How to Buy a Car

Buying a new car is a big step, but it doesn't have to be a daunting one. Here's how to research, locate, price, and negotiate to buy your new car. Smartphones make these steps easier than ever. It is now entirely possible for a buyer to shop for a vehicle while in line at the supermarket or waiting to pick up the kids. This article will mainly explore how to buy a new car. If you're looking to save more money and purchase used, the steps will differ slightly. We'll lightly touch on how to buy a used car, plus a few other buying scenarios, and point you to additional resources. 

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How to buy a new car
How to buy a used car
How to buy a car from a private seller
How to buy a car with bad credit

How to buy a new car

The following questions address many of the concerns you might have when shopping for a new car. We've listed the topics in the order you are likely to encounter them. Following this advice could save you thousands of dollars on your next car. It'll also make the process at the dealer quicker and stress-free. Let's begin.

1. How to research vehicles and features
2. How to buy a car with a preapproved loan
2A. How to buy a car with cash
3. How to trade in a car
4. How to locate a car you want to buy
4A. How to buy a car out of state
5. Test drive do's and don'ts
6. How to buy a new car for the lowest price
7. How to review the car deal and dealer financing
8. How to close a car deal
9. How to take delivery of your new car

1. How to research vehicles and features

Not sure what vehicle you want yet? The Edmunds app and website have just about all the information you need, including expert and owner reviews, vehicle invoice prices and new car deals.

If you need some guidance on where to begin, we have a general guide to finding the right car. If you know what type of car you want but aren't sure which models to consider, our editors have created rankings for nearly all vehicle categories, which will help you quickly identify the top vehicles in their respective classes.

Automaker sites are useful for seeing more photos and learning more about features and options on vehicles. Use these tools and you should have little problem selecting the right car or SUV. Once you have a short list, it's time to figure out how you'll pay for the car.

2. How to buy a car with a preapproved loan

A preapproved auto loan starts you out on the right foot. You get an idea of how much you can afford, and you'll have an interest rate that you can then compare to the dealership's financing, which might actually offer the lowest annual percentage rate. Look for a loan application on the mobile web pages of your bank, credit union, or other lenders such as Capital One or Nationwide. It's a good idea to do your own research on which lender will work best for you.

As you plan your financing, note that the most common loan terms are for about 72 months. Cars have become more expensive, and people tend to take out a longer loan to keep the monthly payments down. That said, Edmunds recommends a loan term that's no longer than 60 months. And while a 20% down payment is ideal, it's also difficult for most people to handle. So Edmunds recommends combining a down payment of around 10% with gap insurance or new-car replacement coverage. That lets you keep more money in your pocket without the risk of being underwater on your car loan.

To begin the loan approval process for your car purchase, collect your employer and salary information and balances of other debt you may have. Make sure you will be ready to shop within about two weeks of seeking preapproval. This strategy will reduce the number of hard inquiries to your credit. If you need more information on preapproved loans, check out this related article, "How to Get a Car Loan."

2A. How to buy a car with cash

Some might want to pay with cash for their car purchase to avoid taking out a loan and save on finance charges. Paying cash may not necessarily get you the best deal on the car, but it does simplify the purchase. However, if you're bringing more than $10,000 in cash, the transaction needs to be reported to the government, and a bit more paperwork is involved.  There's more to it than this, which we cover in the related article "Buying a Car With Cash."

3. How to trade in a car

You can skip this step if you don't have a trade-in. If you do, keep reading. It's important to get your current car's trade-in value before you go to the dealership. This information will help set your expectations for what the car is worth and gives you a reference point for any offers you'll receive. These days, you might be pleasantly surprised to see what your vehicle is worth. The best way to find the value of your trade-in is to use the Edmunds appraisal tool. Use your smartphone so you can sit in the car and double-check whether you have options that affect the car's value — features such as heated seats or a sunroof. Be honest about the condition of your car. Most cars fall into the "clean" or "fair" category. Very few cars are "outstanding," no matter how much their owners babied them.

When you're done appraising your vehicle, you'll see three categories. The trade-in value is what the dealer may offer you, and that's the figure to keep in mind when you're at the dealership. The private-party value is what you might expect to get if you sell the car yourself. The dealer retail value is a little different. It is what you might expect to pay for the car if you were to buy a similar used car at a dealership.

There's a faster alternative to trading in a car or selling it yourself: Get an instant offer from Edmunds. The offer is good for seven days, at which point you can ask your local dealership to beat that price or you can sell your car to one of our participating dealerships. Read "How to Trade in a Car" for a more detailed discussion.

4. How to locate a car you want to buy

By now, you've settled on a few car candidates. You should see them in person before making a decision. Hundreds of car dealerships throughout the country list their car inventories on Edmunds. And in many cases, you can sort by color, trim level and features. It's a better way to shop than configuring a car on the automaker's website and hoping you will find one with that set of options in the real world. All the listings you'll find on Edmunds pages are real cars with a variety of options. Most will have an Edmunds suggested price that should be comparable to what others are paying.

You can filter the inventory results to the dealerships closest to you, but don't be afraid to cast a wider net. The next town or county over may be listing the vehicle for a better price. 

4A. How to buy a car out of state

Some people who are looking for a specific color, engine or trim might consider buying a car from a nearby state. This will give them more variety to choose from, but it can also cause problems. For example, you might be tempted to avoid sales tax by buying a car from another state, but in many places, the state where you register the vehicle will determine what the sales tax is rather than the location of the purchase.  We go more into detail on this and other issues in "Should I Buy an Out-of-State Car?"

5. Test drive do's and don'ts

If you follow the steps below with Edmunds, a salesperson from the dealership will contact you to schedule a test drive. If you found the vehicle on another site, call the dealership's internet sales department to request more information. In either case, keep these do's and don'ts in mind:

• Do verify that the car you want is still in stock. It might have been sold recently, and online inventories can take a while to catch up.
• Do ask the salesperson if there are any dealer-installed options. Many new vehicles are sold with add-ons such as nitrogen in the tires, all-weather floor mats or theft protection packages. Also, ask if there are any "markups" or "market adjustments" on the car. Both the markups and dealer-installed options can easily add thousands to the selling price.
• Don't just show up at the dealer on a busy weekend or late at night. Waits may be long, and you may not get the salesperson's full attention.
• Do schedule an appointment for a test drive. Early in the week and mornings are good times. Having an appointment means the car will be waiting for you when you arrive. You can also ask for the vehicle to be brought to your home for the test drive.
• Don't just drive around the block. Take the time to see how you and your family fit in the car and how it handles on a variety of roads.
• Do ask yourself the following questions: Are the controls easy to use? Is there enough cargo space? Will a child seat fit? (Bring it with you and test it.)
• Don't feel obligated to buy the car the same day. Feel free to take a night to think it over.

Please take a look at "How to Test-Drive a Car" for more detailed information.

6. How to buy a new car for the lowest price

Once you have a target car, it's time to focus on getting a price. We recommend using one of these two ways to get the purchase price of your new car:

• Call, text or email the internet sales department of three dealerships that have the car you want. Ask each for the total selling price, including any additional accessories that may have already been installed on the car. The best price will be obvious. You also can take that quote and ask the other dealerships to beat it. If you plan on leasing, this is the way to go.
• If you want to focus on lowering the price further, read "How to Negotiate Car Prices" for detailed negotiation strategies.
• You can save time and trouble by using Edmunds' new inventory tool to see what our recommended price is and what others near you are paying. We even label which prices are better than others. Make sure you ask the salesperson to email or text you a breakdown of the "out-the-door price," with all the taxes and fees factored in. That lets you see the total amount you'll be spending.

Ask about additional options: Before signing the deal, you should also ask for a preview of the products the dealership plans to offer you in the finance and insurance office. Common items offered include paint protection, curbed wheel insurance, an extended warranty, and a prepaid maintenance plan. Usually, you won't hear about these extras until much later in the shopping process, but we suggest you gather some information now to relieve pressure later.

Here's how you do it: Call the dealership finance manager and ask about these products and services. They may be of value to you, but just know that the price is often something you can negotiate. And you don't have to buy them when you buy the car unless you intend to fold their price into the purchase contract.

7. How to review the deal and dealer financing

Now that you have a price quote for the car, your big question is probably whether it's competitive. We have an Edmunds price checker tool on each piece of inventory that allows you to size up the dealership's price for a specific car you're about to purchase. This check will give you some perspective and peace of mind on the price you're paying. In the past, we called it "Edmunds TMV" or "Average Price Paid." It's the amount that others are paying in your area for a similarly equipped car.

Keep in mind that a fair price is exactly that. Some people have paid more and others paid less. Some shoppers are only happy if they negotiate their way to a rock-bottom price. But for most shoppers, that usually isn't worth the hassle and frustration. And if your price quote is above the average, it's not necessarily a reason to walk away from a deal. Here's why:

A car's price isn't the only element of a good car deal. You also should look at the interest rate, the loan term, and the value of your trade-in if that's part of your deal. There are even some intangibles, such as how the salesperson and the dealership treat you and the time you save in the shopping process. Those are all factors in a good deal. In fact, at this point in the process, you may be able to improve parts of it.

In Step 2, you were preapproved for financing. Now that you're close to purchasing, there's a chance you can get a better interest rate at the dealership.

To see if that's possible, let the dealership run a credit report and assess your interest rate. Or if you know your credit score, tell the finance manager what it is and the rate for which you'd qualify. You can give your information to the finance manager over the phone. Some dealerships have credit applications on their websites, and you can fill one out. If the interest rate is lower than the one in your preapproved loan, go for it. If not, you already have a good loan locked in.

8. How to close a car deal

If the price, financing and fees look right, it's time to say yes to the deal. From here, you can proceed in one of two ways: Buy at the dealership or have the car and paperwork delivered to your home.

Most people tend to wrap up the sale at the dealership. Once you've agreed on a price, the salesperson will take you to the finance and insurance office. That's where you'll sign the contract and purchase any of the additional products we discussed earlier, such as an extended warranty.

The alternative is to make the sale contingent on having your new car delivered to your home or office. Doing so is a great time-saver and allows you to close the deal in a relaxed environment. Home deliveries became far more common after the COVID-19 pandemic. If you do request home delivery, even if the sale is contingent on it, you'll get more cooperation if you agree to receive the car at home during a slow time at the dealership (think Mondays).

Wherever you finalize the deal, review the contract carefully and make sure the numbers match the out-the-door breakdown. Be sure there are no additional charges or fees. A good finance manager will explain each form and what it means. Don't hurry. Buying a car is a serious commitment. And remember: In most cases, once you sign the contract, the car is yours. Returning a new car is very rare.

9. How to take delivery of your new car

Whether you take delivery of your car at the dealership or your home, it should be clean and the gas tank should be full. Give the car a final walk-around, checking for any dents or scratches that might have occurred during transport.

Finally, let the salesperson give you a tour of your new car. The rundown should include showing you how to pair your smartphone via Bluetooth and demonstrating other important features and safety devices. All of this information is in the owner's manual. But let's face it, very few people ever read the manual, which can be hundreds of pages long.

If you don't have time for a complete demonstration when you sign the contract, set up an appointment a week or so later. With the amount of technology that comes in most new cars, that walk-through is important and very useful. You'll learn tricks and shortcuts you might not find on your own.

And now there is only one more thing to do: Enjoy your new car.

How to buy a used car

There are many places to shop for a used car — which we cover in "Where's the Best Place to Buy a Used Car?" — but if you plan on shopping at a dealership, the steps are fairly similar to those for buying a new car. However, you'll have to consider the vehicle's condition, which is a nonfactor for a new car. The way you determine a fair price to pay and negotiate is slightly different for used cars. We cover these factors in "10 Steps to Buying a Used Car." We also have several examples of "Questions to Ask When Buying a Used Car."

How to buy a car from a private seller

Buying a used car from a private seller allows you to learn more about the vehicle from its current owner and potentially get a better deal, as the seller is generally not looking to make the same profit as a dealership. However, the buyer is more responsible for determining the vehicle's condition level, which would be less of a factor when buying from a dealership. We have several resources for private-party buyers, starting with "What to Look For When Buying a Used Car." Then, there's the general used-car buying advice found in steps 5-10 of this article. Completing the transaction on a private-party sale can sometimes have its own challenges, which we cover in "How to Close a Private Car Sale"

How to buy a car with bad credit

Buying a car with bad credit can be challenging, but it is possible. Keep in mind that you will be offered a higher interest rate for the loan, and you will likely have to save up for a greater down payment. You might also need to shop for a less expensive vehicle. We cover this process in more detail in "Buying a New Car When You Have Bad Credit."

How long does it take to buy a car?

If you start counting the car-buying timeframe from when the thought first pops into your head and you start considering which model to buy, it can take weeks or even months before the actual purchase. Hunting down the specific car you want can take anywhere from a day to a few weeks depending on how picky you are about the color or options. Finally, the actual sale and signing of contracts will take about a few hours. There are many moving pieces to a car deal that take time, plus there will be other customers ahead of you at the dealership. Be prepared to have a long day. You can speed the process up greatly if you get approved for your car loan ahead of time and know what documents to bring to the dealership. If you're trading in a vehicle, this will increase the timeframe, so try to handle the appraisal the day before or factor that into your planning for the day. Once you get familiarized with this process, you should be able to buy a new car in one day.

Note that this process is much simpler if you're buying from a direct-to-consumer brand such as Tesla or Rivian. You configure your vehicle on the website and apply for financing, and the brand will call you once your car is ready. 

Related Articles:

How to Buy a Used Car
10 Steps to Leasing a Car
Start With an Online Offer When Selling or Trading In Your Car
How Much Should a Car Down Payment Be?
Buying a New Car vs. Buying a Used Car
Ask for the Out-the-Door Cost When Buying a Car
How Long Should a Car Loan Be?