Yahoo Autos How to Buy or Lease a New Car
Whether you're looking for your first car or your fiftieth, the process of buying or leasing a new vehicle is often a daunting one. Not only is a large purchase stressful, but the car-buying process is ripe with opportunities for consumers to make an error in judgment or be taken advantage of by a pushy salesperson.
Not to fear! Car and Driver's Buyer's Guide team is here to arm you with all the information you need to go into this process with confidence—and to come out of it feeling good about the decisions you've made as you're handed the keys to your new car, truck, SUV, or van.
Decide Whether to Buy or Lease
You'll be making a lot of decisions throughout this process. One of the first is whether you want to buy or lease. Buy, and you'll keep the car once it's paid off. With a lease, you get to drive a new car and then turn it in at the end of the term. This may sound like a simple choice, but there's a lot to consider here.
Leasing might net you a smaller monthly payment, but your lifestyle may be cramped by a lease's mileage limits. Leasing can allow you to get into a nicer vehicle compared to what you'd get with a similar car payment, but remember that you'll have to start this process all over again once the lease ends, with nothing to show for your investment. You'll likely have the option to buy the car at the end of the lease for a price predetermined in the contract; this option is appealing if you like the car and haven't had any major issues with it.
Taking out an auto loan to purchase a vehicle means you'll own it outright after you've paid off the financing, but you might get some sticker shock when it comes to fitting the payment into your budget. It also means shopping around for a good interest rate. Pay cash, if you can swing it, and the car is yours from the very start.
Set a Budget and Decide How You'll Pay
Now is the time to take a hard look at your finances to determine how much you actually have to play with. If you have a current loan or lease, use that monthly amount as a starting point and adjust based on your situation. Maybe you got a raise and want to roll some of your newfound disposable income into a nice ride, or perhaps you have a kid who is going off to college and it's time to tighten the belts.
When planning your budget, don't forget the other costs that come with car ownership: taxes, registration, insurance, fuel, maintenance, etc. Estimate those costs and then set aside a portion of the budget for that non-negotiable chunk. Because these costs vary from car to car, you may need to do some research once you have a list of finalists and then revisit your projected budget at that point.
While everyone's financial situation is different, a good rule of thumb is to spend no more than 10 percent of your monthly income on your car payment. Factor in another five to 10 percent for those additional costs we mentioned.
And whatever method you choose, the value of a trade-in will reduce your total outlay.
Car Loans and Pre-Approval
As is the case with house shopping, if you plan to finance it's a good idea to get pre-approved for a loan. This should happen before even setting foot on a showroom floor. You'll thank yourself later when you're sitting in the dealer, where they'll likely offer you a marked-up loan with worse terms than you can find on your own. Knowing the approximate interest rate and loan term will also give you a good idea of how much spending power you have when budgeting.
Paying Cash
Paying for a car upfront simplifies the process somewhat. Just make sure you have the funds readily available so you can wire the money or get it as a cashier's check from your bank without delay. If you bank exclusively online, be sure to find out how to make that happen and how long it will take to get a check mailed, for instance.
Trading In
Have a car you plan to get rid of? Find out how much it's worth before the dealer gives you a (potentially low-ball) offer. We have an easy-to-use car-valuation tool that asks for a few details about your current vehicle and uses historical values to determine what it's worth as a trade-in and in a private-party sale, with prices for cars in clean, average, and rough condition.
Be conservative when choosing a value to plug into your budget. You may also want to check with some of the larger used-car companies to get a quote or two. It's possible they will offer you more than the dealer you buy your new car from.
Research Body Styles and Features
Before heading down to your local car store, though, there's some prep to do. With hundreds of nameplates on the market and multiple versions of each, it pays to do some research from the comfort of home. Otherwise, you may succumb to decision paralysis once you’re inside the dealership.
The two main things to consider at this step are what body style fits your lifestyle best and which features you must and would like to have.
What body style is right for you?
Choosing between a car, SUV, pickup, or van depends on how you plan to use your vehicle. A two-seat sports car won't be very helpful for a new parent, while a heavy-duty pickup may be overkill for someone who plans to tow a small trailer once or twice a year. Along with the general shape, you'll want to consider attributes like the number of seats, cargo volume, and overall size of the vehicle and its fuel economy. Keep in mind where you plan to park this car and any other limiting factors present in your life.
What are your must-have features?
Make a list of everything you absolutely, definitely have to have in your new car, and perhaps another wish list of your wants. Are you a techie, do you have a long commute, or do you live in a cold climate? While high-tech infotainment systems are seemingly everywhere, not all of them support Apple CarPlay or Android Auto, which are quickly becoming dealbreakers for some buyers. A semi-automated or hands-free driving mode may be important to those who endure long freeway slogs, while a heated steering wheel and seats could be non-negotiable for Northerners.
Consider what powers your future car as well. Perhaps you're EV-curious or you'd like a plug-in hybrid to lower your fuel bills by taking advantage of charging at home or at work. While there are more and more alternative propulsion options, this will also reduce the number of potentials you consider.
Narrow Down Your List
Next comes the fun part: actually looking at new cars. Now that you have your priorities documented, start finding the models that match them. Our 10Best and Editors' Choice lists are great places to start; these highlight the standout new cars, trucks, SUVs, and minivans—the same ones we would (and often do) recommend to friends and relatives. The Editors' Choice list is broken down by body-style segments, letting you quickly see what's available at each size and price point.
It's okay to go to a dealer at this point to sit in, poke, and prod its offerings. This is helpful in winnowing down the list, as you might find that one model on your list isn't roomy enough inside or that you absolutely don't want the bordello-red interior. Or maybe you do. No judgment here.
Once you've got your list of narrowed down, check how the vehicles you're interested in compare to their competitors using Car and Driver's Rankings Lists. We rank every vehicle we test against its direct rivals and list them from best to worst based on our testing criteria so that you know exactly where they stand.
Schedule Test Drives
Now that you've distilled your list to a handful of contenders, it's time to get behind their respective wheels. The internet is a good starting point to find a dealer listing the vehicle you want to sample but be sure to give them a call to confirm that it's still available. Give them a heads-up that you'd like to come by and drive it. (This is all the more important when test-driving EVs, as dealers don't always keep them topped off with a full, or even usable, charge.)
At this point don't worry too much about the visuals like exterior color or upholstery. What's more important is to find a model with the powertrain and features you want to evaluate.
Things to think about: driving-position comfort; visibility to the front, sides, and rear; infotainment ease of use; and of course whether you enjoy driving the car, how it handles, and if it has adequate power for your driving style. Make sure to sample the car on a variety of road surfaces and at varying speeds. Plotting a good route near the dealer ahead of time eases your busy mind, too.
It can be helpful to bring along a checklist of what to look for and any questions you want to ask. It's all too easy to get sidetracked by shiny things or have your attention redirected by a chatty salesperson. Bringing along accessories like a car seat (with or without a child) or your oboe case is a good way to evaluate how well a car will fit into your routine.
Shop Around for the Best Price
At this point, you should have a good idea of which car you want to spend your hard-earned money on. Even if the dealer where you test-drove the car has what you want in stock, it's always wise to compare prices between stores. The internet is your friend here. And if the exact car you want isn't available locally, dealers can often work with others in their network to get it for you.
Be careful not to get too hung up on a monthly payment at this point, because dealers can manipulate a payment easily by extending the terms of a loan or working a larger down payment into the formula. Focus instead on the total cost of the car over the loan or lease term.
If you're trading in, make sure to negotiate your current car's value as a separate conversation from the negotiation on the new vehicle's purchase price. More tips and suggestions can be found in the stories linked below, but the most important advice we can impart here is that you shouldn't be afraid to walk away if you aren't satisfied with a deal.
Review the Financing and Deal
You're in the home stretch. You've agreed on a price for what you're buying and, if you have a trade-in, how much the dealer is willing to give you for it. Now is a good time to revisit your budget and make any necessary adjustments—for instance, if the car you have your eyes on will use more or less fuel than you had accounted for in initial calculations, or if your insurance estimate is no longer accurate.
What to know before signing the contract
Dealers can keep customers waiting and then try to give them the hurry-up when it comes time to sign. Don't allow anyone to rush you! Read the offer they're presenting carefully and, if you can, bring along an ally like a friend or relative to help you review everything and make sure you're not making a rash decision.
Ask about better financing through the dealership or automaker
While dealers generally don't offer the best interest rates (they tack on profit for themselves), it's worth comparing the rates and terms they offer with what you've found from other lenders. Car companies often offer special financing rates through their own financing arms or partners, so read up on those offers before you select your lender.
Should you negotiate?
Some dealers have adopted a no-haggle pricing strategy that makes agreeing on a final price a non-issue. That said, things like interest rates and trade-in value can be negotiated, so if you're up to it you can try and squeeze some money out of the dealer or get them to throw in an accessory or two gratis.
Finalize the Deal
The deal's not done until it's done. Dealers aren't above modifying terms between the final negotiation and signature time, and such changes are rarely in your favor. Give everything a read one more time and make sure you're signing on the dotted line for the car and terms you want.
Understanding warranties, add-ons, and extras
Okay, you've successfully negotiated a fair deal on your new car so the hard part is over, right? Wrong. The next step will likely be a series of sales pitches from the dealer's finance manager as you complete the paperwork required to finalize the deal. Be prepared to hear about extended warranties, fabric protection, wheel and tire insurance, and a host of other add-ons, some of which may be worth it and some of which may not.
Like your analysis in the buy-versus-lease section, your intention with the vehicle should help you identify if any of these things are necessary. For example, if you plan to drive significantly more miles than average over the first five years of ownership, an extended warranty may be worth the peace of mind after the standard warranty package expires. However, if you're leasing and sticking to a low-mileage situation, that same warranty would be overkill.
Many of these optional features aren't cheap, so be smart and don't feel obligated to add any of them to your new car deal if they don't seem worth it to you. Also, know that some add-ons that have already been added to the price can be subtracted, especially if they haven't been physically added to the vehicle yet. Examples include paint protection, mud flaps, and wheel locks.
Tour Your New Car
The big day has arrived. That perfect new car has been prepped and is ready for you to take it home. Before peeling out of the lot, however, ask for a tour of the vehicle and its features if one isn't offered to you. The more you learn, the less you'll have to look up in the owner's manual later.
A good salesperson will even help you get your phone connected to Bluetooth and set up mirroring through CarPlay or Android Auto. Some dealers offer a follow-up appointment, either in-person or through a video call, to help answer questions once you've had some time to live with your new purchase. Take advantage of whatever you feel will be helpful, and enjoy your new car. You've earned it!
You Might Also Like
