Family buying a new car

    Buying a new car? Learn how.

    Key Summary
    Buying a new car can be overwhelming. Let us help take the stress out of the process by breaking down the 5 steps to buying a new car: determine what you can afford, research cars within your budget, visit dealers for a test drive, negotiate the purchase, and sign on the dotted line!


    We all love that new car smell, but buying a new car is so much more than that. Not only is it a big investment, but the decisions you must make can be overwhelming – especially considering the number of options you have to choose from. Let us break down the 5 steps to purchasing a new car, and you’ll be on the road in no time! 


    1. Determine what you can afford and how you're paying.

    You may have your heart set on a specific vehicle, but you won’t be driving it off the lot unless you can afford it. So, it’s important to understand your financial situation before you begin the car-buying process. 

    A good place to start is by deciding if you want to purchase the vehicle with cash, lease your new car, or take out a loan. If you anticipate that you will take out a loan to purchase a new car, it’s smart to get preapproved for a car loan because it simplifies the buying process and gives you an advantage at the dealership. 

    Once you have an idea of how you are going to pay for the car, it’s important to set a budget. A good rule of thumb is to spend no more than 20% of your monthly household income on a new car. Keep in mind, that buying a new car costs more than just the price of the vehicle – you will also be on the hook for gas, insurance, maintenance, taxes & titles, and other items, so it’s important to estimate those costs and include them in your overall budget. 

    Finally, you also want to consider if you’re planning to sell or trade in your current car. If you are, it is crucial to research the trade-in value of your car so that you can negotiate the highest possible price for it. Kelley Blue Book is a great resource for finding the trade-in value of your vehicle. 


    2. Research cars within your budget and dealers in your area.

    Now that you have an idea of how much you can spend on a new car, it’s time to research what type of car you want to purchase and from where. As you’re researching, it’s important to consider what features are most important to you, including size, performance, gas mileage, cargo space, and safety ratings. Also think about any extra details you want, like premium sound systems, tinted windows, and heated/cooling seats. You also want to keep in mind ownership costs, reliability, and market prices. 

    You can easily narrow the field of prospective new cars by making a list of non-negotiable features. From there, search for models of potential cars on manufacturers' websites, Consumer Reports, or Kelley Blue Book. In fact, Kelley Blue Book has a handy car comparison tool on their site that can help you narrow your search even further based on features that are important to you. 

    Once you’ve found a few models that match your preferences and budget, research any discounts that may apply to the purchase. These discounts may include student discounts, military discounts, and manufacturer rebates. Additionally, many credit unions have partnerships with car dealerships and offer discounts to credit union members. If you’re not yet a credit union member, it may benefit you in the car-buying process to join your local credit union

    After completing the necessary research, it’s time to start calling dealerships in your area to check inventory on the specific models you’re searching for. A word of caution, don’t just trust the dealership’s website. It’s always best to pick up the phone to verify they have the car on the lot that you’re looking for. 


    3. Visit the dealer for a test drive.

    Now it’s time to get behind the wheel and test drive a few of your target car models. If possible, you want to test drive all the cars you’re interested in purchasing back-to-back so the experiences will be fresh in your mind for comparison. Make sure to let the dealer know ahead of time when you’d like to come so they can have the right vehicles ready and waiting for you. And don’t forget your driver's license and proof of insurance when heading into the dealership – they will likely need copies for your test drive. 

    Once you get behind the wheel, take your time! Be sure to drive on both city streets and the highway if possible, and never feel you need to rush the process. 

    Here are a few things to keep in mind during the test drive:

    • Comfort. Is the ride smooth or uncomfortable? How does the seat feel while driving? Are there any unusual bumps or jolts when you run over rough road?
    • Noise. Do you hear any strange noises while you’re driving? Any rattles, squeaks, vibrations, or engine noises that could signal a problem?
    • Power and Acceleration. How does the vehicle respond when you push the pedal to accelerate? Does it hesitate, lurch forward, or stall? Does the engine feel solid and smooth?
    • Braking. Does the car come to a smooth stop when you apply the brakes? Do you feel any strange vibrations through the brake pedal?
    • Handling. Does the vehicle seem easy to maneuver? Can you park it? What’s the turn radius like? What about blind spots?

    Don’t hesitate to ask for more time behind the wheel. Spend some time with the vehicle while it’s parked to adjust mirrors, seats, and other controls to become well-acquainted with the car. Most importantly, don’t be afraid of asking too many questions and spending time learning about the vehicle.


    4. Negotiate the price.

    Once you’ve found the car of your dreams that fits your budget, it’s time to sit down and talk about pricing. You will be better equipped for the negotiation conversation if you come prepared with the research you’ve done. 

    If you plan to trade in your current vehicle, save that discussion for after you negotiate the sale price of your new car. Having those conversations separately will help you get a better deal on your current car, and you’ll fare even better if you’ve done research on your current car’s value. 

    Before you sign the final contract, make sure to read the fine print. Examine any proposed fees and extended warranties the dealer will try to sell you. It’s not uncommon for the agreement to include hidden fees and unnecessary coverage, so make sure you know what’s in the contract before signing. 


    5. Sign on the dotted line.

    It’s time to put that new car in gear and drive off the lot - Just make sure to adjust your seat, mirrors, and steering wheel before you do! 

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