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Getting behind the wheel of a new or new-to-you used car is exhilarating. There’s nothing like finding the right car and getting a great deal to put a smile on your face. If you don’t go into the process prepared, though, car-buying can also be stressful or frustrating. Your dream car can turn into an expensive nightmare if you buy the wrong model, overpay for the vehicle, or get in over your head with overpriced financing.

Buying a used or new car is one of the most expensive purchases we make in our lives – right up there with choosing a college and buying a home. Making the right choices when buying a car will get you a vehicle that fits your life and budget, while giving you years of trouble-free service.

Fortunately, car buyers have never had as many resources to help them find the right car at the right price as they have today. In this guide, we’ll show you how to navigate the car-buying process.

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Contents of This Guide:

Think About What You Want and Need

Buying a car without an idea of what features you want and need is like going to the shopping mall with a blindfold on. Beyond the basics, such as how many people you need to carry and whether you need to tow, you want to consider the importance of infotainment technology and advanced safety features. Are you the kind of buyer who is going to buy your next new car before the warranty ends, or do you plan on keeping it for a long time? If you’re the latter type of buyer, strong predicted reliability should be high on your wish list.

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It's important to think about where, when, and how you drive. If you spend a lot of time on the highway, excellent fuel efficiency may be at the top of your wish list. Drivers who encounter a lot of winter weather should consider an all-wheel-drive vehicle, while those in the Sunbelt might think about a convertible. For those seeking fun behind the wheel, getting a car with great performance or handling will put a smile on their face.

Think About Your Current Car

Think about your current car. What does it do well, and what drives you crazy every time you drive it? Are there life events in your future that might make a short-term lease a better deal for now, with plans to purchase a different vehicle later?

Automotive technology has changed dramatically in the last decade, so if you haven’t driven a new car in a while, you’ll want to brush up on the technology available in today’s vehicles. Our article about high-tech safety systems is a great place to learn about today’s safety technology. Modern cars can also integrate your smartphone into their infotainment systems. Our articles on Apple CarPlay and Android Auto explain how.

U.S. News Best Cars Rankings

The U.S. News & World Report new car rankings and reviews and used car rankings and reviews are a great place to start your search. We use the consensus opinion of the country’s top automotive journalists blended with quantifiable information about predicted reliability and safety to create a score for nearly every new car, truck, SUV, and minivan available today. Those scores are used to rank vehicles against their peers, showing you which new cars excel and which ones you should avoid. Our used car rankings add information about the cost of ownership to help you find a vehicle that will be affordable for years to come.

At the bottom of most of our reviews are market insights that describe the current demand for the vehicle, indicating where there are opportunities for great deals and where you can expect to pay closer to the sticker price.

Decide Whether to Buy or Lease

Leasing is a popular way to get into a new car with lower monthly payments than you'll find with a purchase. About three out of every ten vehicles leaving dealer lots today are leased, rather than purchased.

When you lease a car, you're only responsible for the amount of depreciation that is expected to occur during the time of the lease. When you buy a new car, you’re responsible for the whole price of the vehicle.

Both approaches have their pluses and minuses. Our article on buying versus leasing can guide you through the decision. Many of the car-buying tips you’ll see in this article apply to both leased and purchased vehicles. For more in-depth information about leasing, hop over to our article on how leasing a car works.

Choose to Buy a New or Used Vehicle

An important decision you’ll need to make is whether to buy a new car or a used car. A new car comes fresh from the automaker with few miles on the odometer and the beloved new car smell, but there’s a high price on the window sticker.

Used cars come with histories that might include accidents, damage, or major mechanical issues, but you’ll a get a steep discount for that uncertainty. While used cars come at a lower price, you won’t get the latest technology like you would if you buy a new car.

Financing New and Used

You'll likely find a lower interest rate when you finance a new car, but a used car might be cheaper to finance in the long-run due to its lower sales price. In most states, you'll have to pay sales tax whichever way you go.

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Buying a used car isn’t as simple as buying a new vehicle, as you’ll have the extra steps of getting a vehicle history report and arranging to have a prepurchase inspection from an independent mechanic.

CPO

A third car-buying option is a factory certified pre-owned (CPO) car. A CPO car is typically a gently used car with low miles, no history of major accidents, a thorough dealer inspection, and a warranty provided by the original manufacturer. You will only find factory CPO cars at franchised new car dealers of the same brand.

Our guide to new cars versus used cars takes a deep dive into the benefits and costs of both approaches.

Set a Budget and Get Preapproved Financing

Many car buyers decide on the vehicle they want and then try to wedge it into their monthly budget. Smart consumers look at their monthly budget and get a preapproved financing offer before they get anywhere near a car lot.

When planning a car-buying budget, you need to look at all of your monthly expenses, including utilities, credit card payments, student loan debt, child support, insurance, and, of course, rent or mortgage payments. Consider the extra costs of owning the car as well, such as auto insurance, fuel, and the rental of a parking space if you don’t have a garage or your apartment doesn’t include a space.

Get the Car Loan That's Right for You

Apply for financing today, and get up to four offers. Compare your options before visiting the dealership to make sure you get the best rate for you. It's free, quick, and easy.

Get Preapproved by an Independent Lender

It is crucial to get a preapproved car loan before you go any further in the car-buying process. While the majority of car buyers get their financing arranged by the dealership they buy the car from, it can be an expensive mistake to do so without knowing all of your options. Dealers can make significant profit from marking up auto financing, and unscrupulous dealers may direct you to the financing deal that is best for them, not for you.

Your Credit Score

Credit scores are used by lenders to decide whether to approve your car loan and set the terms of the financing. Your credit score will help determine the interest rate you get, the length of the financing they offer, and whether a down payment is required. By looking at financing early in the auto buying process, you'll have time to correct errors in your credit report and work to improve your score.

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The buying process can be more complicated and expensive if you have bad credit. Our article on how to buy a car with bad credit will show you how to overcome the extra challenges.

Keep the Financing Separate

By having a financing deal in place from a large national bank, local community bank, or credit union, the dealership will have the benchmark they need to beat to get your business. Salespeople love to mix the price of the car, the value of your trade-in, and the financing into one big deal focused on the monthly payment. It's like a shell game, where they move things from box to box to make it appear you're getting a great deal on one component while jacking up the price of the others. Taking the financing piece out of the game allows you to focus on the cost of the car.

Compare Financing Offers

You can, and should, compare rates and apply for loans at several lenders. You don’t even have to leave home to do so, as most banks and credit unions have online application options. U.S. News Best Cars partner myAutoLoan can get you up to four offers with one simple online application. Some lenders even offer special programs to first-time car buyers and those with bad credit.

myAutoloan

APR Range: 1.99% - 27%

Loan Term: 24 - 84 months

Loan Range: $8,000 - $100,000

Applicant Requirements:

At least 18 years old, resident of the U.S. (except Alaska and Hawaii), with min. income of $1,800/month and min. credit score of 500

Vehicle Requirements:

Max mileage of 125,000 miles, 10 years old or newer

myAutoloan presents up to four offers from a variety of participating lenders based on your specific loan requirements, offering a wide variety of choice and selections.

LightStream

APR Range: 3.34% - 17.49% (AutoPay Discount of 0.50% also included)

Loan Term: 24 - 144 months

Loan Range: $5,000 - $100,000

Applicant Requirements:

Must have good to excellent credit*

Vehicle Requirements:

No restrictions

LightStream caters heavily to applicants with very strong credit scores, offering a streamlined application process and a Rate Beat program that guarantees they'll beat any other qualifying offers an applicant receives.

Capital One

APR Range: 3.99% - 10.08%

Loan Term: 36 - 72 months

Loan Range: $4,000+

Applicant Requirements:

$1,800/month minimum income requirements, resident of the U.S. (except Alaska or Hawaii)

Vehicle Requirements:

Limited to vehicles available through the Capital One network of dealers

Capital One offers a pre-qualification, which allows you to take your offer to any participating dealer within 30 days.

Chase

APR Range: 4.29% - 24.99%

Loan Term: 48 - 72 months

Loan Range: $4,000+

Applicant Requirements:

At least 18 years old

Vehicle Requirements:

Limited to vehicles available through the Chase network of dealers, no older than 2008

After your application is approved, Chase will send the information to the dealer you choose. The offer is good for 30 days.

Bank of America

APR Range: 3.49+%

Loan Term: 12 - 75 months

Loan Range: $7,500 - $100,000

Applicant Requirements:

At least 18 years old (19 in Alabama or Nebraska) U.S. resident

Vehicle Requirements:

Max mileage of 125,000 miles, 10 years old or newer, valued at $6,000+, plus additional restrictions

Bank of America Preferred Rewards clients can receive an interest rate discount of 0.25-0.50% depending on their tier at the time of applying for an auto loan.

Company

Details

Requirements

Descriptions

myAutoloan

APR Range: 1.99% - 27%

Loan Term: 24 - 84 months

Loan Range: $8,000 - $100,000

Applicant Requirements:

At least 18 years old, resident of the U.S. (except Alaska and Hawaii), with min. income of $1,800/month and min. credit score of 500

Vehicle Requirements:

Max mileage of 125,000 miles, 10 years old or newer

myAutoloan presents up to four offers from a variety of participating lenders based on your specific loan requirements, offering a wide variety of choice and selections.

LightStream

APR Range: 3.34% - 17.49% (AutoPay Discount of 0.50% also included)

Loan Term: 24 - 144 months

Loan Range: $5,000 - $100,000

Applicant Requirements:

Must have good to excellent credit*

Vehicle Requirements:

No restrictions

LightStream caters heavily to applicants with very strong credit scores, offering a streamlined application process and a Rate Beat program that guarantees they'll beat any other qualifying offers an applicant receives.

Capital One

APR Range: 3.99% - 10.08%

Loan Term: 36 - 72 months

Loan Range: $4,000+

Applicant Requirements:

$1,800/month minimum income requirements, resident of the U.S. (except Alaska or Hawaii)

Vehicle Requirements:

Limited to vehicles available through the Capital One network of dealers

Capital One offers a pre-qualification, which allows you to take your offer to any participating dealer within 30 days.

Chase

APR Range: 4.29% - 24.99%

Loan Term: 48 - 72 months

Loan Range: $4,000+

Applicant Requirements:

At least 18 years old

Vehicle Requirements:

Limited to vehicles available through the Chase network of dealers, no older than 2008

After your application is approved, Chase will send the information to the dealer you choose. The offer is good for 30 days.

Bank of America

APR Range: 3.49+%

Loan Term: 12 - 75 months

Loan Range: $7,500 - $100,000

Applicant Requirements:

At least 18 years old (19 in Alabama or Nebraska) U.S. resident

Vehicle Requirements:

Max mileage of 125,000 miles, 10 years old or newer, valued at $6,000+, plus additional restrictions

Bank of America Preferred Rewards clients can receive an interest rate discount of 0.25-0.50% depending on their tier at the time of applying for an auto loan.

Disclaimer: All information provided here is based on Annual Percentage Rate estimates from the websites of the individual lenders on 12/18/2018. It is not a binding or guaranteed loan offer. Individual auto loan rates will vary.

Notes: In compiling this data, we used new-car purchase rates for Virginia.

*To meet LightStream's standard for good credit, you must have several years of credit history with a variety of account types, including credit cards, installment debt (vehicle loans), and mortgages. LightStream also prefers to see few, if any, delinquencies and a history of savings, evidenced by things like deposit accounts and manageable revolving credit card debt. You'll also want to provide proof of stable and sufficient income to repay current debt obligations as well as any new loan with LightStream.

Financing Private-Party Used Cars

When you buy a used car from a private party, you’ll have no other option than to get your own financing. It’s important to get pre-approved for the maximum amount you are willing to spend on a pre-owned vehicle. Otherwise, you’ll have to go back to the lender and reapply if you need more money than your original loan approval.

By having a pre-approval in place, the seller won’t have to wait for you to get financing. While some might be willing to wait, other sellers might sell the car to the first person who comes along with cash or a loan that’s ready to go.

Find the Vehicle Near You

At this point, you’ve narrowed down the vehicles you’re looking at and you know how you’re going to pay for your purchase. Now you have to find the car.

You can go from dealer to dealer, but you don’t have to. Our car finder will show you the new and used inventory at local dealers, and our U.S. News Best Price Program finds you the dealers with the best pre-negotiated prices.

Buyers looking for private-party used cars can use online sites such as Craigslist to show private-party used vehicles available in their area, saving hours over the old way of scouring local newspaper classified ads. Remember, however, that unlike dealer advertising, sites like Craigslist are unregulated, and anything you read should be independently verified.

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Note that even if a new car dealer does not have the specific vehicle in stock you are looking for, you should still ask them for a price. Most dealers are constantly swapping vehicles to meet customer demand, so they can often find the perfect car for you by trading with another dealership. You may even get offers from different dealerships on the exact same car.

Test Drive the Car

You never want to buy a car – new or used – without a thorough test drive of the specific vehicle you are considering. It’s not good enough to drive one that is similar to the one you’re looking at, as not every vehicle leaves the factory perfect, and the test drive is a great time to discover any issues with quality.

A good test drive includes a lot more than just driving. Before you ever start the car, you'll want to adjust the driver's seat to a comfortable position where you can reach all of the controls. Adjust the mirrors and make sure you can see what you need to be able to see. If you have comfort or visibility problems now, you’ll probably still have them 10,000 miles down the road, so never assume you’ll get used to them. Be sure to bring along any car seats or pet crates you use to ensure that they can be used correctly in the vehicle.

Use Your Senses

Almost every sense should be used when testing a vehicle. Feel for vibrations in the wheel that could indicate suspension issues, look for quality problems, listen for strange noises or rattles, and smell for strange odors. That last one is critical when test driving a used car, as the smell of mold or mildew can indicate flood damage. You'll also want to use your sense of intuition. If something doesn't seem right, you'll want to have it checked out before you spend your money.

Test Everything

The test drive is a time to test out every function of the vehicle. Even if you’re buying a car on the coldest day of the year, you’ll want to make sure the air conditioning works. In the middle of the summer, switch on the seat heaters and make sure warm air blows from the vents.

Even if you are buying a new car, you want to thoroughly inspect the vehicle for any defects or damage. Damage can happen in shipping and while the vehicle is at the dealership, plus sometimes things get missed in the quality assurance department before the car leaves the factory. It’s important to have those items noted before you leave the lot so you can get them repaired without a hassle. If you have the option, you’ll want to see the car on a dry day, as dark evenings and wet vehicles can hide dents and scratches.

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For more about test driving a potential purchase, explore our article on how to test drive a used car.

Get a Vehicle History Report and Prepurchase Inspection If Buying a Used Car

You don’t have to worry about these two steps if you’re buying a new car. If you’re purchasing a used car from a dealer or private party, they’re crucial parts of the car-buying process.

Vehicle History Reports

A vehicle history report tells you many things about a used car, including its history of accidents, whether it has any title issues, whether it has been properly serviced, how many times it has been sold, and whether there are any open recalls on the model. It will also let you know if the mileage shown on the odometer is accurate.

Vehicle history reports are often referred to as Carfax reports, but Carfax is just one of a few companies that provide the reports. Autocheck is another major source of the information.

A single report costs between $25 and $40, though you can get discounts when you buy more than one. Many car sellers provide copies of the report as a way to show buyers they’re not hiding anything. If an accident or transaction is very recent, or a shop did not report the repair of a vehicle, the information may not appear in the vehicle history report.

See our article on what’s in a vehicle history report for more in-depth information on what is and is not included.

Prepurchase Inspections

The second step of your due diligence if you are buying a used car is to have an inspection done by an independent mechanic. They can look for accident damage, check to see if maintenance has been done, and evaluate wear items (such as tires and brakes) to let you know if they will soon need replacement. Be sure to give them a copy of the vehicle history report so they can focus on any areas of concern in the report. Many mechanics are familiar with the parts that tend to fail with different models and can let you know about any significant expenses you might face in the future.

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If a seller resists your desire to get a prepurchase inspection, you should consider it a warning sign and walk away from the deal. The only time it is OK to skip the prepurchase inspection is if you are buying a factory-certified used car that comes with a warranty.

Look for Manufacturer Car Deals

Sometimes automakers need to give specific models a boost to increase sales or move them off the lots in anticipation of a redesigned model. Take advantage of these car deals, and you can save thousands off the price of the car, your financing, or both.

Types of Manufacturer Car Deals

New car deals come mainly in two types: cash rebates and low-interest financing. A cash rebate is simply a price reduction off a vehicle’s sticker price. They can range from a few hundred dollars to many thousands, depending on the car, the competition, and the automaker's need to sell them.

A low-interest financing deal reduces the amount you’ll have to pay in interest over the life of your car loan. The best financing incentives are zero percent offers, but any interest rate will save you money if it’s below the rates at banks, credit unions, and car dealerships.

You can find the best manufacturer incentives available for new vehicles on our new car deals page.

You typically won’t find cash back deals on used cars, but you will find financing offers available on some CPO cars. Our used car deals page is a great place to start looking for a used car financing incentive.

Even if you are able to score a great car deal, you should still attempt to negotiate for an even better purchase price, cheaper financing, or extra features thrown in.

Negotiate a Great Price

The reason many people hate shopping for new cars or pre-owned vehicles is the negotiation process. It’s easy to get emotional about a car, but it is best to keep your feelings in check. Car buying is a business transaction – nothing more, nothing less. Car salespeople sell cars every day, and they are typically very good at incrementally moving you to the deal they want to give you.

However, because of the research you can do at sites like ours, you have more knowledge about the transaction at your fingertips than you’ve ever had before.

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Our Best Price Program can save you money by getting you a pre-negotiated price on your car at a local dealer. On average, buyers have saved more than $3,000 off MSRP using the Best Price Program.

Walk Away If You Have To

You always have the ability to walk away from the deal. That is your most powerful car-buying tool, and you should not be afraid to use it if you don’t feel comfortable with the deal you’re being offered or feel you’re not being treated fairly. Accepting a deal because a salesperson wears you down is a mistake that can cost you for years. Many people don’t walk away because they’re embarrassed to do so or they don’t want to give up the time they’ve already spent negotiating. Of course, that’s just how the salesperson hopes you feel.

Don’t Just Focus on the Monthly Payment

When it comes to setting a price, you and the salesperson have different goals. They seek to make the most profit from the cars they sell – and there’s nothing wrong with that, as long as they play fair and keep things legal.

They will almost always want to keep you focused on the monthly payment, and they’ll move all the other pieces in the transaction around to find a payment that they think will get you to buy. A couple of the ways they do so are by lowering the amount they give you for your trade-in or stretching your loan to ridiculous lengths.

Your goal is to get the best out-the-door purchase price on the car, including all fees, rather than the lowest monthly payment. While getting a payment that fits within your monthly budget is important, it’s not as critical as the price of the car and the cost of your financing. You need to remain focused on the price of the vehicle. Since you already have financing lined up from earlier in the process, the only way the salesperson can win your loan is by offering you a better financing deal.

In Negotiation, Knowledge Is Power

Have printouts from the web about pricing and be prepared to back your offers up with information about dealer cost and demand for the vehicle you’re trying to buy. In the end, the price you get will likely be a little higher than you offered initially and a bit lower than the dealership proposed. That's how negotiations work. Remember, you can always walk away if you don’t like the dealership’s offer or attitude.

To learn more, read our article on how to negotiate the best car price.

Sign the Paperwork and Take Delivery

By this point in the car-buying process, you probably just want to take your new ride home. Your work, however, isn’t quite done. The dealership’s finance office – or wherever you do the final paperwork – can be a dangerous place for your wallet if you’re not paying attention and aren’t prepared to say no to costly add-ons.

Watch Out For Add-Ons

While you're signing the final paperwork, you'll likely be offered many add-ons, ranging from nitrogen in your tires to extended warranties. There will often be pressure to decide on the spot, so the packages can be added to your financing.

The truth is, you never want to add the items onto your financing because it raises your loan-to-value ratio and you have to pay interest on the price you pay for the add-ons.

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Before you buy any add-ons at a dealership, you should research their value and the amount you should pay. Many of the items are available from aftermarket suppliers, financial institutions, or auto insurance companies.

Our story on things you should never buy at the dealership discusses many of the items you’ll be offered in detail.

Beware of Spot Financing

Be wary of any dealership that allows you to take the car home before your loan is approved by the lender. You don’t want to fall prey to the spot financing scam (sometimes called Yo-Yo Financing), where you get a call from the dealer a week or so after you take your new car home telling you to come back to the dealership. They’ll tell you that the original financing deal was not approved and you need to sign new paperwork. The new offer is typically more expensive than the old one. In some cases, the fact that you were not approved for a loan is a surprise to the dealership, while in others, they knew all along that you wouldn’t qualify.

In either case, they’re hoping you fall in love with the car and see no other way to proceed than to sign the new papers. If this happens to you, your best course of action is to stop by a community bank, credit union, or other financial institution before returning to the dealer, in hopes of getting a loan approved that’s less expensive than the one the dealership will likely offer you. If you can’t afford the terms the dealer offers, and you can’t find financing elsewhere, your best course of action is to return the car.

Check Every Page

Smart car shoppers know to carefully check every page of the paperwork. Make sure the purchase price, the loan terms (amount, length, and interest rate), and the value of your trade match the deal you were able to negotiate. Make sure any incentives you qualify for are reflected in the agreement. If there are any blank spots or incorrect bits of information on the papers, do not sign them until they are completed or corrected. Once your signature is on the bottom line it can be much more difficult to get the documents fixed.

Owning a Car

Buying a car can be an expensive proposition. Owning a car can be too. There are many expenses car owners have to deal with, including the cost of auto insurance, fuel, maintenance, repairs, and parking.

Auto Insurance

Whether it’s your first car or your tenth, the price of auto insurance can come as a shock. When you’re researching the purchase of a vehicle, it’s a good idea to give your insurer a call. Different cars can cost vastly different amounts to insure, and a good agent can help you find vehicles with reasonable insurance rates.

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States require that you carry certain types and amounts of insurance and auto lenders typically require you to carry collision and comprehensive coverage so you can repay them if something happens to the vehicle. Our auto insurance hub will show you the different types of insurance you need and give you tools to get the best prices. It’s good to reassess your insurance needs every few years, to ensure you’re getting a good deal and the coverage you need.

Maintenance

Whether you have an old car or a new one, it's essential to properly maintain the vehicle so it retains the best possible resale value. Failing to perform the manufacturer-recommended maintenance can put your warranty coverage at risk.

You don't have to get your maintenance performed at the dealer to preserve your warranty, though dealerships are typically the only places where you can have recall and warranty work done at no cost.

On the other hand, dealerships usually charge more for non-warranty-covered repairs than independent repair shops.

Make Your Payments

Finally, if you have an auto loan, it is critical to make your car payments on time each month. An easy way to do so is to set up automatic bill pay. Failing to make your payments on time can put your loan into default and risk repossession of your vehicle. It’s a double-whammy: Not only do you lose your car, but the damage to your credit score will make your next purchase more expensive, if not impossible.

At the end of the loan, you’ll need to get your title from the lender and have them removed as a lienholder. Some lenders will help you take care of that, while others will require you to make a trip to the DMV to take care of the title transfer paperwork.

More Shopping Tools From U.S. News & World Report

No matter where you are on the road to car ownership, the experts at U.S. News & World Report provide tools to help.

Our new car rankings and reviews blend the many voices of the country’s top automotive journalists into a consensus opinion, enhanced with quantitative information about safety and predicted reliability. Our used car rankings and reviews add information about cost of ownership to the mix so you can predict your future expenses.

As we discussed early in this article, it is critical to have a preapproved financing offer in place before you visit the showroom or start talking to private-party sellers. U.S. News partner myAutoLoan can show you up to four financing offers after you fill out a simple online application.

Nobody wants to pay more than they have to for a car. Our new car deals and used car deals pages show the best incentives manufacturers are currently offering.

The U.S. News Best Price Program can save you even more money by connecting you with local dealerships offering prenegotiated prices. Buyers save an average of more than $3,000 when they use the Best Price Program.