How to buy a car: 17 steps to ownership + free checklists

Buying a car is an exciting yet daunting experience for many Americans. Whether it’s your first time purchasing or you’re trading in for an upgraded model, everyone’s experience is different. Depending on your goals, the car-buying process can happen over the course of months or you can be jingling your new keys in just an afternoon. To help you successfully navigate the path to car ownership, we’ve broken down how to buy a car in 17 steps.

Whether you’re doing research on your options or comparing car insurance rates, feel free to use this post as your guide. If you’re ready to buy today, check out our printable car-buying checklists below, so you can take our tips to the dealership or print them out as you shop online.

1. Determine how much to spend on a car

When it comes to making any type of big purchase, it’s important to make sure you stay within your budget. Consider how much money you can afford to spend on a car, and let this number guide what type of car you can buy. Remember to factor in costs like maintenance, gas and insurance when figuring out your car budget. A good rule of thumb is to spend no more than 20% of your net monthly income on a vehicle purchase.

2. Deciding between a new vs. used car

Once you have a budget for your car purchase, you’ll need to figure out whether you want to buy new or used. Many factors go into this decision, so check out the pros and cons of new versus used cars below to help you weigh your options.

Pros and cons of buying new

New cars often have updated technology, better fuel efficiency and can be tailored to your preferences. Despite these perks, they also have some drawbacks.

Pros

• Latest technology regarding safety, navigation and fuel efficiency
• Warranty perks
• Smartphone connectivity
• Updated color and style preferences

Cons

• More expensive
• Depreciates in value
• Potential design or performance flaws

Pros and cons of buying used

If you’re on a strict budget, buying used may be all you can afford. Whether this is the case or not, purchasing a used car has its own advantages and disadvantages.

Pros

• Money saved upfront
• Less lost to depreciation
• Easier car-buying process

Cons

• Potential for costly maintenance or repairs
• Outdated technology
• Less fuel efficiency

If you decide to purchase used, make sure to bring our used car-buying checklist below to help you evaluate your options.

3. Figure out car financing

Under ideal circumstances, we’d all have enough savings to buy a car in cash. However, most Americans may not have that amount of money on hand. A report by Experian found that about 86% of new car purchases and 37% of used cars sold are financed. If you’re in a similar situation to most Americans, you’ll need to look into financing options for your car.

It’s wise to look into private financing because you may get a better deal on a loan at a bank or credit union than at a dealership. Consider getting pre-approved for a car loan beforehand to simplify the process and avoid surprises when you go to purchase. Pre-approval can also help you negotiate the price of your car later, as this qualifies you as a cash buyer and not a monthly payment buyer.

4. List important car features for you

Now that you’ve thought through financing your car purchase, it’s time to focus on your needs and wants. Determine what’s important to you in your vehicle by making a list of car features and prioritizing them into must-haves and nice-to-haves. Choose from upgraded safety features, luxurious design details, advanced Bluetooth and phone capabilities, fuel efficiency, color preferences and high-quality sound systems, among others.

When prioritizing features, think about how you’ll be using the car and what features are necessary for your lifestyle. For example, all-wheel drive is a nice-to-have if you spend the majority of your time on city streets, but it may be a must-have if you spend most of your time driving on more rugged terrain. Once you’ve made your list, start looking for cars that meet your requirements.

5. Narrow down your car options

Now that you have a list of important car features, you can start looking into what models fit your needs, wants and price range. Most people prefer to do their car-buying research online, but remember to utilize the opinions of real car owners like your friends and family. They can shed light on their car-buying process and even give reviews on cars they currently own or owned in the past. Narrow it down to your top three options and then try calling dealerships or browsing sellers online to get a feel for what’s available.

6. Do research on the fair market price

With your top options in mind, it’s time to do some research on their fair market prices. To do this, use an appraisal tool like Kelley Blue Book or NADA to assess the fair value of your potential picks. Whether you’re negotiating with a private seller or at the dealership, come armed with this research to use as a bargaining point. This will help you get the best deal, especially if your car of choice is ridiculously marked up at the dealership or by a private seller.

7. Think about the best time to buy a car

Timing can mean the difference between paying more and paying less for a car. Depending on how urgently you need a vehicle, think about if you can make your purchase at an optimal time. Generally, the best time to buy a car is any time between October and December. Many dealerships have yearly sales quotas to fill, and old models need to be vacated to make room for new inventory at the end of the year.

If you can’t wait for these months, the best day of the week to buy a car is Monday. The reasoning behind this is that many dealerships and lenders will be busy over the weekend. Buying on a Monday gives you the advantage of more time to negotiate a better deal, and sellers may be more willing to negotiate after a busy weekend of sales.

8. Go for a test drive

Before you buy a car, it’s important that you’re able to test drive it first (even if you’re buying online). You may have done all the research and know exactly what make and model you want, but when you get in the driver’s seat, it could be a whole different story. Based on your options, go for a few test drives to see how you like different cars.

This is especially important if you’re buying used, as you don’t want to purchase a car that has glaring problems right from the start. When you’re test driving a used car, make sure to use all your senses to check it out. Look for damage to the inside and outside, make sure there are no concerning smells as you start driving and also listen for noises that may indicate problems.

Remember that in addition to checking the car out yourself, it’s worthwhile to pay a mechanic to do an inspection if you’re serious about purchasing. Once you’ve had experience driving the car, you’ll have a better picture of what you actually want to buy.

9. Find the right car for you

Now that you’ve figured out your preferences, you may need to spend some time locating the right car. If you’re buying new, maybe you need to find a dealership that has your color preference in stock or has the right safety features. If you’re buying used, this might mean finding a private seller within a reasonable geographical distance from you with the exact year and model you want for sale. It’s good to locate a few similar options, and keep in mind that you may have to travel farther to find the right car.

10. Compare auto insurance

With your top pick in mind, it’s helpful to factor car insurance into your budget. Car insurance is the second largest expense after buying the car itself, so use The Zebra to compare car insurance rates side-by-side and ensure you get the best deal. Make sure you have information on your credit score, driving history and preferred coverage levels readily available so you know your quote is accurate. To help you understand your coverage options or choose the right insurance company, check out this car insurance buying guide.

11. Get price quotes

Once you’ve located your car(s) of choice, start collecting price quotes from multiple dealerships or private sellers. It’s helpful to have at least three quotes to compare and don’t forget to test drive the cars you have quotes for in case you didn’t already. Now is the time to ask questions about the car and its features, as well as address any concerns you may have. The information you gather now will help you make the best decision and negotiate the best price later.

12. Look into buying a car online

If shopping around at different dealerships or meeting up with various private sellers seems like a chore, you can always try buying your car online. Browse through new and used car inventories all from the comfort of your home with sites like J.D. Power, Carvana or CarMax. You can go through the entire car-buying process without ever having to deal with another human being, but there are support lines available if you do need help at any point.

It’s important to note that only used cars can be purchased entirely online, as dealerships have exclusive rights to new cars in the United States. However, if you intend to buy a used car, online is a perfectly viable option and they often have excellent return policies in case you decide you no longer want the car.

13. Consider trading in your car

Before moving in for negotiations, you may want to consider trading in your current vehicle if you already own. Ask a few dealerships for their offers and use this information to your advantage. Even if you plan to sell your current car privately and get more money, you can leverage this information in negotiations. If you don’t plan to sell privately, it’s worthwhile to consider the dealership’s offer as a way to finance your new car purchase. Here are a few tips to help you get the best trade-in offer:

• Consider selling to a used-car dealer if your car is a popular model with low mileage. They always need new inventory for their lots.
• Make minor repairs such as replacing a dim headlight because it can help you get more trade-in value out of your car. Don’t spend your money to repair big things, though — it will be much more affordable for the dealer to do it themselves.
• Spruce up your car’s appearance to improve your trade-in estimate. Give your vehicle a wash and clean up the interior and engine so that it makes a good impression.

14. Negotiate the best deal on a car

Whether you’re buying from a dealer or a private seller, it’s important that you take the opportunity to negotiate the best deal for you. One tip is to have other dealers or sellers write down their best offers and use it to see if someone else can give you a better one. This shows that you’ve done your research and can justify a drop in price. Check out a few more car negotiation tips below or other tips from car salespeople:

• Be patient. It’s hard to negotiate when you’re in a hurry. Take your time to talk through the details and make sure you have the numbers straight by asking for the out-the-door price.
• Know that you can walk away at any point. If you’re not being treated fairly or don’t like the deal, feel free to walk away from the negotiation.
• Negotiate on more than just the price of your car. While getting a bargain on your car is one thing, lowering your interest rate if you're financing or negotiating more out of your trade-in can help keep money in your wallet.

15. Bring what you need to buy a car

Buying a car can be quite a time-consuming process. Lessen the time you spend at the dealership or with a seller by being prepared with all the right documents and payment information. Below is a list of things you’ll need to bring:

• Your driver’s license
• Proof of car insurance
• Your payment method (e.g., loan, check, cash)

If you’re financing with the dealership also bring:

• A credit report
• Proof of employment (e.g., recent pay stubs)
• Rebate eligibility or discount information (e.g., deals from the manufacturer or your credit card company)
• Reference list (for those with lower credit scores)

16. Finalize your insurance policy

Did you know that purchasing your policy in advance can help you save on your car insurance? Prior to buying a car, make sure to purchase insurance online and pay in full to get the best deal. Then, when you have information on your VIN, provide that to your insurer along with your driver’s license, Social Security and lien holder (if you’re financing). You need to have complete insurance paperwork and an activated policy before you can drive away with your car.

17. Make your purchase

With your insurance activated and deal settled, it’s finally time to buy your car. Sign your paperwork and relish the moment they hand over your new keys. Congrats on becoming the owner of a new car!

Once you own your car, it’s important to take steps to protect and maintain it for the long run. Remember to evaluate your auto insurance regularly and compare rates every six months to a year. Additionally, get in the habit of maintaining your car to ensure the functionality and longevity of your vehicle.

Not sure where to start regarding maintenance? Use our printable car maintenance checklist above to keep track of everything you need to do to keep your car properly maintained.