Buying a New Car Made Easy: 7 Simple Steps

Buying a new vehicle is not a cheap purchase. The average new car is just shy of $50,000, according to Kelley Blue Book. And this doesn’t take into account taxes, fees, insurance, and more.

With such an expensive purchase, it's vital to make sure that you can afford the monthly payments that come along with this.

One way to consider this purchase is using either the 20/3/8 or 20/4/10 rule. Both of these break down the purchase price into three segments, where you need to meet all three to ensure that the purchase won’t put financial strain on your monthly income.

The average new car payment today is $745, according to Experian. This doesn't include fuel, insurance, or maintenance. So before you run to buy a new car, be sure your budget can absorb this cost. 

You can use a calculator like this to consider other financial factors, such as a trade-in, possible down payment, and more.

The first place to visit when you’re interested in a new car isn’t a dealership, it’s the internet. Begin looking around to find a car (or cars) you’re specifically interested in. Narrow your search down as much as possible so you can approach a dealership with confidence in what you want.

Additionally, you can begin crunching the numbers based on MSRP, manufacturer incentive, and any special financing offers.

Once you have your exact car pinned down that you want, then begins the negotiation process and working the numbers in your favor.

Dealerships have high pressure to regularly move their inventory. The longer a car sits on its lot, the less money the dealership makes. To drive sales, dealerships regularly run promotions, along with pressure on salespeople to hit their quotas.

Here are the best times to purchase a brand-new car:

• End of the month – Dealers push to hit sales quotas and may offer deeper discounts.

• End of the quarter – March, June, September, and December often bring extra incentives to boost quarterly numbers.

• End of the year – November and December see big clearance sales on current-year models.

• Holiday sales events – Memorial Day, Labor Day, Black Friday, and New Year’s Eve often feature aggressive deals.

• Model changeover season – Late summer to early fall, when next year’s models arrive and dealers clear old inventory.

Even certain days of the week have a higher likelihood of scoring a deal.

Dealerships have decent margins on their vehicles, but they make even more by providing financing options to their customers. Dealerships are paid a commission and also mark up the interest offered by the lender, making the lending arm of their business very lucrative. The unfortunate part is that consumers can potentially get better lending options by getting prequalified before visiting a dealership.

Being prequalified gives you a powerful edge because it shows you’re a qualified and serious buyer. It shifts the conversation from “what can you afford per month” to “what’s the lowest price you can give me for this vehicle.” Prequalification also gives you a clear picture of the interest rate, loan terms, and maximum amount you can borrow, which helps you spot a good deal (or walk away from a bad one) with confidence.

Your local credit union (or one online) will likely have the most competitive interest rates. And if rates drop months later after you already have the car, you can always consider refinancing to save even more. Caribou helps consumers find the best car rates for refinancing.

If you’ve made it this far, you’re in the driver's seat (pun intended). You know exactly what you want, and you’re prequalified. Now it’s time to start contacting dealerships in your area to see if they have the exact vehicle you want.

Cast your net as wide as you’re possibly willing to drive. Once you have the contact information for multiple sales representatives, you can let them battle for your business. Here’s a template you can use.

Sample Negotiation Message Script:

Subject: Request for Best Out-the-Door Price

Hi [Salesperson Name],

I’m interested in purchasing a [Year, Make, Model, Trim] with [specific features or packages]. I’m ready to buy soon, but I’m reaching out to several dealerships to get the most competitive out-the-door price, including all taxes, fees, and extras.

Please email me your best out-the-door price for this vehicle. I will be making my decision based on the most competitive written offer I receive.

Thank you,
[Your Name]
[Your Contact Info]

You will likely have to go back and forth several times with several people, but allowing them to battle for your business can potentially help you save thousands.

Here’s the best part: We’ve all heard horror stories of spending far too many hours at a car dealership. By doing it this way, you can agree to a price and conditions before you even leave your house. Make it clear to the dealer you want to be in and out quickly. This will cut a potentially 4-6 hour ordeal down to 1-2 hours.

When you get to the dealer, it's time to review everything that was agreed upon over the phone/email. Be sure everything matches, and ask questions prior to signing anything. 

When you get to the dealer, they will contact your lender to get payment for the vehicle. After you take possession of the vehicle, expect communication from your bank for the first monthly payment.

Bonus tip: You can even negotiate small things, like an extra key for your vehicle and a full tank of gas before you agree.

Take your time to identify any tiny issues with the vehicle before driving off the lot. This could include:

• Scratches

• Dent

• Scuffs

• Missing accessories

• A second key

• Functioning lights and turn signals

• Interior for any upholstery issues

• Confirm the VIN is the same as the paperwork

• Spare tire/hardware

• Owner's manual is in the glove compartment