Car Buy

Car Buy

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.
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