16 Car-Buying Tips To Make Car Shopping Easier

Buying a car, whether it’s a new Cadillac or a 10-year-old Volkswagen, is a high-stakes transaction – the consequences of which you will live with for years to come. If you’re not prepared, you could end up with a car you don’t like, that you paid too much for, and which will eventually be tough to resell. While there are a lot of great cars on the market, and most dealers are honest and reputable, there are a few things to watch out for.

Preparation and education are the keys to you finding a great, affordable car that you’ll drive for years. If you’re doing it properly, 90% of the work of buying a new or used car is done before you ever step on a dealer’s lot or pull up an online car inventory. When you’ve done your homework, actually finding the car is the fun part. When considering all the important tips and tricks that will help you find the right vehicle, it helps to break them up into three basic categories:

Assessing financial matters: How to get the most for your hard-earned money

Researching and shopping: Simplify the buying process by knowing what you’re looking for

Executing the deal: Know what to expect in the buying process

Car financing is not complicated, but if you haven’t been through the process before it can get confusing. You don’t want to find out about the details when you’re presented with a contract at a car dealership. Take some time to educate yourself on car finance before you even begin to shop. Ask a friend or family member to explain the process, or consult with your bank or credit union when you meet with them for preapproval on a loan.

1. Determine Your Budget

Whether you’re buying or leasing, you should have a maximum monthly payment in mind. This should be a figure that works with your current income but also something you can support if there is a disruption to that income for a few months (like a job loss). It should also factor in estimated monthly costs for insurance, gas, and routine maintenance.

2. Decide Between Leasing And Buying

When purchasing a new car, you usually have the option of leasing instead. Lease payments are usually significantly lower than monthly loan payments on a car you own. This also gives you the option of driving a car that is more expensive than the one you budgeted for. Read more to find out all of the pros and cons of leasing vs. buying a car.

3. Understand The Differences Between Bank And Dealer Financing

Car dealers do a very good job of making financing your new car through them easy. You provide them with all the information they need and you can have a loan inside of an hour—making the whole car buying process a convenient one-stop shopping trip. However, dealers may not always be able to get you the best rate. Shop for the best auto loan interest rates from at least two lenders before going to the dealership. Also be sure to check out credit unions, which often have the lowest rates.

4. Get Preapproved For An Auto Loan.

Getting preapproval from your lender is vital for many reasons. First, it helps you set a realistic budget. Chances are, if a bank won’t lend you $50,000 for a new car purchase, it means you are buying too much car. A preapproval usually entails looking at your income figures and credit score, and outputs how much money the lender is willing to loan you, for how many months, and at what interest rate. Having preapproval for a loan not only helps narrow your car search to those you can afford, it also gives you more bargaining power with the dealer since you do not have to rely on dealer financing.

5. Research Your Insurance Options

It’s imperative that you think of the cost of auto insurance as part of the overall monthly cost of owning your car. When purchasing a new vehicle, do not assume that insurance will cost the same as your old car. New cars and more expensive used cars will cost more to insure than an older car. We’ll visit the insurance issue more below.

If you have more questions, or if this is the first time you have ever purchased a new or used car, see our beginner’s guide to financing a car.

Once you’ve determined a reasonable budget and are certain that a financial institution is willing to give you a loan, you are in a position to start looking at vehicles that you can realistically purchase. Things to consider include what you need most from your vehicle, whether you should look at new or used cars, and how to take your time in making this important decision.

6. Narrow Down Which Type Of Car To Get

Most people have a vague idea of what they would like their next car to be, but when daydreaming gives way to reality you should give your transportation needs an honest assessment. Once you have a budget in mind, consider several things all at once. What will the car be primarily used for? Is it for a single person or a family? Will it be driven in the country or an urban environment? In 2022 a very important question is how fuel-efficient must your car be. If the car has to be able to hold a lot of cargo, an SUV might be best. If it’s to be driven 50 miles one way to your job, a compact car would work. It’s also important to consider not just your life now, but how it might change in the future. By knowing the answers to these questions you can eliminate whole classes of vehicles from your search and help you find the right car more quickly.

7. Choose To Buy A New Car Or Used Car

Everyone enjoys a new car, but the economics state that you’ll get more value for your money on a pre-owned vehicle. Cars depreciate quickly after purchase. In just the first year, for instance, a car loses 15% – 20% of its value, and then 15% – 20% every year thereafter. A used car with lower miles can be a tremendous value, especially if it has a clean accident report and has been well-maintained. Once you have a monthly payment in mind, you will find a great deal more vehicles within your budget on the used car market – including cars that are bigger or have more luxury features than any new car you might be able to buy.

8. Understand Shopping Vs. Buying

There is a difference between shopping for a car (gathering information) and buying one (striking a deal and closing). While shopping, take as much time as you have and/or need. Visit several different dealers and look at their inventory as well as their sales incentives, financing options, and other special programs. A sales representative will likely offer to help, but be aware that their goal from the time you walk into a dealership is to get you to buy a car. From them. That day. If you make it clear that you are just shopping they will give you some room to consider all the important factors that go in to making this major purchase. Let them know that you are in an information gathering phase and taking your time, and that you are visiting several dealers – this will help you if you decide to start negotiating to buy a car from them. They will know they have competition for your dollars and will offer you their best deal.

9. Look Beyond Your Local Inventory

Thanks to the internet, your search for a new or used car is not just limited to local dealer lots or classified ads in the newspaper. There are now several online sites that have listings for thousands of vehicles for sale around the U.S. You can search by make, model and year but also narrow the scope even further to specific trim level or price point. There are extra steps that go into buying a car from 1,000 miles away, sight unseen, however. Before purchase you should hire an appraiser from that area to inspect the vehicle for you, and if you do buy you will have to work out how the car gets shipped to you and who pays for shipping. But online vendors make things easy for you, and if nothing else looking at hundreds of cars for sale online helps you decide exactly what car you want and what the price should be. For an example of how easy it is to shop for a car online, visit the Rocket Auto^SM inventory.

So you’ve done your due diligence. You have a budget and a preapproved loan and you have found the vehicle that suits your lifestyle perfectly. Now it’s almost time to close the deal. Once you have identified the car you want to purchase, there are still a few important steps to take before you sign the contract.

10. Get An Insurance Quote

Once you’ve identified the car or cars you are seriously considering buying, it’s time to call several insurance companies to get an idea of what your premium will be. Again, this might be quite different from the rate you were paying on your previous car, especially if it’s a step up in value. Imports can also be significantly more expensive to insure if replacement parts are made in another country. You can save on car insurance if you use the same company that insures your house or rental property through a process called bundling, but it’s best to get several quotes.

11. Get The Vehicle History Report

A vehicle history report has a lot of useful information about the car, all based on the car’s unique 17-digit vehicle identification number (VIN). You can see if the car has been in any serious accidents, had major repairs, or been subject to any recalls by the manufacturer, as well as title information since the car was first purchased, such as previous owners and odometer readings at time of sale. There are a number of online services like CARFAX that will supply this information if you provide the VIN.

12. Get A Professional Inspection

Even after you’ve seen the vehicle history report, it’s still best to hire a professional mechanic to give the car a thorough inspection. This step should happen when you are pretty certain that you are going to purchase the car, since you will pay the inspector’s fee whether you buy or not.

13. Don’t Reveal Your Budget

One of the first questions a salesperson will ask at the dealership or used car lot is “How much are you looking to spend?” or “What kind of monthly payment are you hoping for?” While this is important information for you to know, it’s best if they do not. The reason is the dealer can use that when you are negotiating on price, perhaps inflating the price on a particular vehicle because it will fit your budget. The best tactic is to get a quote on the dealer’s best price, then run that figure by your bank or credit union which has already given you preapproval on a loan. They will give you an accurate monthly payment, based on the overall vehicle price and the rate they are willing to lend at.

14. Ask About Warranties On The Car

If the car in question is used and has 100,000 miles or more, it likely won’t be under warranty. But all new and some used cars have warranty coverage. Warranties differ with each manufacturer, but the basic warranties are of two types. A bumper-to-bumper warranty covers almost anything on the car and typically lasts 3 years or 36,000 miles, whichever comes first. These cars can also have a separate powertrain warranty that protects major engine components and transmission – these can cover a range of about the first 60,000 to 100,000 miles and anywhere from 6 – 10 years. All warranties come with official certification, so you must ask to see the paperwork. Dealers now offer some used cars for sale as “Certified Pre-Owned (CPO)”. These are cars that the dealer has done a thorough inspection of and will have some warranty coverage. All CPO terms are different so you will need to ask for a complete explanation.

15. Don’t Be Afraid To Negotiate

The psychology of the negotiation process can be daunting for many people. A buyer can be so uncomfortable with haggling on price that they will overpay for a car just to make it stop. This can cost you hundreds if not thousands of dollars. It’s not a crime to say no to a dealer’s offer – and in fact sometimes your “no” will get them to say “yes” to yours. It can help to bring a friend or relative along for support and a little extra backbone in the negotiation – they will always have your best interest at heart. And remember that you can always walk away.

16. Watch For Extra Fees And “Services”

Once you’ve agreed to a price for the car, there are legitimate additional expenses and fees to be added to the final amount. These include taxes (which can be significant, depending on your state), title, and registration. But some unscrupulous dealers will also try to include other fees for things you did not agree to. Some of the more common fees and “services” they will try to tack on include underbody rustproofing (the cars have excellent rust prevention from the factory), a reconditioning or preparation fee (trying to make you pay for having the car cleaned up and detailed so they could put it up for sale), a cash fee (actually charging you more for paying with cash – they make more when you finance through them), a nitrogen fee (for filling your tires with nitrogen instead of air, which is already 78% nitrogen – a total fallacy), or a destination charge (paying to have a new vehicle shipped to their lot, which is already figured into the MSRP). These fees can equal more than $1,000 and may be added to the invoice without your knowledge, in the hope that you will miss them in your excitement to pick up your new car. Before you sign the contract, be sure to go over the invoice line by line and ask that anything you didn’t ask for be removed from the bill.

Buying a new car can be and should be an exciting experience. There are so many vehicles to choose from, and today’s cars are better than ever before. Each year new safety, luxury and technology features are rolled out to entice buyers in an immensely competitive global car market. But some cars are better than others, and some deals are more worth it. By being prepared you can avoid mistakes that can cost you hundreds if not thousands of your hard-earned dollars. Prepare first by having a budget and preapproval from a bank or other lender, then by taking your time to shop for the best car that fits your needs and budget, and finally by understanding the ins and outs of the buying process so you can avoid paying too much.