We don’t get new cars all the time, so when the time finally rolls around to pick one it is incredibly exciting. But with so many makes, models, and options available to you it can be hard to know where to start. Getting organized and prioritizing your needs is a great place to start, so we are here to help.
The first step when purchasing a car is to determine what you need. There are so many cars on the market with so many features, so you need to prioritize what you will be using your car for and what you need. Here are some questions to ask yourself:
Will I be commuting long distances and need good fuel economy?
Do I live in an area where I need four wheel drive or all wheel drive?
What features are important to me? Do I need a backup camera? Leather seats? All weather mats? Make a list of your must-have features. Then, make a list of features that you would like to have but that aren’t totally necessary.
Is this going to be the family car? Do I need to fit multiple passengers and have the best safety features?
Do I need a lot of cargo space? How important is trunk space or towing capacity?
These questions can help point you towards the type of car you should be considering and give you an idea of where to start.
The next major factor in the car you choose is your budget. If you are planning on purchasing a car upfront with cash, this answer will probably be pretty straightforward. But if you are like most of us you will need to lease or finance your car. You will ultimately need to determine two things:
What down payment can I afford?
What monthly payment can I afford?
Look at your monthly budget to see how much you can swing every month. There is a general rule that you should not spend more than 20% of your monthly income on transportation expenses (this includes gas, tolls, maintenance, parking, insurance, etc) and you should not spend more than 15% of your monthly income on your car payment. Play around with numbers and your budget to see what you can comfortably afford. You don’t want to put yourself in a position where you are struggling month to month to make your payments. It’s better to underestimate the amount that you can spend every month instead of overestimating.
Think about if you want a new car or a used car. Keep in mind that getting a used car doesn’t mean that you are buying a beater car. You can get a certified pre-owned car that is in great condition with a significantly lower price tag. And most times you will still have the option to finance it. But with a lower price tag comes more wear and tear, an unknown history, and more maintenance costs. A new car allows you to skip the questionable past and the wear and tear, but as a trade off you are paying a good amount more as your car will experience instant depreciation.
When it comes to new cars, you have the option to either lease or buy. There are pros and cons to both, so it will depend on how you plan to use the car and what your preference is. Leasing a car might be a good option if:
You want to get a new car every few years
You are on a tighter budget and still want a nicer car
You don’t care to work on your car or customize your car
You can stay within the mileage restraints of the lease period
On the other hand, buying a car might be a good option if:
You like to work on your car and customize it
You want the freedom to keep your car and sell it whenever you want
You drive a lot and will not be able to keep within the mileage restraints
You want the equity of ownership
Leasing is generally cheaper than financing, so if you are on a tighter budget leasing might be the right choice for you. You can always buy your leased car if you end up loving it.
Now is the time to determine what type of car you need. You already know what features are important to you and how you plan on using the car, so now you get to narrow down what type of car is right for you. Here are the major contenders:
Sedan
Coupe
Hatchback
Sports Car
Luxury
SUV
Minivan
Van
Truck
Electric or Hybrid
Again, look at how you will be using your car. If you have a family, a minivan or SUV will probably make more sense than a coupe. If you are looking for a nicer ride with all the bells and whistles, a luxury car or sports car is more up your alley. Is gas mileage important? An electric car or coupe is the way to go.
Once you know what type of car you need, you can start narrowing down what brand you should look at. There are lots of brands with different price points and different pros and cons. Most people have a preference off the bat of what brands they like and what brands they want to steer clear from. When researching brands, be sure to consider the following:
Who is well known for making the type of car I want? For example, a Subaru is a great option for a rugged SUV, while a Kia is a great option for an affordable sedan.
What brand fits in my budget?
What do the reviews say? Are people happy with their cars from the brand you are interested in?
Is this brand known for safety?
Your budget and the type of car you are interested in should help you to narrow this brand list down significantly. Talking to friends and family and reading online reviews can help you to make a final decision.
Once you’ve determined the brand that is right for you, you should be able to select the perfect model based on your needs, wants, and budget. Picking the exact color and trim level is also very important. Keep in mind that being flexible on these features may help you get the car a little quicker. If you have a lot of special requests you may have to special order the car from the manufacturer which can take several months.
Now that you know what you are looking for, you need to decide where to actually buy it. This is now easier than ever, as you can do an inventory search online on many sites such as Edmunds to find where you can get the exact car you want. You can even plan to have a car shipped to you if you find the perfect car that’s out of state.
Even if you buy a car online, it’s a good idea to take your car for a test drive. You can go to most dealerships and go on a commitment free test drive. There might be something that you don’t actually like about the driveability of the car, so it’s a good idea to physically drive it before committing.
When you have landed on the perfect car, you need to cross your t’s and dot your i’s. If leasing, you will have to finalize the terms such as the lease period. If you are financing you will need to apply to lenders and compare the offers. Look at the interest rate, loan term, and prepayment penalties. Keep in mind that you can always refinance your car loan in the future so long as the prepayment penalties are not prohibitive.
You will also need to decide how much of a down payment you will put down. Experts recommend putting down at least 20% to help protect your car from depreciation. If you end up in a situation where you owe more than your car is worth, it can be a problem down the road.
And that’s it! Once you sign the papers and write the check you can drive your car as soon as it is available.
Buying a new car can feel overwhelming, but following these steps can help you choose the perfect car for you and your family.
If you already have your perfect car but have a less than perfect car loan, Auto Approve can help! By refinancing your current car loan you can get a better interest rate, better terms, and a loan that works for you. Our experts can help determine if you qualify for refinancing and help guide you through the process.