Guide to Buying a New Car

Why New?

Buying a car "fresh off the lot" is a goal for many, and has somehow become a rite of passage in the American psyche. Once we get to the point in our career where we feel secure enough to be able to afford a new car, we begin to consider the possibility. A new car is more than a status symbol, it also acts as a validation that we have "made it," an endorsement of some measure of our success.

While some people are content to buy and drive secondhand cars throughout their driving days, most people will purchase a new car at least one time in their lives. Others are convinced that buying new is the only way to buy a car and they will do so time and again every few years.

Before you even begin to think too deeply about buying a new car, take some time to consider why you want to buy a new car. If you have a partner, you'll want to think this decision through first--and then go to them with the idea. Expect some healthy questioning from them about the reasons you want to buy a new car, and be willing to negotiate (and perhaps postpone) the decision for the good of the family if necessary.

As you go through this preliminary brainstorming step, you will want to determine why you want to buy a new car. There are a myriad of good reasons to do so, but some of the primary reasons are listed below:

Prestige: Let's face it; buying a new car can do a lot for your image (and ego). Your choice of make, model, extras, and even car color speaks volumes about who you are and how you see yourself in our society. It also makes a statement to friends and family members. The appeal of a new car is heady from a psychological perspective, but don't over think it too much. If you've worked hard to get to the position of being able to afford a new car, enjoy it--you've earned it!

Technology: New cars offer the latest in engineering, style and mechanical innovation. The manufacturers compete to offer the very best in their new makes and models. Fuel efficiency and emissions control improvements can be appealing to those who are concerned with environmental issues. Because the makers continually improve and add technological advances in their newest models, those who appreciate the state of the art are drawn to the cutting edge components of a new car.

Safety: Along the same lines as above, manufacturers continue to make improvements on safety features. The inclusion of such features as side air bags and other features are only available on the latest models. Many families choose to purchase the latest models in order to best protect their children and themselves.

Reliability: New cars provide an element of worry-free driving for an extended period of time. Drivers of new cars appreciate the peace of mind that a new, mechanically sound vehicle provides. Guarantees, warranties and the newer extended warranties ensure that owners of new cars will be spared the expense of costly repairs for several years to come. With the advent of computerized systems on cars, gone are the days of the backyard mechanic; many women and men who never signed up for auto shop find the reliability factor in a new car especially appealing.

Once you have determined that you want to buy a new car (and why you do), you are ready to move along to the next step:

Take a Look at the Bank Account

Only you can decide how much you can afford to pay for a new car. The desire to own a new car cannot be allowed to overwhelm the practical considerations of your budget. Take off the rose-colored glasses―now is the time to take a brutally honest look at your finances.

Many financial experts state that you should spend no more than 20% of your net income on a monthly car payment. To determine what that number is, you'll need to figure your total net income (take home pay after taxes) and then subtract all your fixed expenses. The remaining amount is your net spendable income. By figuring that out, you can then determine what 20% will be in dollars and cents.

Once you know that number, you can answer three important questions:

• How much can you afford as a down payment?

• How much can you afford in monthly payments?

• How much should you spend on the total price?

While you are working this out, be aware that there will be costs over and above the price of the car itself that will need to be factored in such as insurance, sales taxes, licensing fees, and possibly dealer fees payable at the time of purchase (more about these later).

Both the state sales tax rate and the state licensing fees will vary depending on where you live. Once you know how much you can afford to spend for the total price of the vehicle, calculate those figures based on your state's rates. Those expenses can inflate the total cost of the car beyond your budget, and may require you to shop for a less expensive model.

Many lending and car selling websites offer a loan calculator tool to use online. Before ever stepping into a dealer showroom, run the numbers based on the price of the car, the taxes and licensing fees, any other closing fees you may anticipate, and the rate that you expect to get for financing. Once you know those figures, you will know what your probable monthly payment will be.

In addition to the budgetary considerations, you'll now also want to take a close look at your lifestyle before shopping for a new car. Job security and life stability should come into play before you decide to buy a new car. For example, if you are new on the job or having difficulties in your marriage, your financial future may be changing soon. Before signing a contract for payments for the next several years, be absolutely sure that your career and lifestyle will be able to support such a decision.

After taking a serious look at how much money you can afford for a new car, it is time to fix a price. Write it down and take that number with you when you go to the dealership. Having that number firmly in your mind will help you stay within your budget despite the best efforts of a car salesperson to upgrade you to a more expensive model or tacking on extra features that will increase the total price.

To find more deals on New Cars, try our sister site Classifieds.org.

Eye Shopping

Once you know how much you can reasonable afford for a new car, it is time to do some shopping―with your eyes only. Now is the time to see what is out there in your price range, and which makes and models will best suit your needs. Make a list of makes and models and features you want to consider and then do some searching.

Some of the places you can look at new cars include:

Newspapers: Most local newspapers run special articles, supplements and ads at least one day of the week. Many times larger cities run special car features on Saturday, and of course, the Sunday edition will be a good source to check out the dealers' ads for new cars.

TV: Now is the time to stop zoning out during commercials and begin taking a hard look at what is out there. You'll see the vehicles at their sexiest, of course, but after awhile you will likely see and hear about a make or model that especially appeals to your taste.

Talk to friends: Let your family and friends know that you are planning to buy a new car. Once you open that discussion, it is likely that they will offer suggestions on what type of car and which make of car they have had particularly good (or bad) experience with. Listen to what they have to say, but keep in mind that this is anecdotal information only; your experience with a certain car may turn out to be quite different. If nothing else, they may recommend a dealer where they had a particularly positive buying experience.

Online: The Internet is a terrific place to do some window-shopping for a new car. Nowadays, there are thousands of websites that offer cars for sale. Spending some time browsing through the cars on the market, including the prices and available options, is a great way to decide which car you want to buy―all from the comfort of your own home without dealing with any high-pressure sales tactics.

Dealerships: Eventually, you will need to stop by a showroom or two. There is no substitute for actually seeing and sitting in a new vehicle, and taking a brochure on a specific model home to review will only increase your knowledge of the car and available options. If you think you might be swept away in a buying frenzy, be sure to leave your checkbook at home during the first visit.

The time spent on this step narrows the field of cars you are interested in, and brings you to the next invaluable step:

Serious Research Time

Hopefully, by this time you have decided on an affordable price range, and have chosen two or three models to concentrate on through the research process. This is the time to bring out all your study and research skills. In today's world, most people will conduct this research online on a home computer, but much of the information is also available at the newsstand or your local library.

In addition to comparing prices and features through car shopping sites, there are a number of other types of sites you should spend some time browsing:

Consumer reports:
There are numerous non-profit and for-profit organizations that compile and report on new cars on the Internet. Many of these sites will rate new vehicles, providing information on pricing, reliability, fuel economy, dimensions and performance. Some sites will provide side-by-side comparisons should you be trying to decide between two or more models. Try Consumer Reports or ConsumerGuide for example.

Safety records:
Since you are planning to buy a new car, why not ensure that the model you purchase is as safe as it can be on the road? Take few minutes to review the safety reports provided about your model. Many websites offer this sort of information, perhaps most popular is the Insurance Institute for Highway Safety (IIHS), although there are many others to search. In addition to safety performance reports, you should also check some of these sites for any safety recalls issued on the models you are shopping for.

Resale values:
Most people have heard that a new car loses tremendous value the minute you drive it off the lot. While this is true, there are makes and models that are known to retain a higher percentage of value after the time of purchase. Many websites and articles review which models retain the best resale value, why not take a few minutes and see where the car of your choice sTachs up against the other contenders? Finding this information may not change your mind about which model to buy, but at least you will know what the potential resale value of your car will likely be should you decide to sell or trade it in after a short period of time. One tried-and-true source for resale value is Kelley Blue Book

Insurance rates:
Your choice of car will determine how much your current insurance rates will be affected. If you have a good relationship with your current insurance agent, now is a good time to give them a call. If you have narrowed your choices down enough, they will be able to provide a quote for your new insurance rates based on what car you plan to buy and your driving record. If for some reason you'd rather not contact your current insurer, you can always get comparison quotes by major insurance carriers over the Internet. Visit our Guide to Auto Insurance for a list of auto insurance companies who can offer you a free quote.

Once all your background research has been compiled, you'll want to consider the next step:

Online or at the Dealership?

The newest way to buy a new car is to buy via the Internet. Hundreds of car-selling sites provide the services where you simply choose all the specifications of the vehicle you are looking for, and they will do the legwork to find such a car in your immediate area. While this method of car buying may still be in its infancy, it may be particularly useful to those with little time―and an adventurous spirit. Before committing to this method of car buying, however, be sure to read and thoroughly understand the small print on the agreement.

For most car shoppers, the trip to a dealership is inevitable. If you have seriously crunched your budget and have a firm price in mind, and if you have done your research, you should anticipate a successful buying trip. The vast majority of car sellers are on the up-and-up and they want to make the process of buying a car as easy as possible for both parties involved.

A strong dose of self-confidence is in order, however, for that first trip to the lot. You don't want to get talked into more of a car, and more of a monthly payment, than you have planned for should you run into a high-pressure salesperson. When you are ready, here are a few hints that may help the whole process go more smoothly and perhaps help get you the best deal:

Time of day:
There are two schools of thought on this issue: some experts advise going to the dealership first thing in the morning, others suggest coming in toward the end of the day. If you are at your best first thing, then by all means shop early in the day. The salesperson may be looking for a jump-start to a terrific day of sales, and you may come away with a great deal. On the other hand, if you still have one eye closed until after noon, don't rush yourself. Many a great deal has been cut right before closing time because the salesperson or dealer want one more sale for that day's books.

Day of the month:
Traditional wisdom says that some of the very best days to buy a new car are at the end of the month because the dealership and sales force want to eke out the best end-of-month figures they can.

End of the year:
October used to be the month to buy a new car in anticipation of the new models' arrival in November. While many car manufacturers still adhere to that traditional schedule, many carmakers now stagger their new models' issue date. If you have done your homework, you will know when the new models will arrive. Plan to shop for your new car just prior to the new cars coming out. You may not find everything you want (like a certain color), but you may drive away with a new car at a very good price.

Special promotions:
Once you know which make and model car you are going to buy, start watching the media for national or local promotions and sales. A drop in interest rates or bonus add-on feature offers for a limited time may just be the incentive you've been waiting for to decide to shop at a particular dealer.

Weather:
During inclement weather, new car sales drop off significantly. While conducting business in a driving hailstorm may not be your idea of a good time, if you're ready to purchase that new car, going to the dealership on a less than perfect day may just save you some money.

Remember that if at any time you feel overwhelmed by the experience, or begin to feel as though you are being treated dishonestly, discourteously, or unfairly―walk away. There are many car dealerships to choose from right around the corner. If, however, you are being treated right, it is time to move along to the next step:

Get Down to Brass Tacks

You've chosen which dealership to visit because of the model of cars it sells. Once on the lot, you will be assigned a salesperson to show you the cars they offer. The initial contact with that salesperson is likely to dictate how the entire transaction will be conducted. Their job is to ask some opening questions to ascertain what type of vehicle you are shopping for and in what price range. Your job is to come across as a qualified, educated consumer. If you are adamant about buying a particular model, let them know that right away; if not, tell them which type of vehicle and your price range. Now is also the time to let them know if you have any specific requirements, such as 4-wheel drive or automatic transmission.

The salesperson will guide you to the specific model you are interested in, or some comparable models. Every car will have a "spec sheet" visible that lists the features of that particular car. Now would be a good time to pull out your research file to compare the cars' listings with your list of predetermined choices. Review the equipment offered on each vehicle until you find a suitable match.

Of course, while you are looking at vehicles and considering their equipment and features, you will also be keeping an eye on the sticker price. A quick review of the components of a specification sheet will help you understand exactly what you will be seeing:

Vehicle description:
This top section will give you the year, make, model and VIN number of this particular vehicle. It also lists the size and weight of the car, engine size, passenger capacity, color, body style, interior treatment, and kind of transmission.

Standard equipment:
Here is where you will find the type of basic equipment that comes standard on this car. These features listed will detail features such as air conditioning and heating, safety belts, sound systems and length of warrantee.

Manufacturer suggested retail price:
The manufacturer suggested retail price (MSRP) is rather like a subtotal. This is the price of the vehicle before the destination charges and any optional equipment included on this particular vehicle.

Optional equipment:
Within this section, you will find what special features this specific car comes equipped with, including such things as: sport packages; tilt steering wheels; cruise control; arm rests; power windows; floor mats; specialized brakes; and air bags. This is where the price usually escalates quickly; if you don't want these special features, ask to see a barebones model.

Destination charges:
This fee is the cost of shipping the vehicle from the manufacturing plant to the dealership. While this cost is passed along to the buyer and there is no way to get around it, this fee should be the same on all stickers at the same dealership.

Fuel economy:
The Environmental Protection Agency (EPA) determines the standards for mileage ratings. Listed on the window sticker will be both the highway and city mileage per gallon (MPG). Remember that these numbers are estimates only and many factors go into the gas mileage you will actually receive.

Total retail price:
The total retail price includes the standard features, the optional equipment, the MSRP, and destination charges. Remember that this number does not include all applicable taxes, car registration, or title fees.

Once you are satisfied that you have found a car that appeals to you, has the features you are looking for, and is within your price range, it is time to move on to the next step:

Road Trip

No one would ever consider buying a new car without taking it out for a spin. All dealers expect you to want to drive the car, and they will likely do their level best to get you behind the wheel and onto the street.

Many dealerships will schedule appointments for a test drive over the phone. Remember to bring with you your driver's license and proof of current insurance, it is expected that the dealer will need a copy of these documents before allowing you to drive their vehicles.

If you are already at the dealership, and become interested in a certain vehicle, take a few minutes to sit in the vehicle. Check to see if the car "fits" you. Does the car provide maximum visibility from the front, sides and the rear? Are all controls within easy reach? Is the driver's seat comfortable and suitable for long-distance driving? Now is the time to pay particular attention to creature comforts; the bottom line should be whether the primary driver feels safe and comfortable.

When you find a car that suits you, take it for a test drive. Understand that the salesperson will be going along for the ride. Normally, the salesperson will drive the car off the lot and take you on a routine route. At some point, they will pull over and allow you to get behind the wheel.

Take the time to get comfortable behind the wheel before pulling out from the curb. Adjust your seats and mirrors to provide maximum visibility for your body, and familiarize yourself with the location of critical features such as: the horn, turn signals, windshield wipers, emergency flashers, and parking brake. As you begin to drive, reach over and turn off any music system; you will want to listen to the engine and be able to hear any unusual noises.

If your style of driving includes anything out of the norm, ask that you be allowed to duplicate that to see how it will handle. Always take a car onto the highway to determine the strength of acceleration; test the braking system; and drive up hills to check out the engine capacity.

It is likely that as you are driving, the salesperson will be both touting the benefits of this particular car and asking you some leading questions. Besides needing to concentrate on driving an unfamiliar car, it is best to stay non-committal about a potential sale during the test drive; once you get back to the dealership, you can get down to "brass tachs" if you are ready to buy the car. If you are ready to seal the deal, you are ready for the next step:

Moment of Commitment

So, you've found the car of your dreams with all the features you want at the price you want to pay. What comes next? Actually the steps leading to the moment of commitment is for many people, the most difficult. This is the time when you will hammer out the price of the car. It is also the time to discuss financing with your salesperson if you haven't already arranged private financing.

In most cases, the salesperson will create a worksheet where they will write down the particulars of the car being negotiated and will probably pencil in their first price. Both parties expect a certain amount of negotiation at this point. After making your initial offer, the salesperson may counter offer or they may remove themselves to discuss your offer with the sales manager. At some point, they will come back to you with another offer; after all, they are in the business of selling cars.

It is not uncommon for these offers and counters to take some time. Relax, and don't feel pressured to accept any deal that you are not completely comfortable with. While some consumer advocates encourage buyers to stage some theatrics should the deal not be coming together as well or quickly as you had envisioned, it doesn't usually help to threaten to leave or walk away from a pending deal. Instead, stay calm and restate your offer.

However, should the salesperson become heavy handed or the two of you have genuinely reached an impasse on your preferred price, you can always leave and go to another dealer. They know this is an option for you too, so it is likely that somewhere along the line, the logjam will be broken.

Once you strike the deal, it is time to review the paperwork and the official contract. If you are financing through the dealership, be sure to understand all the conditions. Read through all forms very carefully, paying particular attention to any blank spaces or figures that seem to be inflated. Question the salesperson or finance manager on each and every item that you do not fully understand. Only when you are absolutely, positively certain that you understand all aspects of the contract should you sign the papers.

At some point the time will come when you need to pull out your checkbook.

Write the check for the agreed upon down payment and make copious notes on the check itself, including the VIN number of the purchased vehicle.

Now that you have taken the big step, there is another step to take:

Before You Drive Away

You've filled out the paperwork, signed the contact, written a check for the down payment, and you may even be holding a new set of keys, but there are still a couple of things to do before taking official ownership.

One critical thing to do is to verify the car's vehicle identification number (VIN). If you haven't written it down and brought it into the sales office with you, be sure to take the time now to match up the VIN on all your paperwork to both the sticker on the car and the actual VIN located on the car itself.

Inspect the vehicle one more time, looking for any blemishes or imperfections that you may not have noticed during the test drive. If there are problems, have the dealer write down the list of items to be repaired, and insist that those repairs be completed by the service department within 30 days and paid for by the dealer. Get all of these details in writing (with signatures) before leaving.

If the issue of insurance coverage for the vehicle hasn't been raised earlier, now is the time to bring it up. If you have prearranged temporary coverage through your own insurance agent, be prepared to give the dealer proof. If you are planning to set up your own coverage, you can call your insurance company from the dealership and have policy proof faxed over. If you are financing your new car through the dealership, they will be happy to set up insurance coverage for you.

Once these last minute details are in order, you are ready to move along to the final step:

After the Sale

Buying a new car is not an easy task for most people; it can be time consuming, stressful and expensive. However, if you have followed the steps in this guide, you will have eliminated some of the classic pitfalls that can befall an inexperienced car shopper. Educating yourself, setting a price you can afford (and sticking to it), and understanding the entire buying process goes a long way to make the buying experience much more positive and may even eliminate the possibility of any buyer's remorse.

Taking possession of a new car is an exhilarating and exciting time. Pride of ownership and the accomplishment of having made the deal create a sense of near euphoria. To best enjoy that remarkable feeling there is only one thing left to do―go for a drive in your brand new car.

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