Difficulty: Moderately Easy
Step1
Shopping for the car! Fun! Fun! Via web, car lots, or newspaper. We can often get overwhelmed with the whole process. This is one of many steps that can take much of your time, valuable time that is. Time away from family, friends, work, or just leisure. When you do find that "one", now what? Think to yourself: I have to Call my bank to get rates for my loan, check dealer for their rates, does the car have any warranty, if not, how much will one cost? Ah.. don't forget to check the new insurance rate you will be paying. Full coverage of course. Oh and do not forget, if there is a trade involved. Get a 10 day payoff, as deals can actually drag out that far and it takes time for the dealer to receive the title from the bank. Banks are not always the best source of finding trade values as they are in the business to loan money not appraise vehicles. They want a high loan value to loan you more money. Banks will have a tendency to put a high figure in your mind about your trade because the use N.A.D.A or blue book and when it comes time to go to the dealer to swap, guess what? They have a totally different value. Dealers use a black book, which is what vehicles have a tendency to go for at the auto auctions. "actual value" or "wholesale value"
Step2
Shopping price NOT payment. Knowing the mathematics of a car loan. Five year notes are the norm and you can figure that on a $10,000 vehicle your payment will be somewhere around $200 to $210 per month, (based on credit) or $20 to $21 per thousand. Credit scores over 680 will receive the best rates. Under 680 estimate around $8-$10 more on payment. On a 2 year 12000 mile lease figure around. $35-$40 per thousand. Leases are good for those who like the feeling of a new car and those who do not drive over 12000-15000 miles per year. You can however purchase mileage bands up front for more mileage. After knowing these little equations you now can find a vehicle and negotiate price, and price alone. Dealers will often stretch the term of the loan to compensate a lower payment as you will often see on television advertisements. Do not be fooled. You will see that they will pay off your vehicle no matter what you owe! Yes they do as they have to in order to get the title to resell it to someone else. However the remaining balance that you owed on your trade-in over and above what it was actually worth will be tacked on to the new loan. Figure this into your budget. When I was in the business many clients would come to me and want a new Lincoln for $250 per month. It is very important to know these little secrets to a car loan. Shop price always and the payment will fall to simple mathematics.
Step3
Who can I trust out there. All of the carfax numbers, bluebook pricing etc. Actual values, salesmen. Blah! After you have located the vehicle that you want and negotiated price, now what? Well by now you have established some sort of a relationship with the salesman/dealer. Before you sign anything READ ALL DOCUMENTS, ASK QUESTIONS, make sure loan is what was agreed upon: 5yr term, 6yr term, lease, etc. Too many people I have known have gotten burned thinking they were buying and instead they were fooled into a lease. READ PAPERWORK! There are services out there that do all of this for you. They are called auto consultants or personal buying assistants. You pay them a nominal fee and they represent you and you alone throughout the process. Like an attorney, or real estate agent, if you will. (handlethecardeal.com) Be advised on warranties, gap insurance, accessories etc. I always suggest Gap coverage. It pays off the vehicle in full in the event it were to be totaled, thus getting you out of that loan if you were to owe more on it than it was worth. Great product! Usually $275-$325 on a high end and can be included in the loan. Warranties are a bit different. That is up to you. Typically one who has had numerous problems with vehicles has a tendency to purchase these. They are pricy at that. Average cost is around $600-$2500. That changes the budget a bit. Accessories can usually be included in as well, if you negotiate properly. Dealers will throw in accessories much of the time to close the deal. (i.e. rain guards, pin stripping, free oil changes, etc.
Novice 
