7 Important Car-Buying Steps You Don’t Want To Skip
Are you ready to buy a new vehicle but feel intimidated by the car-buying process? We understand how daunting it can be to research vehicles, secure financing, and negotiate prices at the dealership.
But don’t worry, we’re here to help! We’ve put together seven key steps to guide you through the car-buying process with ease, ensuring you secure your dream vehicle.
Keep reading to find out where to start.
1. Determine a price you can afford
The first step is determining a vehicle price and monthly payment you can afford. Before you head to the dealership, you should identify the maximum total price you’re willing to pay. This will help you stay within your budget and avoid overspending.
Try our easy-to-use Auto Loan Payment Calculator to crunch some numbers and find a loan that fits your budget.
Another consideration when evaluating price and monthly payment is whether you have a current vehicle to sell or trade in. If you do, you can use these funds towards your new car, helping to lower the overall price. Use Kelley Blue Book to estimate your current car’s value.
2. Decide if you’re buying new or used
When shopping for a vehicle, you must make several decisions. One of the first and most important is whether to buy new or used.
While brand-new cars can be appealing because of their shine, latest features, and warranties, used vehicles are often much less expensive. Although they might have some wear and tear and higher mileage, they can be a smart financial decision for many buyers.
When deciding, consider your budget, the vehicle price, depreciation, features you want, long-term costs, and more. Check out this article by Car and Driver for the pros and cons of buying a new versus used car.
3. Narrow down your list
With hundreds of makes and models available, choosing a vehicle that’s right for you can be difficult. To help you narrow down your list, consider your lifestyle.
Do you have children you drive to and from school, sporting events, or other extracurricular activities? If so, you might consider a vehicle with plenty of room and the best safety features.
Maybe you enjoy back-road adventures that involve hauling or towing something, such as a recreational vehicle. In this case, you’ll narrow your choices to vehicles that can handle this type of ride.
Factors such as seating capacity, comfort, size, and performance should all be considered. Researching in advance will help you find the vehicle that best suits your lifestyle. Be sure to read reviews and compare different cars and their prices.
Kelley Blue Book offers a Best Cars list and a comparison tool to help you narrow your options.
4. Reach out to your insurance company
After narrowing down your list of potential vehicles, contact your insurance company for a quote on auto insurance. The vehicle’s make and model, along with your driving record, will affect the cost of your insurance.
If you’re upgrading to a newer make or model, you will likely need to increase your coverage, which will result in a higher premium.
You may also need Guaranteed Asset Protection (GAP) insurance, which covers the difference between what you owe on your car and its current value in the event of a total loss. Visit our Auto Loans page to learn more about GAP insurance.
5. Get pre-approved for an auto loan
Throughout the car-buying process, you’ll likely encounter the terms “pre-qualification” and “pre-approval” in relation to car loans. While they sound similar, they represent two distinct steps.
Pre-qualification involves sharing basic financial information with a lender, who then performs a soft credit pull (which doesn’t affect your credit score). Based on this, the lender provides an estimated annual percentage rate (APR) and loan amount for which you qualify. However, the APR and loan amount are not final and subject to change.
Pre-approval, however, requires a formal application and approval process. The lender conducts a hard credit pull and verifies your financial details. This allows the lender to approve you for a specific loan amount, giving you more negotiating power at the dealership.
Getting pre-approved before visiting the dealership offers several benefits. It helps you secure a favorable interest rate and loan term. Knowing your budget and monthly payment allows you to stick to it. Plus, it will help you avoid surprises during the buying process.
Learn more about the benefits of getting pre-approved for an auto loan before heading to the dealership.
6. Look for deals
Shopping for a car is similar to other forms of shopping—looking for deals before purchasing is essential. Opportunities to save money include manufacturer rebates, clearance sales on older models, dealer incentives, trade-in bonuses, and discounted extended warranties.
Before stepping onto the lot, research deals that could help you save money. Also, be sure to ask the salesperson at the dealership about any discounts they’re offering.
Additionally, certain days and times of the year are better for buying a new vehicle. For more information on the best times to shop and buy, check out this article by Bankrate.
7. Make the most of your test drive
Test-driving a vehicle is a crucial step in the car-buying process. It helps ensure that the car you choose meets your needs and expectations.
Before you head out for your test drive, take the time to inspect the vehicle, both inside and out. Sit in the driver’s seat to check for comfort, and if you often have passengers in the backseat, try sitting there as well. Evaluate whether there is enough cargo space and storage for your needs. Think about what you want most in a vehicle and make sure it checks those boxes.
Once you’re ready, it’s time for the test drive. Don’t rush through the process; take your time and drive on city streets and the highway. As you drive, pay attention to several key factors, including comfort, noise levels, power, acceleration, braking, and handling. These aspects will matter in the long run and ultimately help you decide.
Ready to get started?
Now that you’re familiar with some key steps of the car-buying process, we’re here to help whenever you’re ready. Visit our Auto Loans page to explore our low rates and flexible term options. Then, apply online in a few simple steps or schedule a call with one of our auto lending experts to get started.