How to buy a new car

A new car is a big expense, so you’ll want to proceed carefully. The following tips can help you make a smart purchase on a reliable vehicle at a price that you can afford.

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Follow these steps to buy a new car

Get pre-approved. Whether you’re buying new or used, getting pre-approved is the best way to know how much car you can afford. To get pre-approved for a vehicle loan at Oregon State Credit Union, apply online, call 800-732-0173 or drop by any branch.

Research, research, research. This is critical. For each make and model vehicle you’re considering, research the price, reliability and cost to insure. You can find information online and in several publications, including Consumer Reports, Edmunds and Car & Driver.

If you’re looking at a new model or a newly updated model, there won’t be any information on the cost to own the vehicle. Things like vehicle repair history are easier to find for used cars. Nevertheless, you can get an idea of how reliable this car will be by examining similar models from the same car manufacturer.

You can research the Manufacturer’s Suggested Retail Price (MSRP) – or asking price – in your area by shopping online. If you become familiar with prices in your region you’ll be able to recognize an unreasonable price if it’s presented to you. Make sure you’re comparing apples to apples, though. There can be considerable variation in the price of a vehicle with and without options and add-ons like a sports package, upgraded audio system and so forth.

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In addition to the asking price, you’ll want to know the dealer cost, or invoice price, of the vehicles you’re considering. This is the price that appears on the invoice the manufacturer sends to the dealer. One way to negotiate your best price is to start at the invoice price and negotiate up from there.

You can find dealer prices for most makes and models by searching online.

Finally, call your insurance carrier and get an estimate for insuring each car you’re considering. Many carriers have an insurance calculator on their website. It won’t be exactly what you’ll pay for insurance, but you can gather approximate costs to help you compare vehicles.

Get familiar with each make/model vehicle. Spend time with each make and model car you’re considering. Visit the car lots, take one for a test drive or even rent one for a day or two. The cost of renting a car for a day is well worth the investment if you’re dropping tens of thousands of dollars on a car. If you can't find the current year model to rent, rent the previous year's model.

Consider the following as you drive the vehicle:

• Is it easy to get in and out?
• Do you have clear lines of sight from the driver’s seat?
• Are the dashboard controls easy to understand and operate?
• Is the gas mileage what you expected?
• Does it handle well?
• Are the brakes responsive?
• Is the acceleration zippy or sluggish?
• Is the interior quiet or noisy?
• Are the seats comfortable?
• Can you stretch out your legs?
• Does your head hit the roof?

Even something as simple as the location and orientation of the air vents can help you make the difficult choice between models.

Negotiate the deal. If you followed all the steps above, by this time you’ve got a short list of acceptable makes and models. It’s time to contact the dealer and negotiate your best price. Before you sign the paperwork, make sure that what’s in the sales contract matches the terms and conditions to which you’ve agreed. If the dealer presents his best price but it’s a little short of what you wanted to pay, see if you can negotiate added options to sweeten the deal.

Congratulations! You’ve bought a new car. This is a major expense, and you’ll want to maintain it properly to protect the vehicle’s resale value. That means regular oil changes and maintenance, keeping it clean and making swift repairs when needed. Read the owner’s manual and follow the maintenance schedule. With luck, your $40,000 car can be sold for a decent price after you’ve driven it for 10 years. That’s money you can put down on your next car.

Many personal finance experts recommend buying a used car. It makes sense: you’re not paying for the instant depreciation that occurs when you drive off the lot; you have a solid history of how cars of this particular year, make and model perform; and the price tag on a used car can be substantially lower than a new car. 

But sometimes you just want to buy new. Sometimes you want the features you like in the color of your choice, you want to know the history of the car, or you want the latest safety and fuel efficiency features.

Sometimes you just want to treat yourself to that new-car smell. And if you can afford it, why not?

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