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How to buy a new car Part Of Buying a Car In this series Buying a Car Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make smarter financial decisions by offering interactive financial calculators and tools as well as publishing objective and original content. We also allow users to conduct studies and compare information for free and help you make informed financial decisions. Bankrate has agreements with issuers, including but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this site are from companies that pay us. This compensation may impact how and when products are featured on this website, for example such things as the sequence in which they be listed within the categories of listing and other categories, unless prohibited by law for our loan products, such as mortgages and home equity and other home loan products. This compensation, however, does have no impact on the information we publish, or the reviews that you read on this site. We do not cover the vast array of companies or financial offers that may be open to you. Caiaimage/Martin Barraud/Getty Images

5 minutes read. Published 21st October 2022

Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is an expert with the ins and outs of securely borrowing money to purchase a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are dedicated to helping their readers feel confident to control their finances with concise, well-researched and researched information that breaks down complicated topics into bite-sized pieces. The Bankrate promises

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At Bankrate we strive to help you make better financial choices. While we are committed to strict editorial integrity ,

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who ensure everything we publish will ensure that our content is reliable, honest and reliable. The loans reporters and editors concentrate on the things that consumers care about most — the various kinds of loans available, the best rates, the top lenders, ways to repay debt, and more — so you can feel confident when investing your money. Editorial integrity

Bankrate adheres to a strict code of conduct and rigorous policy, so you can rest assured that we’ll put your needs first. Our award-winning editors, reporters and editors create honest and accurate information to help you make the right financial choices. Our main principles are that we appreciate your trust. Our aim is to offer readers truthful and impartial information. We have established editorial standards to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is true. We maintain a firewall with our advertising partners and the editorial team. The editorial team of Editorial Independence Bankrate does not receive compensation directly by our advertising partners. Editorial Independence Bankrate’s team of editors writes for YOU as the reader. Our goal is to give you the best advice to assist you in making smart financial choices for your own personal finances. We follow strict guidelines to ensure that our editorial content isn’t in any way influenced by advertising. Our editorial team is not paid any compensation directly from advertisers and our content is checked for accuracy to ensure its truthfulness. So, whether you’re reading an article or reviewing, you can trust that you’re getting reliable and dependable information. How we make money

You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We are constantly striving to give our customers the right advice and tools needed to make it through life’s financial journey. Bankrate adheres to strict standards policy, which means you can be confident that our information is trustworthy and accurate. Our award-winning editors and journalists produce honest and reliable information to assist you in making the right financial choices. The content we create by our editorial team is factual, objective and uninfluenced by our advertisers. We’re transparent regarding how we’re able to bring quality content, competitive rates and helpful tools to you by explaining how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the promotion of sponsored goods andservices or by you clicking on certain hyperlinks on our site. So, this compensation can affect the way, location and in what order items appear within listing categories and categories, unless it is prohibited by law for our mortgage or home equity products, as well as other products for home loans. Other factors, like our own rules for our website and whether or not a product is offered in the area you reside in or is within your own personal credit score may also influence the manner in which products appear on this site. While we strive to provide a wide range offers, Bankrate does not include the details of every financial or credit product or service. If you’ve spent the last several months dreaming of having getting a brand new car in your driveway, chances are you’re checking out the models, comparing prices and evaluating what add-ons you can afford. Buying a car is a big investment so you’ll need to think about the cost as well as financing options and negotiation strategies prior to going to the dealer. 7 steps to purchasing an auto when you’re ready, follow these seven steps to get the most out of your car buying experience. You’ll walk away with the car that you’ve always wanted for an affordable cost that doesn’t cost you a fortune. 1. Determine what you can afford You may be tempted to set your sights on a specific car, but you won’t be able to drive it home until you . Take into consideration the monthly installment along with other . A good general rule of thumb is to limit yourself to spending less than 20 percent of your household’s monthly income on a new car. This amount should comprise the monthly car loan payments as well as all other expenses, like fuel, , maintenance repair, registration and maintenance fees. For the monthly payment alone, suggests that you should be aiming for no more than 15 percent of your annual income. You can use this to determine an accurate estimate of what you can expect to pay each month and the interest over the course that you will be paying for the loan. It’s equally important to as it determines the rate of interest you pay. 2. Choose whether to lease or buy the car Do you intend to drive the car so long as the wheels can stay on? If so, buying is the best option, and you’ll be able to sell or trade in the vehicle whenever you’d like to get a new set of wheels. If you’re looking for an upgrade at least every 3 years . leasing can help you obtain a higher-end car for your money as they often offer less down payment requirements and an affordable monthly installment. But you’ll not have the vehicle for a long time and you’ll need to look for lease conditions that are specific including mileage restrictions and wear-and-tear charges, to avoid expensive penalty charges. Take a look at the cars that are on your radar, and then weigh the one of them. Bankrate’s will assist you in estimating the savings on the cost of purchasing or leasing to help you make an informed choice. Consider certified pre-owned

Certified pre-owned options can be an excellent option to get buying a new car with lower costs. You’ll get reassurance of a manufacturer’s guarantee that you can’t get from a private dealer.

3. Research: Once you’ve set your budget and decide on the right kind of ownership to suit your driving style, begin looking into the cars that have attracted your attention. First, visit automaker websites as well as independent auto information sites to determine the features that matter to you. Take note of the MSRPs (manufacturer’s suggested retail prices) and invoice prices. Also, check your local listing of inventories to see what is available in your region. Also research any possible discounts. A lot of automakers offer discounts for military members, students, and even members of certain credit unions. Discounts can be stacked together with cash-back rebates offered on the vehicle, which should be deducted after you have negotiated the price. Go to the site of the automaker for the incentives prior to going to. 4. Find out the actual cost price of owning a car is far more than your initial payment. Use websites like or to get a general estimation of insurance, gas repairs and maintenance expenses in your area — although these figures will be contingent on the driving habits you follow. For greater accuracy you can calculate your own cost for fuel based on the number of miles you travel each year and then get a price estimate for the cars you are considering. It is essential to provide your insurance company the exact model, trim level, engine, and other add-ons for an accurate quote. It’s crucial to note that the cost of fees such as taxes on sales, registration fees and other documentation costs are not included in the price that dealers advertise. Bankrate tip

Request a detailed price breakdown of the quote so you can know what charges to expect.

Bankrate tip: Take into consideration the cost of fees like registration fees, sales tax and document fees, that aren’t included on the sticker price advertised by dealers. Request a detailed price breakdown of the quote to know the costs to anticipate 5. Make sure you lock in your financing prior to going to the dealer Dealers don’t want to just sell you a carthey also want to manage the car loan as well. Dealers typically receive a flat fee or a commission on the car loans they facilitate, regardless of whether the loan originates either from a manufacturer or local lender. Instead of having your dealer handle the task, you can have them look it up you can inquire at credit unions and banks and before heading to the dealership. Preapproval from a bank, credit union or online lender does not mean that you are required to accept the deal however, it will help you determine which option for financing is the least expensive. It may also grant you the ability to negotiate if you present the preapproval for your lender and they agree to beat the interest rate in exchange for your business. To secure a preapproval letter you’ll have to submit your employment, personal and income details with the lender. They can also inquire about any other debts you currently have to determine how much the auto loan you are able to afford. 6. Test drive The majority of car buyers keep their new vehicles for about 6 years, so take your time when you test drive. Make sure that you really love the car, especially in the event that you frequently drive to work or for travel. Do not hesitate to request an extended time behind the car. You can spend time in the car while it’s parked to adjust the seats, experiment with the controls and figure out if the passengers are comfortable and if your regular items would fit in the. 7. Negotiate When you’re ready to meet and discuss about pricing, prepare with the information you’ve gathered. See if other dealerships offer better deals on your car and ask for price matches with your salesperson. If you’re interested discuss this, you should do it when you’re negotiating the sale cost of your new vehicle. Separately discussing these issues will help you get a better deal on the car you currently own and you’ll do better if you’ve done some research on the value of your current vehicle online. Before you sign the contract in its entirety, review the entire contract carefully. Review any fees proposed and ensure that what that you had negotiated verbally is spelled out in writing. Also, be ready to decline those nice-to-have extras that you might not need or to the entire deal when it’s not working your way and the person selling it doesn’t want to compromise. The current state of the automobile market. Purchasing a new car requires some additional aspects to be considered. New car average transaction prices (ATPs) reached record-breaking levels at over $48,000, for the fifth straight month in August 2022, according to . The price hikes you’ll likely be met with are caused by a simple problem of demand versus supply. With less vehicles available in car dealerships due to lingering supply chain problems, and drivers in need of vehicles, costs are rising. Along with the increase in supply and demand, choices from the to quell inflation have made the cost to borrow higher as well. This is evident in the amount drivers are borrowing, an average of $40,290 in the 2nd quarter of 2022, compared to $35,587 by 2021, according to . This means you should prepare to spend some extra money for the new car you purchase. What next steps to take when buying a brand new car is a thrilling processand there’s no better feeling than leaving the car dealership confident that you have gotten the most affordable price. However, before you begin your search for the perfect vehicle be sure that your finances are in order and that your credit score is up to level. It’s equally crucial to review your budget and determine the amount of car you can afford. Once you have ironed out all financial aspects look around for the best financing deal so you can bargain with confidence. Going to the dealership prepared can help you choose the most affordable financing option that works for your budget. Find out more

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Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the details of taking out loans to purchase an automobile. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are dedicated to helping their readers gain the confidence to take control of their finances with concise, well-studied and well-researched content that break down complex subjects into bite-sized pieces.

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