Step 1: What kind of car do you need?
If you examine your needs rather than wants, you will quickly discover what the right car is for you. Take a moment to think about what you use your car for. How many people do you need to transport? What kind of driving do you most often do? How long is your commute? Is it important that your next vehicle get good gas mileage?In too many cases people choose a car because it has an eye-catching style or it is a trendy favorite. If you go in this direction, you may either break your budget or have to go car shopping again soon. Let your needs, not your wants, drive your decision.Here are a few other questions to keep in mind when you begin your car-buying process:
Do you want a manual or automatic transmission?
Do you really need four-wheel drive?
Or all-wheel drive?What safety features do you want?
Do you require a lot of cargo-carrying capacity?
Will you be doing any towing?
Will the car easily fit in your garage or parking area?
Do you want a manual or automatic transmission?
Do you really need four-wheel drive?
Or all-wheel drive?What safety features do you want?
Do you require a lot of cargo-carrying capacity?
Will you be doing any towing?
Will the car easily fit in your garage or parking area?
Step 2: How much can you afford?
Regardless of whether you decide to buy or lease your next car, establishing a realistic monthly payment that will fit into your budget is a crucial first step. How much should this be?
A rule of thumb is your total monthly car payments — whether you own one car or more than one — shouldn't exceed 20 percent of your monthly take-home pay.
Check the Edmunds.com "Financial Calculators" to help you estimate what your monthly payment will be based on purchase price, down payment, interest rate and length of loan. Take the time to run the numbers now, before you go car shopping, print out the result and put this information into your car-buying folder. It will not only show you what you can afford, it will also help you control the numbers when you negotiate with a car salesman.
A rule of thumb is your total monthly car payments — whether you own one car or more than one — shouldn't exceed 20 percent of your monthly take-home pay.
Check the Edmunds.com "Financial Calculators" to help you estimate what your monthly payment will be based on purchase price, down payment, interest rate and length of loan. Take the time to run the numbers now, before you go car shopping, print out the result and put this information into your car-buying folder. It will not only show you what you can afford, it will also help you control the numbers when you negotiate with a car salesman.
Step 3: Should you lease or buy your next car
A lease requires little or no money up front and offers lower monthly payments. But when the lease ends you are left without a car and a need to replace it.
Buying a car is more expensive initially and the monthly payments are higher. But at the end of the loan, you will own a car you can still drive or sell.
Other key factors that differentiate leasing and buying include:
Advantages of Leasing:
Buying a car is more expensive initially and the monthly payments are higher. But at the end of the loan, you will own a car you can still drive or sell.
Other key factors that differentiate leasing and buying include:
Advantages of Leasing:
- You can drive a better car for less money
- You can drive a new car every few years
- No trade-in hassles at the end of the lease
Advantages of Buying
- When interest rates are low, it makes more financial sense to own a car rather than lease it
- No mileage penalty
- Increased flexibility — you can sell the car whenever you want
Step 4: Have you considered all vehicles in that class
Today's new car (and truck) market is filled with great products. Most shoppers have difficulty keeping up with all of the vehicles manufacturers introduce and the changes they are making to their older vehicles, so it's important to do your research. Use Internet sites like Edmunds.com and Edmunds.com New Cars and Trucks Buyer's Guide to research all your choices before you hit the showrooms.
On Edmunds.com you can pick a specific car and bring up a list of similar cars in the same class. If you already have a car you are considering, this will be your starting point. Find the specific car you want on the web site by searching by Make, Type, Price Range or Market Segment. Once you have chosen your specific car, you will be on a Vehicle Detail page. This page has links to all the Car Pricing, Features, Reviews and Shopping options. Down the left hand side of the Vehicle Detail page there is a section called "Find a Related Vehicle" all of the links in this section help you to locate similar and competitive vehicles.
If, on the other hand, you have no idea where to begin you should might want to consult the Best Cars section of the site, or you can begin by searching by Make, Type, Price Range or Market Segment.
On Edmunds.com you can pick a specific car and bring up a list of similar cars in the same class. If you already have a car you are considering, this will be your starting point. Find the specific car you want on the web site by searching by Make, Type, Price Range or Market Segment. Once you have chosen your specific car, you will be on a Vehicle Detail page. This page has links to all the Car Pricing, Features, Reviews and Shopping options. Down the left hand side of the Vehicle Detail page there is a section called "Find a Related Vehicle" all of the links in this section help you to locate similar and competitive vehicles.
If, on the other hand, you have no idea where to begin you should might want to consult the Best Cars section of the site, or you can begin by searching by Make, Type, Price Range or Market Segment.
Step 5: Have you considered all the costs of ownership
Here is an often overlooked fact of car ownership: one car might be cheaper to buy, but more expensive to own. Why? Even if two cars cost about the same to buy, one can depreciate at a different rate or cost significantly more to insure or maintain. Before you commit to one car, you should estimate the long-term ownership costs of the vehicle you are considering. These include depreciation, insurance, maintenance and fuel costs. The Edmunds.com Web site has a feature called Cost to Own, which presents this information in an easy-to-read table.
Another tool you should use is Edmunds.com's True Market Value (TMV®) pricing. By following the prompts you can find out what a fair price is for the car you are considering. The TMV price is the average price other buyers are paying for the same car in your area. TMV represents a good price for you and a fair price for the dealer.
By using TMV and TCO, you can make a smart decision up front and then save hundreds of dollars over the life of the car.
Another tool you should use is Edmunds.com's True Market Value (TMV®) pricing. By following the prompts you can find out what a fair price is for the car you are considering. The TMV price is the average price other buyers are paying for the same car in your area. TMV represents a good price for you and a fair price for the dealer.
By using TMV and TCO, you can make a smart decision up front and then save hundreds of dollars over the life of the car.
Step 6: Research options
By completing steps one through five, you should now have a good idea about what car will work for you. Maybe there are a few cars that fit your criteria. It's time to narrow it down.
Car buyers have been trained to visit local dealerships to find the car they want. In the Internet age, this is a waste of time and money. You can quickly cover more ground by shopping on-line. Car dealers are waking up to this new breed of shopper and have created Internet departments within their dealerships to serve the educated buyer who already knows what he wants and what he's willing to pay. The only thing you have to do in person are test drive the car and sign the contract. And in some cases, you can even have the car "delivered" to you by the salesperson.
Edmunds.com is your link to the automotive world. By reading our Web site you can not only educate yourself about cars, but also find local dealers, check interest rates for buying or leasing and calculate your exact monthly payment. Before ever heading out the door, you can answer almost any question you may have by searching Edmunds.com. Remember, you don't want to go to the dealership until you're really ready.
Car buyers have been trained to visit local dealerships to find the car they want. In the Internet age, this is a waste of time and money. You can quickly cover more ground by shopping on-line. Car dealers are waking up to this new breed of shopper and have created Internet departments within their dealerships to serve the educated buyer who already knows what he wants and what he's willing to pay. The only thing you have to do in person are test drive the car and sign the contract. And in some cases, you can even have the car "delivered" to you by the salesperson.
Edmunds.com is your link to the automotive world. By reading our Web site you can not only educate yourself about cars, but also find local dealers, check interest rates for buying or leasing and calculate your exact monthly payment. Before ever heading out the door, you can answer almost any question you may have by searching Edmunds.com. Remember, you don't want to go to the dealership until you're really ready.
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