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Complete Online Car Buying Guide
Money SmartsMarch 11, 2022
Nowadays, it's easy to skip the crowds and weather at the dealership and shop for a car from the comfort of your own home. You can use your favorite device to find the right vehicle for you and even secure your financing.
But where should you start and how can you avoid some common pitfalls? Read this online car buying guide for answers to these questions and more. Your dream car is only a few clicks away!
Shopping for a Car Online
You can choose from a range of car buying sites, including Cars.com, CARFAX, CarMax.com, Carvana.com, and Vroom.com. Just spend a few minutes on each site and see which one you like best.
Most car buying sites will let you search by vehicle type then compare different models to see which one will give you the most value for your budget. You can save your favorites until you come up with a shortlist of potential cars.
Researching Reliability for Cars
Sites like Edmunds.com, ConsumerReport.org, RepairPal.com, and JDPower.com provide lists of the most reliable vehicles in different categories. The rankings may be based on views of the site's writers and editors, or user reports.
Reliability reports may include information about:
- The cost of repairs
- The frequency of repairs
- The severity of repairs
Getting Your Car Checked Out
Once you've got your shortlist together, you can use a service like CARFAX to get a vehicle history report so you can be sure the description of the car is true.
Your report may include information like:
- Previous ownership
- Titles
- Accident reports
- Mileage
Negotiating the Price
Haggling over prices may be less common today than in the past, but you might want to get those skills into practice when buying a car. The best way to gain the upper hand in any price negotiation is to go into the deal with plenty of information.
- Tell the dealer if you know you can get the same car for a lower price from another site.
- Mention things like mileage and wear and tear as reasons why you think the price should be lower.
- If the dealer won't budge on price, try to get extended warranties or other perks thrown in for free.
When to Buy
There are certain times of the year, month, and week that can work in your favor when buying a car. Generally speaking, the deals increase as the year goes on. There might be fewer discounts at the start of the year compared to the summer months and the holiday season.
- If you're planning to buy a used car, aim to buy from October to December when many people trade in their old car for a new one.
- If you want a particular type of car, new models tend to arrive at the end of the year so watch out for discounts on the older model or a discontinued line.
- Take advantage of discounts on holidays like Black Friday and three-day weekends.
- Shop at the end of the month when dealers may need to fill their sales quota.
- Shop at the beginning of the week or the end of the day when sales may be slow and dealers could be more willing to strike a deal.
Understanding Auto Loans
An auto loan is a popular and convenient way to buy a car. Before you hit the apply button, keep reading our online car buying guide to make sure you're up to speed on a few key points.
Here's what you need to know about auto loans:
- You may be able to borrow 100% of the purchase price of the car, but a down payment means you'll pay your loan off faster.
- You should work out a monthly budget to see how much monthly payment you can afford – it shouldn't be more than about 15% of your monthly income.
- The rates you get will be based on your credit score. The higher your score, the lower your rates.
- You get to choose your loan term, or how long you have to borrow the money. Longer terms mean a lower monthly payment but higher rates.
- You can use an auto loan calculator to choose the right term for you.
- Once you get your loan, you can buy your car, and then you'll start making equal monthly payments until the loan is paid off in full.
- Timely payments will improve your credit and missed payments will hurt your credit.
Finding the Best Auto Loan
You can get an auto loan from a range of financial institutions, including your local credit union. To make sure you get the best offer in town, gather information about a few different auto loans then compare the rates, terms, and conditions.
Here's what to look for when comparing auto loans:
- You can borrow the amount you need for your chosen vehicle.
- You can get a competitive APR for your credit score.
- You can choose a term that will give you an affordable monthly payment.
- There's no prepayment penalty if you pay the loan off sooner than planned.
- You have the option to skip one or two payments a year.
- You get a discount on car insurance.
Online Car Buying Guide: Finance First
It's a good idea to get pre-approved for your auto loan before you get serious about choosing a car. That way, the dealer will take you seriously as a buyer and you'll know exactly what purchase price and monthly payment you can afford.
When you apply for your auto loan, you might need to say if you want to buy a new or used car, and indicate how much money you want to borrow. Then you lock in the details when you find your car. Click below to start shopping for an auto loan!