. 7
    Try this clever trick, if you're willing. Decide exactly what kind of car you want to buy. Locate several dealerships in the area that have that car. Call each one of the dealerships up and tell them that you're planning on buying such and such a car at 5 PM from the dealer that gives you the best price. Tell them you're not negotiating, aren't willing to come into the office until the price is agreed upon, and that you want an out-the-door prices (taxes, everything included).
    • The dealer may not want to play this game with you, but they'd be missing out on an opportunity to sell a car (something a dealer hates to do). Assure them that if they can give you the lowest possible offer, you'll take their offer.
  8. 8
    Before buying a used car, take the car to a qualified mechanic for a complete prepurchase inspection. If you're buying a used car from a private seller or even a dealership, ask to take the car to a trusted mechanic to check for performance, accident history, or even water damage. Buying with peace of mind will help you find the best deal.
  9. 9
    Before buying a used car, run a Vehicle History Report on the car. Check if the car was reported stolen, salvaged, or ever recalled before you buy. You can get a full history report at CARFAX.com.
  10. 10
    Read the fine print carefully before you sign. Don't put your guard down until you've driven the car of your dreams off the lot. Make sure you understand any contract you're reading, and don't be afraid to ask questions. A lot of the time, a dealership will try to add on $10 a month or even hidden fees to wring extra money out of your purchase. Don't be gullible and trust that the salespeople necessarily have your best interest at heart.
    • If the dealership tries to "pack payments" by surreptitiously increasing your interest rate, for example, know that the dealer may be subject to heavy fines, as is it illegal.[4]If you believe you are a victim of packing payments, contact a lawyer.

Tips

  • When you have done your homework, and know what you want in a car, then visit the dealership.
  • When you go to a dealership, bring your spouse, or a friend. You are more likely to be taken seriously. If you do not have one, then walk in with an air of confidence. If you are a single woman, it is good to bring a male friend who knows about cars, so that you don't let the dealer mislead you. Sales people will try to take advantage of you, don't trust them.
  • Act as if you know what you are talking about, do not allow them to sway you from what you are honestly looking for. Be confident and firm, and if they start swaying you to another choice, then just leave.
  • Check out Consumer Reports. It's arguably the best place to look for impartial reviews, ratings, crash tests, reliability forecasts, and pricing guidelines for new and used cars. Start with their list of recommended cars, research them, pick out a few you like, and then go to the dealer. They also have an excellent guide to new car buying, a guide to used car buying, and even a guide to buying cars for teens. Much of their info is free, but a subscription is well worth it...they review everything from chocolate to computers.

Warnings

  • Make sure you read the contract completely. Do not sign, unless you understand exactly what you are signing. If you are not sure, then take the contract home, and have an attorney read it. Once you sign, you have bought the vehicle!
  • Always test drive the car, check things like; the sound of the engine, whether the windscreen wipers work, air-conditioning (if applicable), heater, indicators, and lights. Check for cup holders, compartments, the rear boot, the seat quality (no rips or stains), look in the bonnet to make sure nothing funky is going on, Check the comfort of the seats (will this car be comfortable on long trips?), The visibility (is it easy to see other cars?), does it have seat belts, air bags, roof handles, Sun shades, radio (CD or tape), and whether it works.
  • Always ask yourself if the car you are buying is worth the money they are asking. If not, make a lower offer, and if they refuse, don't worry - there are plenty more cars out there, the perfect one is just waiting for you to come along and buy.
  • If you are concerned about the safety using the car if a bad situation was to ever happen such as a car crash, check out it's crash test results on Euro NCAP before purchasing.

Article Info

Recent edits by: Quickpaws, Jeffrey, Vick251w

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