How to Buy a New Car

As exciting as it is to own a new car, many people dread shopping for one. Do your research before you head out, and the experience can be fairly painless. You can avoid haggling altogether by shopping online via a car broker (see How to Buy or Sell a Car Online). Or go to a "no haggle" dealership such as Saturn where the price isn't negotiated.

Things You'll Need

• Copies of your credit report

Instructions

1. Take a hard look at your bottom line and consider these factors: who will drive the car and where; how many passengers does it need to carry; how much are you willing to pay; will you finance it and if so, what kind of monthly payment can you afford; and how much will it cost to insure?

2. Learn as much as you can about which safe, well-built cars in the class you're considering retain their value longer than others. Test-drive your top choices to help you decide on one model and to learn about prices and options.

3. Before you commit to a model, research its safety and cost of maintenance history through consumer reporting agencies, auto magazines, newspaper stories, and Web site reviews of the vehicle. Contact the National Highway Traffic Safety Administration to see if there has been a recall on the model (see Resources).

4. Once you've picked an option package, trim level and possible colors, you're ready to shop. Research the vehicle's pricing through auto sales Web sites, dealers' newspaper ads and consumer advocacy sites such as Consumer Reports that compare prices and list rebate information (see Resources).

5. Get a copy of your credit report from a free service, such as Experian (see Resources). (See also How to Obtain Auto Insurance.) Make sure there are no issues that might cost you a decent financing rate or sink the deal altogether.

6. Investigate other financing options besides the dealer's--you might get a better rate at a credit union or bank.

7. Work the phone and the Internet to find a dealer with the car you want, then bring your research on pricing and rebates with you. Ask lots of questions and show that while you're not in a hurry, you are serious about getting a fair deal. Be rested and well-fed before you negotiate for your car. You want to be alert, comfortable and in your element. Be ready to walk, if you don't get the price you're looking for.

8. Ask the dealer about special ordering the exact options and color for the vehicle if you don't see what you want on the lot. It may take a month or so for your car to be delivered, but if you're not in a rush, this could be the way to go. Also ask about dealer cars, which may have a few miles on them, and thus are cheaper.

9. If you're satisfied with the price and vehicle, it's time to get down to the nitty-gritty and sign the contract. Read it carefully: It should spell out sale price, down payment, trade-in value of your previous car (if applicable), destination charge, sales tax, total cost and loans. Make sure no extra costs were added that you didn't discuss. Manufacturers pay the dealer to get a car ready for its new owner, so try talking your dealer out of dealer-prep fees.

10. Discuss warranties thoroughly, and understand what they cover. Compare warranties on vehicles using the manufacturers' Web sites and on others (see Resources).

11. Sign the contract, write your check and show proof of insurance to fill out the paperwork for the Department of Motor Vehicles.

12. Inspect the car before you take possession. It's your chance to catch any manufacturing irregularities as well as damage to the body, which the dealer should fix at no cost.

Tips & Warnings

• No-haggling dealerships may not offer the lowest price, so if you're not afraid to wheel and deal, go elsewhere.

• If you bring along a friend or a family member to help you shop and negotiate, make it clear who the dealer should be selling to.

• If negotiations stall, don't be afraid to go to another dealer. Savvy shoppers play dealers against each other to get the best price.

• Shop at certain times of the year for a better deal. Late December is busy for nearly everyone except car dealers, so they'll welcome your business. Annual clearances are held in late summer and early fall, when the old models are sold off.

• Avoid high-priced extras like rust-proofing and road safety kits.

• Unless it's in writing on your bill of sale, don't assume there's a 3-day grace period to change your mind.