The Car Buying Process

the Car Buying Process

If you haven’t bought a house before, then buying a car will probably be the biggest purchase you have made. There’s so many options that it can become overwhelming. We have tried to lay out the process for you to make your decision a little bit easier.

Step 1: Identify a vehicle based on logic

Think about why you’re actually buying the car. Do you really need a new one? Would it be a waste of money? What’s this car going to achieve for you?

Make sure your decision is based on what is actually best for you. Don’t make an impulse decision when it comes to something like this.


Step 2: How much car can you afford?

If you aren’t paying for the car in cash, you’ll need to take out an auto loan. Make sure you find out what the monthly payment is, and don’t just take the biggest loan you are offered. You need to be able to actually afford the payments. Utilize trade-ins if you have a car that you can trade in. Also, keep in mind there will be commission for the sale, so the salesman will be trying hard to get you the car. Talk down the price!

Step 3. Purchasing options

Buy a brand-new vehicle- When buying a brand-new car, you have complete ownership of the vehicle, but that can vary based on your loan. However, this will be EXPENSIVE. Cars also always lose value, unlike some other purchases. A brand-new car can lose almost 10-20% of its value right after it leaves the lot.

Certified pre-owned vehicle- With this purchase you can save money while still receiving a warranty. These cars will be inspected by the dealership & pass some other requirements. Another perk is that you can know the backstory of the car, and there should be no surprises. 

Lease a vehicle- Leasing is similar to renting because you don’t own the car, but you pay monthly. You get a new car, but you only lease the car for a few years. One major downside is that you have a mileage limitation and you’ll have to pay extra if you go over that. These are often 10,000-15,000 miles a year. Read the whole contract before you sign.  

Used car- This is a great option if you’re just starting out or don’t necessarily want a new car. You can look around locally, on Craigslist, on Facebook Marketplace. Unfortunately, you don’t know the history on these cars because they’re not certified. However, you can get the CarFax and it will tell you the titles, accidents, or you can hire a mechanic.


Step 4: Car Loans

Car loans are typically 2-10 years with interest rates of 3-6%. The interest will vary based on your credit score and down payment.

For a $25,000 loan for 5 years at 5% interest, you would end up paying $28,307.

Search around for the lowest interest rate, and use a co-signer if you need to.

Step 5: Warranties

Warranties work like insurance on your vehicle. One form of warranty is bumper-to-bumper, which covers anything in the car, from front to back. Powertrain warranties only cover things that make the car move. The length of warranties depends on time or distance, whichever one you hit first. There may be a 5-year, 100,000 mile warranty, so whichever comes first will terminate your warranty. Make sure to take advantage of re-calls, no matter how small the issue is.

Useful resources:

CarFax for car histories.

Kelley Blue Book for car valuations.

“Money Tip of the Week”

Take care of the car you have! Make sure you get routine oil changes, get it washed, keep it clean. Keeping the value of your car high will help you when you eventually sell it!