1. Why buy a new car?
2. What kind of car do you need?
3. How solvent you are?
4. Do some eye shopping.
5. Serious Research Time.
6. Online or at the Dealership?
7. Leasing or buying?
8. Get Down to Brass Tacks.
9. Don’t forget about a test drive.
10. After the test drive.
11. You’re almost ready.
12. Before You Drive Away.
13. After the Sale.

Why buy a new car

• Getting what you want. The first advantage of getting a new car is that you can decide exactly what you want – paint, specification, accessories and everything else that goes into the build of the car. You will know exactly what options are available and for what you pay.

• A longer, more comprehensive warranty. Manufacturer’s new-car warranties are the best and some may even cover oil changes and the like for three or four years. If you come across any problems with your purchase, you don’t have to worry at all. Once a car has been registered, you get a warranty that absolutely frees from any problems with the car.

• The latest features. If you want the best airbags, electronic stability systems, super-deluxe seat-warmer doodads and the cleanest engines, you’ve got to buy new. New cars offer the latest in engineering, style and mechanical innovation. The manufacturers compete to offer the very best in their new makes and models. Improvements in fuel efficiency and emissions control can be appealing to those who are concerned with environmental issues. Because car makers continually improve and add technological advances in their newest models, those who appreciate the state of the art are drawn to the cutting edge components of a new car.

• A car that lasts longer. This point is nearly obvious: new cars live longer than older ones for minimum two to three years. So if you are a stickler for maintenance and want your car to last longer and deliver more value, you should give your preference to new cars. On the contrary unless you have a used car’s full service history, you may not know whether its first owner changed the oil once every 3,000 miles, or once a year. Casual maintenance early in a car’s life can have long-term effects that might not show up until much later.

• Better financing terms. Unless you plan on paying cash for that new ride, financing costs will be a sizeable chunk of what you pay to own your car over the first few years. Buying new entitles you to low-cost factory financing and special deals, which can represent a sizeable saving over a bank loan. And even if you do finance through your bank, you’ll often pay more on a used car loan. Rates on used car loans from major banks such as Bank of America (NYSE: BAC) and Wells Fargo (NYSE: WFC) are often a full percentage point higher than their new car loan rates.

• A simpler purchase process. When you’re buying new, you know what’s available, you know where to go to get it, and most importantly, you know what it’s going to cost you. It’s easy to find a new car’s “invoice” price and to learn the average selling price of your desired car. The price you will pay in the end will vary depending on your negotiation skills and local supply and demand, but it won’t vary like used car prices do.

• Experiencing the feeling that you are the first. For most people who choose a new car instead of a used one the most important point is the knowledge that they are the first to experience the joy of driving that very car. It’s a special moment when you drive it for the first time knowing that it was built and delivered for you.

What kind of car do you need?

To decide what kind of car you should buy, try to examine your needs rather than wants and you will quickly discover what car is the best for you. Think about what you will use your car for. Usually people choose a car because it has an eye-catching style or it is a trendy favorite. If you take this as your guide, you may either break your budget or have to go car shopping again soon. Let your needs, not your wants, drive your decision. Generally there are a few other questions that may be rather helpful when you begin your car-buying process:

• How long is your commute?
• Will you be doing any towing?
• What safety features do you want?
• What kind of driving you most often do?
• How many people will you need to transport?
• Do you require a lot of cargo-carrying capacity?
• Do you want a manual or automatic transmission?
• Will the car easily fit in your garage or parking area?
• Is it important that your vehicle gets good gas mileage?

How solvent you are?

One of the most crucial steps when buying a car is establishing a realistic monthly payment that will fit into your budget. 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.

Try to answer the following three important questions:

1. How much can you afford as a down payment?
2. How much can you afford in monthly payments?
3. How much should you spend on the total price?

While you are working this out, be aware that there will be costs over and above the price of the car itself that will need to be factored in such as insurance, sales taxes, licensing fees, and possibly dealer fees payable at the time of purchase (more about these later).

In addition to the budgetary considerations, you’ll now also want to take a close look at your lifestyle before shopping for a new car. Job security and life stability should come into play before you decide to buy a new car. For example, if you are new on the job or have some difficulties, your financial future may be changing soon. Before signing a contract for payments for the next several years, be absolutely sure that your career and lifestyle will be able to support such a decision.

After taking a serious look at how much money you can afford for a new car, it is time to fix a price. Write it down and take that number with you when you go to the dealership. Having that number firmly in your mind will help you stay within your budget despite the best efforts of a car salesperson to upgrade you to a more expensive model or tacking on extra features that will increase the total price.

Do some eye shopping.

Once you know how much you can afford for a new car, it is time to do some shopping with your eyes only. Now is the time to see what is out there in your price range, and which makes and models will best suit your needs. Make a list of makes and models and features you want to consider and then conduct some search.

Some of the places you can look at new cars include:

Newspapers: A lot of newspapers run special articles, supplements and ads for new cars that may be very helpful when looking for a new car.

TV: Now is the time to stop zoning out during commercials and begin taking a hard look at what is out there.

Talk to friends: Let your family and friends know that you are planning to buy a new car. Once you open that discussion, it is likely that they will offer suggestions on what type of car and which make of car they have had particularly good or bad experience with. Listen to what they have to say, but keep in mind that your experience with a certain car may turn out to be quite different.

Online: The Internet is a terrific place to do some window-shopping for a new car. Nowadays, there are thousands of websites that offer cars for sale. Spending some time browsing through the cars on the market, including the prices and available options, is a great way to decide which car you want to buy―all from the comfort of your own home without dealing with any high-pressure sales tactics.

Dealerships: Eventually, you will need to stop by a showroom or two. There is no substitute for actually seeing and sitting in a new vehicle, and taking a brochure on a specific model home to review will only increase your knowledge of the car and available options. If you think you might be swept away in a buying frenzy, be sure to leave your checkbook at home during the first visit.

The time spent on this step narrows the field of cars you are interested in, and brings you to the next invaluable step.

Serious Research Time

Hopefully, by this time you have decided on an affordable price range, and have chosen two or three models to concentrate on through the research process. This is the time to bring out all your study and research skills. In today’s world, most people will conduct this research online on a home computer, but much of the information is also available at the newsstand or your local library.

In addition to comparing prices and features through car shopping sites, there are a number of other types of sites you should spend some time browsing:

Consumer reports:

There are various non-profit and for-profit organizations that compile and report on new cars on the Internet. Many of these sites will rate new vehicles, providing information on pricing, reliability, fuel economy, dimensions and performance. Some sites may also provide side-by-side comparisons should you be trying to decide between two or more models.

Safety records:

Since you are planning to buy a new car, why not ensure that the model you purchase is as safe as it can be on the road? Take few minutes to review the safety reports provided about your model. Many websites offer this sort of information, perhaps most popular is the Insurance Institute for Highway Safety (IIHS), although there are many others to search. In addition to safety performance reports, you should also check some of these sites for any safety recalls issued on the models you are shopping for.

Resale values:

Most people have heard that a new car loses tremendous value the minute you drive it off the lot. While this is true, there are makes and models that are known to retain a higher percentage of value after the time of purchase. Try to find some information on the car’s resale values.

Insurance rates:

Your choice of car will determine how much your current insurance rates will be affected. If you have a good relationship with your current insurance agent, now is a good time to give them a call. If you have narrowed your choices down enough, they will be able to provide a quote for your new insurance rates based on what car you plan to buy and your driving record. If for some reason you’d rather not contact your current insurer, you can always get comparison quotes by major insurance carriers over the Internet.

Online or at the Dealership?

The newest way to buy a new car is to buy via the Internet. Hundreds of car-selling sites provide the services where you simply choose all the specifications of the vehicle you are looking for, and they will do the legwork to find such a car in your immediate area. While this method of car buying may still be in its infancy, it may be particularly useful to those with little time―and an adventurous spirit. Before committing to this method of car buying, however, be sure to read and thoroughly understand the small print on the agreement.

For most car shoppers, the trip to a dealership is inevitable. If you have seriously crunched your budget and have a firm price in mind, and if you have done your research, you should anticipate a successful buying trip. The vast majority of car sellers are on the up-and-up and they want to make the process of buying a car as easy as possible for both parties involved.

A strong dose of self-confidence is in order, however, for that first trip to the lot. You don’t want to get talked into more of a car, and more of a monthly payment, than you have planned for should you run into a high-pressure salesperson. When you are ready, here are a few hints that may help the whole process go more smoothly and perhaps help get you the best deal:

Time of day:

There are two schools of thought on this issue: some experts advise going to the dealership first thing in the morning, others suggest coming in toward the end of the day. If you are at your best first thing, then by all means shop early in the day. The salesperson may be looking for a jump-start to a terrific day of sales, and you may come away with a great deal. On the other hand, if you still have one eye closed until after noon, don’t rush yourself. Many a great deal has been cut right before closing time because the salesperson or dealer wants one more sale for that day’s books.

Day of the month:

Traditional wisdom says that some of the very best days to buy a new car are at the end of the month because the dealership and sales force want to eke out the best end-of-month figures they can.

End of the year:

October used to be the month to buy a new car in anticipation of the new models’ arrival in November. While many car manufacturers still adhere closely to that traditional schedule, many carmakers now stagger their new models’ issue date. If you have done your homework, you will know when the new models will arrive. Plan to shop for your new car just prior to the new cars coming out. You may not find everything you want (like a certain color), but you may drive away with a new car at a very good price.

Special promotions:

Once you know which make and model car you are going to buy, start watching the media for national or local promotions and sales. A drop in interest rates or bonus add-on feature offers for a limited time may just be the incentive you’ve been waiting for to decide to shop at a particular dealer.

Weather:

During rough weather, new car sales drop off significantly. While conducting business in a driving hailstorm may not be your idea of a good time, if you’re ready to purchase that new car, going to the dealership on a less than perfect day may just save you some money.

Remember that if at any time you feel overwhelmed by the experience, or begin to feel as though you are being treated dishonestly, discourteously, or unfairly―walk away. There are many car dealerships to choose from right around the corner. If, however, you are being treated right, it is time to move along to the next step.

Leasing or buying?

Leasing 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 initially more expensive and the monthly payments are higher. But at the end of the loan, you will own a car you can still drive or sell.

Both leasing and buying have their advantages. The advantages of leasing include:

* 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

On the other hand advantages of buying include:

* In case interest rates are low, it makes more financial sense to own a car rather than lease it
* No mileage penalty
* Better flexibility — you can sell the car whenever you want

Get Down to Brass Tacks

You’ve chosen which dealership to visit because of the model of cars it sells. Once on the lot, you will be assigned a salesperson to show you the cars they offer. The initial contact with that salesperson is likely to dictate how the entire transaction will be conducted. Their job is to ask some opening questions to ascertain what type of vehicle you are shopping for and in what price range. Your job is to come across as a qualified, educated consumer. If you are adamant about buying a particular model, let them know that right away; if not, tell them which type of vehicle and your price range. Now is also the time to let them know if you have any exact requirements.

The salesperson will guide you to the specific model you are interested in, or some comparable models. Every car will have a “spec sheet” visible that lists the features of that particular car. Now would be a good time to pull out your research file to compare the cars’ listings with your list of predetermined choices. Review the equipment offered on each vehicle until you find a suitable match.

Of course, while you are looking at vehicles and considering their equipment and features, you will also be keeping an eye on the sticker price. A quick review of the components of a specification sheet will help you understand exactly what you will be seeing:

Vehicle description:

This top section will give you the year, make, model and VIN number of this particular vehicle. It also lists the size and weight of the car, engine size, passenger capacity, color, body style, interior treatment, and kind of transmission.

Standard equipment:

Here is where you will find the type of basic equipment that comes standard on this car. These features will detail features such as air conditioning and heating, safety belts, sound systems and length of warrantee.

Manufacturer suggested retail price:

The manufacturer suggested retail price or MSRP is rather like a subtotal. This is the price of the vehicle before the destination charges and any optional equipment included on this particular vehicle.

Optional equipment:

Within this section, you will find what special features this specific car comes equipped with, including such things as: sport packages; tilt steering wheels; cruise control; arm rests; power windows; floor mats; specialized brakes; and air bags. This is where the price usually escalates quickly; if you don’t want these special features, ask to see a barebones model.

Destination charges:

This fee is the cost of transferring the vehicle from the manufacturing plant to the dealership. While this cost is passed along to the buyer and there is no way to get around it, this fee should be the same on all stickers at the same dealership.

Fuel economy:

The Environmental Protection Agency determines the standards for mileage ratings. Listed on the window sticker will be both the highway and city mileage per gallon (MPG). Remember that these numbers are estimates only and many factors go into the gas mileage you will actually receive.

Total retail price:

The total retail price includes the standard features, the optional equipment, the MSRP, and destination charges. Remember that this number does not include all applicable taxes, car registration, or title fees.

Once you are satisfied that you have found a car that appeals to you, has the features you are looking for, and is within your price range, it is time to move on to the next step.

Don’t forget about a test drive.

The goal of a test drive is to experience, as closely as possible, the same type of driving conditions the car will be used for after purchase. If you commute, drive the car at both freeway speeds and in stop-and-go traffic. If you often drive into the mountains, try to find some steep grades to climb. Drive over uneven surface, take tight corners at aggressive (but not dangerous) speeds and test the brakes in a safe location, such as a deserted parking lot. Get in and out of the car several times and be sure to sit in the backseat, especially if you plan on carrying passengers. In short, ask yourself what it will be like to live with this car for a number of years.

While evaluating the car don’t be distracted by the salesperson’s pitch. A new car is a big investment; so you are to be sure you spend enough time really looking at it. And then, consider one last thing: your intuition. If you are uneasy about this car, follow your instincts. A vehicle purchase decision is too expensive and important to undertake without total confidence.

After the test drive.

After the test drive, you should leave the car lot because you will probably need to drive other types of cars at other dealerships. It’s a good idea to do your entire test driving in one morning or afternoon. Driving the cars back to back will help you uncover even minor differences, which will lead to a more educated purchase decision.

So, how to get out of the clutches of the salesperson? Normally, Internet salespeople are pretty mellow and won’t pressure you to buy on the spot. Besides, you can remind them you still have other cars to drive and you can’t make a decision yet. Most good salespeople will respect that. If they don’t, you probably won’t be coming back to make a deal with them anyway.

You’re almost ready

At this stage you should have considered all the cars in the class that interest you. You should have a good idea what you can afford. You should know if you want to buy or lease your next car. You should have test driven your top choices.

Now it’s time to narrow your choices down to one car and make a deal. Take a moment to congratulate yourself. You have done your homework to find the right car for you. Now you can move forward with confidence.

Before You Drive Away

You’ve filled out the paperwork, signed the contact, written a check for the down payment, and you may even be holding a new set of keys, but there are still a couple of things to do before taking official ownership.

One critical thing to do is to verify the car’s vehicle identification number (VIN). If you haven’t written it down and brought it into the sales office with you, be sure to take the time now to match up the VIN on all your paperwork to both the sticker on the car and the actual VIN located on the car itself.

Inspect the vehicle one more time, looking for any blemishes or imperfections that you may not have noticed during the test drive. If there are problems, have the dealer write down the list of items to be repaired, and insist that those repairs be completed by the service department within 30 days and paid for by the dealer. Get all of these details in writing (with signatures) before leaving.

If the issue of insurance coverage for the vehicle hasn’t been raised earlier, now is the time to bring it up.

Once these last minute details are in order, you are ready to move along to the final step.

After the Sale

Buying a new car is not an easy task for most people; it can be time consuming, stressful and expensive. However, if you have followed the steps in this guide, you will have eliminated some of the classic pitfalls that can befall an inexperienced car shopper. Educating yourself, setting a price you can afford (and sticking to it), and understanding the entire buying process goes a long way to make the buying experience much more positive and may even eliminate the possibility of any buyer’s remorse.

Taking possession of a new car is an exhilarating and exciting time. Pride of ownership and the accomplishment of having made the deal create a sense of near euphoria. To best enjoy that remarkable feeling there is only one thing left to do―go for a drive in your brand new car.