A Complete 8-Step Guide To Buying A Car

Buy A Car

You want a new car, but you’re not a “car person.” You love the idea of securing a car you’ll love for years, but the thought of dealing with a sweaty salesman nauseates you.

Where do you start? Should you lease or buy? How do you choose a body style? How do you pick the right car? By the end of this article you’ll have these answers and more, wise to all the shortcuts to finding the best car for the best deal.

Unlike other Complete Car Buying Guides, we start with a critical question that may save you tens of thousands right off the bat:

1. Ask Yourself: Do I Really Need a Car?

Before we go any further, a great question to ask yourself is: do I really need a car at all? We tend to underestimate the costs and hassles of car ownership, which include paying for parking, scratches and dent repair, planned maintenance, unplanned maintenance, weather damage, gas, and more. All can be avoided by simply using public transport, taking Lyft, or even just renting cars through Turo.

With this in mind, are you considering buying a car for a genuinely good reason?  

Good reasons to buy a car include: I started a new job in a new city without public transportation, and I’m getting married and neither of us has a car, and my old car is a deathtrap.

Bad reasons to buy a car include: my 2016 just doesn’t feel new anymore, I deserve a Porsche, and I wanna go fast.

If your reason skews towards the first list, we welcome you to read on!

2. Set a Budget

Let’s cut right to the chase: your car-buying budget is 25% of your annual pre-tax income.

If you love cars and your quality of life increases with each extra horsepower, you can up that number to 30%. If you see cars as four-wheeled appliances, maybe drop that number to 20%. If you’re somewhere in between, 25% is a responsible amount to spend on a car.

Does 25% sound disappointingly low? If so, you may want to consider leasing. Leasing grants you access to sweet rides that would normally be out of budget, with the obvious drawback being that you’d never actually own the car. As a rule of thumb, a sensible leasing budget is 10% of your monthly take-home.

So let’s say you make $50,000 per year.

You can afford to own a car with a sticker price of up to $15,000.

You can afford to lease a car with a sticker price of up to $40,000.

Still disappointed with your budget? Remember that the used car market is rife with excellent rides that may be a few years old, but have at least another decade of life left in them. For example, a new, barebones BMW 320i is a whopping $35,000, but a fully-loaded BMW 335i from 2015 will cost just $20,000. 

3. Decide on a Body Style

Now that you’ve found your budget, let’s find a specific model you’ll be happy with. A great place to start is to narrow your choices down by body style.

Do you value driving fun, ease of parking, and high MPG? You may want to look at a coupe or sedan. Perhaps you’re willing to sacrifice speed and MPG for presence, practicality, even off-road ability? You may be happier in a truck or SUV. Or perhaps you’d like something spacious, but economical? There’s a crossover out there for you.  

Though the versatile crossover currently reigns king, a massively underrated body style is the hatchback. While sedans lack trunk space and crossovers can be boring to drive, hatchbacks make neither compromise. The Toyota Prius, VW Golf GTI, and Kia Stinger are all a blast to drive (yes, even the Prius), and boast the cargo space of a crossover. In all, there’s a reason the Golf GTI is considered the best daily driver of all time.

Once you’ve decided whether you’d like a coupe, sedan, crossover, SUV, truck, minivan, hatchback, or even a two-seater convertible, the next step is to pour a cup of your favorite caffeine source and engage research mode.

4. Make a List of 20 Options and Narrow it Down to 5

The fastest way to finding your four-wheeled soul mate is to first cast a wide net, and then narrow down your choices.

You’ll start by crafting a curated list of 20 high-quality options. If you’ve decided on an SUV, Google “Top 10 SUVs 2014” and write down the results. Then, Google “Top 10 SUVs 2015”, and add to your list any SUVs that weren’t present before. Rinse and repeat until you get to the current year, and you’ll have a list of 15 to 20 critically-acclaimed SUVs.

Now comes the fun part; start eliminating. Be honest with yourself, and not afraid to be superficial. Is the car too expensive? Gone. Too big? Goodbye. Has a stupid face? Auf wiedersehen.

Once you have about 10 cars left, find more subtle reasons to narrow the list down to 5. Here are three great ways to do this:

  1. Google “[make, model and year] long term ownership” and see what real owners have to say about them.
  2. Call your local mechanic and ask which of your top 10 he or she recommends avoiding. Mechanics can offer a vivid picture of how dependable certain cars really are. If some of your top 10 are routinely in the shop, may be best to eliminate them.  
  3. Call your insurance provider (or any insurance provider) and ask for estimates for each of the 10 cars. Inevitably, at least two of your 10 will be shockingly expensive to insure for reasons they may or may not share, and thus you’ll want to avoid those models.

After this step, you’ll now have a clean list of 5 winners. Your next step is to schedule some dates and play hard-to-get.

5. Test Multiple Cars Multiple Times

The #1 mistake people make during the car-buying process is not testing enough cars. They test 1 or 2 cars, let impatience or sales pressure set in, and prematurely settle for whichever car offended them the least. Skimping on test drives and settling inevitably leads to 5 to 10 years of passionless coexistence with a car that bores you.

Don’t let a pushy dealer pressure you into writing a check after two test drives. Instead, test your top 5 and more at Carmax. Here’s a secret: Carmax will let you drive as many cars on their lot as you like, back-to-back. Like your local ice cream shop, they let you sample flavors to your heart’s content.   

Carmax test drives are brief at around 10 minutes, so remember to focus entirely on what you can’t research online later. As soon as you’re in the driver’s seat, concentrate on what you feel.

  • How comfortable is the seat?
  • How do the buttons feel to the touch?
  • Is the infotainment system easy to use?
  • How do you like the acceleration and braking?
  • Above all else, do you feel happy driving the car?  

Use Carmax’s Netflix-like test driving policy to pilot your top 5 multiple times. Don’t forget to change up variants and trims. Maybe you liked the Honda Civic, but want more power? Test a Civic Si. Liked the Mazda CX-5 but want more space? Try the Mazda CX-7. Your sales associate may also recommend cars outside of your top 5. Why not take them for a spin?

Once you’ve test drive 5-10 cars multiple times, a favorite will emerge. Congratulations! Now, it’s time to get a deal…  

6. Find a Deal

Now that you’ve decided on the car you like, who the heck do you get it from, and how do you get the best deal?

If you’re leasing, you’re likely going to lease from a local dealer. The Internet is rife with great advice about negotiating car leases, but here’s our favorite one-two punch:   

  1. Don’t mention leasing until the last minute. Because lease rates are based upon the car’s agreed upon sale price, you want to negotiate the sale price first to get the lowest rate.
  2. Don’t negotiate down from the dealer price; negotiate up from the invoice price. Ask the dealer for the car’s “invoice price,” which is what they paid the manufacturer. Use this as a starting point for a negotiation to save hundreds, even thousands.  

If you’re buying, you have four sources to buy from: a dealer, a private party, Carmax, and relative newcomer Carvana. Here’s a rundown of the pros and cons of each:

  • Dealers may pummel you with high-pressure sales tactics, but offer better-maintained cars than most private parties and are open to negotiation. A 2016 Mazda CX-5 may be $23,000 from Carmax or Carvana, but $19,000 from a Honda dealer desperate to clear lot space. Still, dealers are notorious for sneaky fees and manipulation tactics; if you feel uneasy, just walk out the door. No need to say goodbye.
  • Carmax is the Target of used cars, synonymous with a dignified and painless, brick-and-mortar car shopping experience. Carmax cars are generally ~5% more expensive than their competitors, but they’re high-quality and come with a 5-day return policy. Plus, Carmax offers shockingly generous warranties which are a must for any models with questionable dependability.  
  • Carvana is the Amazon Prime of car buying: quick, convenient, and remote. Carvana’s #1 drawback is their inability to offer test drives, but if they have the exact car you’re looking for in the right color, you can test it at Carmax and buy it from Carvana, saving hundreds.  
  • Private Parties are the Wild West of car buying; if you can stomach the risks of fraud and poor maintenance, you may strike gold. You can save up to 20% buying from someone listing on Autotrader, CarGurus, Craigslist, even Facebook Marketplace, but keep in mind that you’re buying a car “as-is” with no warranty, trade-in offer, finance options, and are responsible for 100% of the paperwork. Never buy a privately owned car that hasn’t been inspected by a mechanic of your choice.

While the high-risk, high-reward prospect of buying from a private party appeals to us, we recommend the safe options of buying from Carmax or Carvana with a warranty. Dependability and peace of mind will offset any amount you could save haggling with a dealer or private party.

7. Maximize Your Trade-in

Carmax, Carvana, and most dealers will offer to buy your old car to help offset the cost of the new car. What will they do with your old beater, you ask? If it’s under a decade old, they may resell it, otherwise they’ll just send it to auction.

Just like buying, finding a good trade-in value is worth shopping around for. Quite handily, you can see what Carvana would offer you right now using their online tool. Carmax requires an in-person appointment, but you can schedule one online and they take around 45 minutes. Dealer quotes will vary; give them a call to learn about their process.

If you’re disappointed in your car’s trade-in value (almost everyone is), you can always try your hand at selling your car to a private party. Invest in a good wash, a good photographer, and some premium listings on Autotrader/CarGurus/Craigslist/Facebook, and you may find yourself handing the keys to a happy new owner for 25% more than Carmax offered you.

8. Make the Purchase!

Once you’ve found the right car, it’s time to claim your new four-wheeled best friend. Be sure to contact whomever currently has it to establish a hold until you can sign on the dotted line.

Carvana has a painless online process helping you organize all of your paperwork without speaking to another human being. You can buy a car from them in your pajamas.

Purchasing a car from Carmax will take around 2 hours in-store. You can also buy a car from them in your pajamas, but that’s a personal choice we won’t judge.

If you’ve negotiated a purchase remotely, some dealers will be willing to deliver your car to you, Carvana-style. This adds a bit of convenience, but more importantly, a bit of pomp and circumstance to your major purchase.

If you purchase from a private party, ensure the seller has all paperwork ready for you both to sign before a penny trades hands. This includes transferring the title and registration, the bill of sale, taxes, and fees.

Summary

Your last step is to find good insurance. That’s a whole bag of tricks we won’t open today, but hopefully you know what to expect from your investigation in step 4.

Buying a new car shouldn’t be an afterthought like buying an appliance. Not all cars are created equal, and some are absolutely more capable at raising your quality of life than others. Just 10 extra hours of research and test drives can mean the difference between passionless coexistence and a never-ending honeymoon.

How can we help you make your car-buying decision? What additional tips would you add? Let us know in the comments below!

Though a professional speaker by day, Chris also nurses a fierce love of cars and car-buying. Since 2015 he's tested over 200 cars, from cheap Jeeps to $400k Aston Martins, and helped thousands of millennials get a great deal on a car they'll love.

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