10 Steps to Buying a New Car

The following is an overview of the new-car buying process.

1. How Much Of A Car Payment Can You Afford? Begin by deciding how much you have to spend on a new vehicle. Your monthly car payment should be no more than 20 percent of your monthly net income.
    
2. Will You Get A Car Loan Payment? Decide whether to pay cash, finance or lease your new vehicle. Each method offers different advantages for different budgets and lifestyles.
    
3. What is the Right Car for You? What are your needs in regard to size, performance, safety or styling? Research cars that meet your needs-and are in your price range-by using multiple sources. Choose at least three "target cars" to consider buying.
    
4. Setting Your Price. Find the market value price for your target cars. Add the cost of options and subtract rebates and incentives. This is a good deal for you and a fair profit for the dealer.
    
5. How to Test Drive a Car. Make an appointment to test-drive the cars you are interested in. This is a chance to evaluate the salesperson too. Drive-then leave!
    
6. Should You Trade in Your Used Car? A dealer will rarely pay what your trade-in is worth. Still, some shoppers like the ease of a single transaction. Here's how to do it.
    
7. Beginning Negotiations. Be prepared to visit three or more dealers. Make your opening offer several hundred dollars below the market value.
    
8. Closing the Deal. Don't let yourself be trapped by verbal games some salesmen play. Raise your offer to market value but not above. If negotiations stall, go to another dealer. Play the dealers against each other until you get your price.
    
9. In the Finance and Insurance Room. You will move to the Finance and Insurance (F&I) room to sign contracts. Review the contract carefully and avoid high priced extras like rust-proofing, and road safety kits. Check your new vehicle for scratches and dents before taking delivery of it.
    
10. Alternate Buying Strategies. Consider using Internet buying services or faxing your offer to local dealerships for competitive bids. This can save you money and avoid the hassle of going from dealer to dealer.