8 Steps to Buying a New Car

Buying a new car is a big step, but it doesn't have to be a daunting one. Here's how to research, locate, price and negotiate to buy your new car. Mobile technology makes these steps easier than ever, and it is now entirely possible to shop for a new car while you're in line at the supermarket or waiting to pick up your kids.

These eight steps could save you thousands of dollars on a new car. They'll also make the process quicker and stress-free. Let's begin.

Step 1: Research Vehicles and Pick the Features You Want
Not sure what car you want yet? The Edmunds app and website have just about all the information you need, including expert and owner reviews. In addition to Edmunds, we've also found automakers' sites useful for seeing more photos and learning more about the features and options on cars. Once you have a short list, it's time to figure out how you'll pay for the car.

Step 2: Get Pre-Approved for a Car Loan
A pre-approved car loan starts you on the right foot. You get an idea of how much you can afford and you'll have an interest rate that you can then compare to the dealership's financing, which might actually have the lowest annual percentage rate. Look for a loan application on the mobile web pages of your bank, credit union or a third-party lender. It's a good idea to do your own research on which lender works best for you.

To begin the loan-approval process, have at hand your employer and salary information and balances of other debt you may have. Make sure you will be ready to shop within about two weeks of seeking pre-approval. This will reduce the number of "hard" inquiries to your credit history.

Step 3: Plan Your Trade-In Strategy
You can skip this step if you don't have a trade-in. If you do, keep reading.

It's important to get your trade-in value before you go to the dealership. This will help set your expectations for what the car is worth and gives you a reference point for any offers you'll receive. The best way to get the value of your trade-in is to use the Edmunds app on a smartphone or tablet. Those devices make it easier to sit in the car and double check whether you have options that can affect the car's value — things like heated seats or a sunroof. Be honest about the condition of your car. Most cars fall into the "clean" or "fair" category. Very few cars are "outstanding," no matter how much their owners babied them.

When you're done appraising, you'll see three figures. The trade-in value is what the dealer may offer you — that's a figure to keep in mind when you're at the dealership. The private-party value is what you might expect to get if you sell the car yourself. Dealer retail is a little different: It is what you might expect to pay for the car if you were to buy it at a dealership.

There's an alternative to trading in a car or selling it yourself: Have used-car retailer CarMax appraise the car and make you an offer. The offer is good for seven days, at which point you can ask the dealership to beat that price or you can sell your car to CarMax.

Step 4: Locate and Test-Drive the Car
By now, you've settled on a few car candidates. You should see them in person before making a decision. Hundreds of dealerships throughout the country list their car inventories on Edmunds, and in many cases, you can sort by color, trim level and features. This is a better way to shop than configuring a car at the automaker's website and hoping you will find one with that set of options in the real world. All of the listings you'll find on Edmunds pages are real cars with a variety of options. Most will have a locked-in price that should be comparable to what others are paying.

If you follow the steps below with Edmunds, a salesperson from the dealership will contact you to schedule a test drive. If you found the vehicle on another site, call the dealership's internet sales department to request more information. In either case, keep these do's and don'ts in mind:

• Do verify that the car you want is still in stock. It might have been sold recently, and online inventories can take a while to catch up.
• Do ask the salesperson if there are any dealer-installed options. Many new vehicles are sold with add-ons such as nitrogen in the tires, all-weather floor mats or theft protection packages. These can easily add a thousand dollars to the sale price.
• Don't just show up at the dealer on a busy weekend or late at night. Waits may be long and you may not get the salesperson's full attention.
• Do schedule an appointment for a test drive. Early in the week and in the morning are good times. Having an appointment means the car will be waiting for you when you arrive.
• Don't just drive around the block. Take the time to see how you and your family fit in the car and see how it handles on a variety of roads.
• Do ask yourself the following questions: Are the controls easy to use? Is there enough cargo space? Will a child seat fit? (Bring it with you and test it.)
• Don't feel obligated to buy the car the same day. Feel free to take a night to think it over.

Step 5: Get a Sale Price and Ask About Extended Warranties
Once you have a target car, it's time to focus on getting a price. We recommend using one of these two ways to get a price quote on a car:

1: Call, text or email the internet sales department of three dealerships that have the car you want. Ask each for the total selling price, including any additional accessories that may have already been installed on the car. The best price will be obvious. You also can take that quote and ask the other dealerships to beat it. If you plan on leasing, this is the way to go.

2: You can save time and trouble by using Edmunds to get a locked-in price that's designed to be comparable to the average price that others are paying in your area. Make sure you ask the salesperson to email or text you a breakdown of the "out-the-door price," with all the taxes and fees factored in. That lets you see the total amount you'll be spending.

You also should ask for a preview of products the dealership plans to offer you after you buy a car — things like paint protection, an extended warranty and possibly a pre-paid maintenance plan. Usually, you won't hear about these until much later in the shopping process, but we suggest you get some information now to relieve pressure later.

Here's how you do it: Call the dealership finance manager and ask about these products and services. They may be of value to you, but just know that the price is often negotiable and you don't have to buy them when you buy the car, unless you intended to fold their price into the purchase contract.

Step 6: Review the Deal and Check for Dealer Financing
Now that you have a price quote for the car, your big question is probably whether it's competitive. Edmunds uses the term "Average Price Paid" — also known as Edmunds TMV — to measure this. It's the amount that others are paying in your area for a similarly equipped car. If you have any trouble finding that figure on our site or in our app, our Shopper Advice team will happily help you. This is a free service from Edmunds to help car shoppers get the best deal they can.

It's important to keep in mind that an average price paid is exactly that. Some people have paid more and others paid less. Some shoppers are only happy if they grind their way to a rock-bottom price. But for most shoppers, that usually isn't worth the hassle and frustration. If your price quote is above the average, it's not necessarily reason to walk away from a deal. Here's why:

A car's price isn't the only factor that determines a good car deal. You also should look at the interest rate, the loan term and the value of your trade-in, if that's part of your deal. There are even some intangibles, such as how the salesperson and the dealership treat you, and the time you save in the shopping process. Those are all factors in a good deal. In fact, at this point in the process, you may be able to improve parts of it.

In Step Two, you got pre-approved for financing. Now that you're close to purchase, there's a chance that you can get a better interest rate at the dealership.

To see if that's possible, let the dealership run a credit report and assess your interest rate. Or, if you know your credit score, tell the finance manager what it is and the rate for which you'd qualify. You can give your information to the finance manager over the phone. Some dealerships have credit applications on their websites and you can fill one out. If the interest rate is lower than the one in your pre-approved loan, go for it. If not, you already have a good loan locked in.

Step 7: Close the Deal
If the price, financing and fees look right, it's time to say yes to the deal. From here, you can proceed in one of two ways: buy at the dealership or have the car and paperwork delivered to your home.

Most people tend to wrap up the sale at the dealership. Once you've agreed on a price, the salesperson will take you to the finance and insurance office. Here, you'll sign the contract and purchase any of the additional products we discussed earlier, such as an extended warranty.

The alternative is to make the sale contingent on having your new car delivered to your home or office. This is a great time saver and allows you to close the deal in a relaxed environment.

Regardless of where you finalize the deal, review the contract carefully and make sure the numbers match the out-the-door breakdown. Be sure there are no additional charges or fees. A good finance manager will explain each form and what it means. Don't hurry. Buying a car is a serious commitment. And remember: There is no cooling-off period. Once you sign the contract, the car is yours.

Step 8: Take Delivery
Whether you take delivery of your car at the dealership or at your home, it should be clean. The gas tank should be full. Give the car a final walkaround, checking for any dents or scratches that might have occurred during transport.

Finally, let the salesperson give you a tour of your new car. This includes showing you how to pair your smartphone via Bluetooth and demonstrating other important features and safety devices. All this is in the owner's manual, but let's face it, very few people ever read that book, which can be hundreds of pages long. If you don't have time for a complete demonstration when you sign the contract, set up an appointment a week or so later. With the amount of technology that comes in most new cars, that walkthrough is important and very useful. You'll learn tricks and shortcuts you might not find on your own.

And now there is only one more thing to do: Enjoy your new car.