• Buying Guides

How to Buy a New or Used Car - The Complete Guide

By Autolist Editorial | March 9, 2020

Table of Contents

  • Start here
  • What's it going to cost me?
  • What do you want?
  • Drive and don't drive
  • Time to drive a bargain
  • Getting your new car
  • Go drive!

Start here

First of all, take a deep breath and remember that at the end of all this, you’re getting a new car! Or a new-to-you used car. Or truck. Or minivan. Or crossover. Whatever its shape, a new car is awesome.

And it will be worth the time and energy you put into finding the perfect one, because you have us here to help.

To make sure that you not only love your new vehicle but that you feel good about how you found that vehicle and how much you paid for it, we’ve put together a step-by-step Buyers Guide that works for both new and used cars.

Follow these easy steps, take deep breaths if you get stressed out and remember that this will be worth it! OK here … we … go.

What’s it going to cost me?

shutterstock 1426286264 (1)

To get an idea of what vehicle to look for, start by figuring out what you can afford. This is a good time to be honest with yourself about what you can and should spend on a new-to-you vehicle.

How much should I budget for a new car?
There are a range of suggested budgets for what to spend on a car, so use these as rough guidelines.

Generally, financial experts recommend spending between 10 and 20 percent of your monthly income on your vehicle. Some say that should be pre-tax while others say to calculate your budget based on your actual monthly take-home pay. Others say to look for a vehicle that costs roughly half of your annual take-home pay.

But when calculating your budget for a new-to-you vehicle, remember to factor in two additional monthly costs that will likely change from your current vehicle: insurance and fuel.

Insurance will go up because your new vehicle is worth more than the one you’re replacing. Depending on your new vehicle, it could go up a lot. A general rule of thumb is, the faster, more rare and more exciting the car is to drive, the more it will cost to insure it. Thus, an entry-level Chrysler Pacifica minivan will cost considerably less to insure than a loaded Porsche 911 Turbo S.

It’s typically the high-end sports cars with big engines that cost the most to insure. Not only are these expensive in the first place, but statistically they’re more likely to be crashed. Sorry speed-hounds, but it’s true.

Regardless of what you end up buying, expect it to come with a higher insurance bill than you’re paying now.

Your fuel costs could also change.
As we mention below, the EPA has a handy free tool here that allows you to look up the fuel economy of any car going back to 1984. Use this to compare your old car to your new one, or several new models that you’re considering to each other.

How do you pay for a new car?
Sadly cars aren’t free. You need to pay for them, and since they’re likely the second-most expensive thing you’ll buy (homes are No.1), you will need help finding the money.

You have two options: leasing or buying. Regardless of its source, we strongly recommend having your financing worked out before you step foot in a dealership. Sometimes a dealer can offer you better financing terms than anywhere else, but you’ll often get better rates elsewhere. If you walk into a dealership and you have the financing already done, you can then compare it to what the dealer is offering.

Buying and Financing
If you’re buying the car, you will need to finance the purchase.

Depending on the model or the time of year, the automaker itself (not the dealer) may offer great financing terms like interest rates between 0% — basically free money — and 1.9%. That’s a smart option.

You can also check out car loans at your bank or credit union that may have better interest rates than a bank.

Getting pre-approved for a loan could also be a good idea so you know what you can afford.

Remember that when you’re trying to figure out how much to spend for a down payment, most experts say it’s smart to budget between 10 and 20 percent of the vehicle’s cost.

But no matter where you get your loan, be smart about its length. The average price of new vehicles has never been higher (currently around $33,000) but to afford that, more consumers are signing up for 72- to 96-month loans.

This can end up costing a lot in interest, and it likely means you will owe more on the car than it is worth for the duration of the loan. That could come back to bite you if the car is totaled or if you’re forced to sell it for an unforeseen reason. It also means your car will be old by the time it’s paid off.

If you really want a car that is more expensive and would stretch you into a long loan, consider leasing. This gets you more car for your monthly payment, and most leases are 24 to 36 months long so you’re not stuck with a car for a long period of time.

This is also useful if you expect your car needs to change in two or three years. Perhaps you’ll be moving to another city in that time, or you plan to have kids, or your kids will be moving out.

The downside to leasing is that you don’t build equity in the vehicle as you would if you had bought it. It’s the same as renting a house versus buying a house; every rent check you write you will never see again.

Leases also limit the number of miles you can drive annually and charge you for every mile you’re over the limit (though you can negotiate this at the beginning of the lease if you’re sure you’ll go over.

When is the best time to buy?
There are good times during the calendar year to buy a car and not-so-good times. Not everyone has control over when they have to go car shopping again: your old car kicks the bucket, it’s totaled or your lease is up.

But if you can control when you shop, here are some times throughout the year when you’ll have better luck getting a deal on a new or used car from a dealer (buying private is generally the same all year).

  • At the end of the model year. This falls around August and September. It’s when the current model year vehicles are on their way out and dealers are starting to get next year’s models. This is when dealers and the automakers themselves are feeling pressure to get rid of the older models while they can.

  • At the end of the calendar year. We’ve all seen the commercials during the holidays: a husband or wife leads their spouse outside to a snowy driveway where a new car sits with a big red bow on it. While that scenario may be far-fetched, the notion of getting a new car at this time isn’t. At the end of the calendar year dealers and automakers are keen to get rid of everything they can to have as good a sales year as possible. And those 2018 models that weren’t snatched up in August and September are really making dealers nervous; as soon as the new year hits the cars will be old, and no dealer wants to be stuck with them then.

  • Black Friday and three-day holidays weekends. Again with the ads … we’ve all seen dealers screaming on TV about all the deals they’re having for INSERT HOLIDAY HERE. But there’s truth to what they’re saying; they wouldn’t be spending money on the ads in the first place if they didn’t want to sell some cars. Automakers get into this too and often offer low financing deals or lease specials.

  • Not a good time? Springtime isn’t when you want to be buying a car. Many people have tax refund checks they’re looking to spend, and dealers and automakers know this so they’re less willing to cut deals. Plus, the spring is in between several big holidays like Presidents Day and then Memorial Day that are traditionally good deal-making times.

Buyers Guide Search

What do you want?

Before you even walk into a dealership, do some thinking — and some online research — about what you want. The floor of the dealership is not the place to start making up your mind in terms of vehicle type, your budget, must-have features, color, brand or model.

To start, think about how you’re going to use the vehicle.

Not how you might use it but how, on a daily basis, you will actually use it. Because we have big, open roads and relatively cheap gas, Americans are used to getting the biggest, most-capable vehicle possible.

Many people assume they need a vehicle that will meet every need that they might encounter in the five years they own it. “I’ll go skiing twice in five years so I definitely need all-wheel-drive” doesn’t make sense for the other 1,821 days that you own the vehicle if you’re driving in Los Angeles.

Also think about how long you plan on owning this vehicle. How might your life change in that time? This isn’t the time to buy a sexy two-door coupe if you plan on having a baby soon.

If you’re honest with yourself now about how you will use the vehicle, you will save yourself the time, money and hassle of needing to buy another car in the future.

It’s also good to ask around and see what your friends and family like. Not necessarily for specific brand or model — though that’s certainly helpful — but ask what type of vehicle they have and see whether it would fit your lifestyle.

New vs Used vs Certified Pre-Owned
For every person who says new cars lose a chunk of their value the minute they leave the lot, there’s another person who says that when you buy a used car, you’re just buying someone else’s problems.

So who’s right?

As you’d imagine, there are pros and cons to each case. Hear us out:

When to buy a new car - the main benefits

  • The latest safety and technology. Tech inside cars today is advancing as rapidly as it is on your smartphone. So if you want the latest in safety and/or tech like low-level autonomous vehicles with adaptive cruise control, pedestrian detection, automated self-parking or connectivity to your phone, new cars will offer what used cars — even those that are a few years old — can’t match.

  • It’s easier and less stressful. A new car obviously hasn’t had any prior owners that you need to worry about. The warranty is new on the car, you don’t need to have it checked out by a third- party or worry that it’s been abused in its past life, even if it looks and drives fine.

  • Style. Automakers deliberately change the styling and features of all their vehicles every few years. Some of this is because there have been genuine advancements in safety, efficiency, comfort and technology. But some is pure vanity; they know there are plenty of people who like knowing that they have the latest version of any given vehicle. This is a key reason some people only consider new vehicles; they just want the latest.

  • They’re more efficient. No car gets more efficient as it gets older. So if you’re really concerned with the efficiency of a vehicle, buying something new ensures that you’re getting the greenest and cleanest vehicle possible.

  • It’s easier to pay for. Whether leasing or buying, it’s generally easier to get loans for a new car than it is a used car. Many banks won’t even offer car loans on cars that are above a certain age. And new car dealers and automakers themselves often have great lease deals or low financing offers on new cars to lure shoppers away from the used lot and toward the new lot.

When to buy a used car - the main benefits

  • It’s a smarter financial decision. There’s still no getting around the fact that it makes better financial sense to buy used versus new. Used buyers aren’t hit with the depreciation every new car instantly faces when it’s driven off the lot. Insurance is cheaper too if the car costs less to repair or replace.

  • More car for your $. Let’s say you have a budget of $30,000 for a vehicle and you want a compact crossover. That could buy you a nicely-equipped brand new Honda CR-V. Or you could go the used route and get a 2-year-old Acura RDX with 20,000 miles on it for the same price. More luxury for the same money! Or you could get a used Honda Pilot (the next size up from the CR-V) for the same money. More size for the same money!

  • Reliability isn’t an issue like it used to be. Buying a new car is no longer the only way to make sure you’re getting a trouble-free car. Yes, maintenance is still important on any car, but a car with 50,000 miles on it today still has plenty of trouble-free mileage ahead of it.

Other resources
So you’ve figured out your budget, how you’re going to pay for it and how you feel about new versus used. Now some research on the vehicles themselves. Here are some common areas that are important to people and where to find the info you’re looking for.


  • JD Power: JD Power tracks car owners’ satisfaction and vehicle dependability and comes out with multiple surveys each year that rank the reliability and quality of automakers and specific models. This can give you an excellent idea of how people feel about their cars and brands and the troubles they’ve encountered.

  • Consumer Reports: In addition to reviewing new cars like we at Autolist do, Consumer Reports also closely tracks the reliability of vehicles via a survey sent to thousands of its readers. Like the JD Power survey, this is an excellent way to look up the reliability of used vehicles, sourced directly from car owners like yourself.

  • CarFax: Once you’re ready to buy a specific used car, use CarFax to check that vehicle’s specific history. This is a critical step to knowing the full backstory about the car you’re interested in. A CarFax report will show its full history for maintenance, accidents and repairs as well as odometer verification, recall status and even if the airbags have been deployed. To use this site, you’ll need the vehicle’s vehicle identification number (usually 17-digits long and found where the windshield and the dashboard meet in front of the driver), so if a seller refuses to give it to you after you’ve made it clear that you intend to buy the vehicle, that could be a red flag.


  • Crash tests and safety ratings: There are two great (and free!) sources for crash-test info and unbiased safety ratings on nearly every car on the market. They are the National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS).

  • Recalls: Check for open recalls on a model you’re interested in on NHTSA’s site here. You can also use this site to search for a specific vehicle if you have its VIN.

Fuel economy

  • fueleconomy.gov has the EPA ratings for almost any vehicle you’ll want to look up — new or used. You can compare various models and model years too. The site often compares these official ratings and estimates to what owners of that specific model are getting.

    Just because a vehicle is rated at a certain fuel economy (say 24 mpg in the city and 31 on the highway), doesn’t mean you will actually see those figures. Automakers test their vehicles’ fuel economy in a controlled lab that isn’t as accurate in the real world as you might think.

    Plus, with the rise of turbocharged engines across the industry, it’s becoming more common for a vehicle with that engine type to get lower fuel economy in the real world, which makes the user-submitted info particularly helpful. This is because automakers know that turbocharged engines are efficient in the lab tests but less so when real people are driving them in the real world.

So what’s good fuel economy?
The EPA says the average fuel economy in a 2018 vehicle is 27 mpg combined.

So if you’re looking at a smaller, non-hybrid car, you should expect something quite a bit higher — like above 40 mpg combined.

Hybrid cars like the Toyota Prius can easily surpass 50 mpg combined.

Midsize sedans and crossovers should be in the high 20s to mid 30s for combined mileage.

Larger crossovers and minivans will have combined fuel economy averages in the low to mid 20s.

If you’re looking at an electric vehicle or a plug-in hybrid vehicle (which is a gas engine and an electric motor), you’ll notice that the EPA has a new MPGe rating. What this actually means can be confusing to the average consumer, though it can be helpful in comparing one plug-in hybrid’s efficiency to another.

But generally if you’re looking at a plug-in hybrid vehicle or an electric vehicle, you’re going to want to know its all-electric range, or the time it takes to recharge a dead battery on a 240v outlet (like the one your dryer uses) and how many miles of range you can get on a quick 30-minute fast charge.

Drive & Don’t Drive:

shutterstock 765129619 (1)

OK, you’ve done your homework, now comes the fun part: driving what you like!

Finding a dealer
Use a site like Yelp or Google or an automaker’s own website to see where the dealerships are in your area. Check the online reviews of them, but as with any online review, take everything (good and bad) with a grain of salt. Also, ask around among friends, family and coworkers to see who had a good experience at which dealership or salesperson.

The advantage of larger dealerships is they have more inventory and therefore a better chance of having the exact model, color and trim that you’re looking for.

Larger dealerships can also offer better deals (sometimes) since they’re more easily hitting sales targets set by automakers that generate bonuses for the dealership and the sales people.

Larger stores are also paying less in overhead (per vehicle), savings that theoretically they can pass on to the customer.

Finally, larger stores can also offer better interest rates from banks because of their size.

But smaller stores can often offer personalized attention which can be important if you’re living in that area for a while and there’s a good chance you’d return to that dealership in the future for your next car.

Also remember that while you shouldn’t go to the dealership for out-of-pocket oil changes (since a place like JiffyLube or Valvoline will do it cheaper), you will need to go to the dealership for any warranty repairs or service intervals. So keep this in mind if you buy from a dealership that’s any distance from your home or office.

You don’t need to set up an appointment to test drive a vehicle, though it can be a good way to set up a relationship with a salesperson rather than just working with whomever is available when you show up.

The test drive:
Useful seat time in the car is absolutely critical. So if the person selling the vehicle or the salesperson won’t let you drive it on a meaningful test drive on public roads (20-30 minutes at least), walk away. You’re about to spend tens of thousands of dollars on this vehicle so it’s reasonable to expect some seat time in it first.

It also might be the first new (to you) car that you’ve driven in a while. So the first one you get in could feel amazing just because it’s newer. But be sure to drive competing models to really get a sense of what to expect. The worst new car on the market could still drive better than what you’re used to, but that doesn’t mean it’s worth buying.

Because there’s a lot you’ll want to learn about that car, break it into two parts: drive it to see if you like how it is on the road, then park it to check out its other features.


  • Drive on surface streets. Drive it like you normally drive your current car. Stop, go, change lanes, merge; get a feel for the vehicle at lower speeds. Aim for a rough road or a bump or pothole to see if there are any significant vibrations or rattles that are a concern. Accelerate and brake hard to see what it feels like (maybe warn the salesperson first).

  • Drive on a highway, freeway or street where you can safely hit freeway speeds. Not only does this give you a sense of how the car handles at speed, but it can also reveal wobbles, rattles and noises that you might miss at low speeds. Use this time to check your blind spots too as you change lanes. Again, accelerate on the onramp to see how the car feels.

  • Park it. Is there a backup camera, parking sensors, a huge blindspot that causes you to bump into a tree or hop a curb? Parallel park the car and turn it around in a K-turn at least once to see what this feels like. Maneuver in and out of a tight parking lot … you’ll be doing this a lot once you own it.

Don’t drive
Almost as important as how the vehicle drives is how it does all of the other things beyond driving. Some new cars today are getting poor reviews from their owners because they only discover they hate the seats or stereo controls after they’ve bought the car.

So once you’re parked, insist on sitting in the driver’s seat and the rear seats and spend 10-20 minutes going over the following things. If these present red flags or they just don’t make you feel comfortable with the car, reconsider.

  • How do you connect your phone?
  • How do you make a phone call?
  • How do you put a destination into the navigation system?
  • Is the nav system more useful than the one on your phone or can you save some money and buy one without paying extra for nav?
  • How do you find your favorite radio station on the stereo or song on your phone?
  • Some new cars are using touch-sensitive buttons or touchpads for things like stereo volume. How easy is it to use these features?
  • How do you configure the infotainment system in the dashboard to your preferences?
  • How do you set up the screen (if there is one) in the instrument panel?
  • Is there an easy place to put stuff like a purse, drinks, laptop, sunglasses and phone?
  • Are the seats comfortable?
  • How easy is it to adjust them?
  • Is there enough room in the rear seats for what you’ll need (don’t forget to actually sit back there...we at Autolist do it for every vehicle we review, despite some odd looks from our neighbors).
  • Do the rear seats fold down? If so, where is that lever … in the trunk or behind the seats?
  • On minivans and crossovers with three rows of seats: how do the middle seats fold completely flat and move out of the way? What about the third row of seats? Are the seats removable?
  • How easy is it to put in (and take out) a child’s seat?
  • Where is the trunk release and gas door release?
  • Does the car have a spare tire? Where is it (under the car, under the trunk floor)? If it doesn’t, does it have a patch kit?
  • Are there USB ports to charge your phone? Where?
  • How do the headlights turn on/off? Is there an automatic feature?
  • How do the windshield wipers work?
  • How do you adjust the mirrors?

Done driving
After you’re done test-driving (and test not-driving), get a quote from your dealer. Make sure that price is specific to that exact model and VIN that you want and that it’s the total price that includes all taxes and fees. Get it in writing with all of these details.

Tell them you’re looking for their final, take-it-or-leave-it offer that’s exactly what it will cost you to get out the door, and that you’ll be shopping it around.

Get the salesperson’s contact info and thank them for their time — remember, most dealers are honest, hardworking salespeople trying to earn a living. The smart ones will realize you’re a savvy buyer who’s done your homework and they’ll be direct about what price they can and can’t accept for a vehicle.

Finally, no matter how good their offer might seem, take it home and sleep on it.

If you have the time, you can visit other dealerships to continue test-driving, especially if you want to compare brands.

But if you’ve found the model, trim and features that you like, the rest of the negotiations can and should be done from home.

Time to drive a bargain

Buyers Guide Negotiation

This is the part of car-buying that people hate the most: You want to make sure you’re getting a good deal and that you’re not being taken advantage of, but it’s also uncomfortable asking for what you want from the seller or dealer. We get it!

Just remember: at the end of all this, you’ll have a new vehicle. That’s awesome. Fortunately, you’re also smart so you know three secrets other buyers forget:

  • The seller wants to sell the vehicle. You have the power in this situation to walk away at any point.
  • Be confident! You’re doing your research so you know not only the vehicle you want but what you should pay for that vehicle. Just make sure you get to this decision on your own time, without the pressure of the seller or salesperson.
  • This isn’t the only vehicle for sale on the planet. In fact, there are likely thousands just like it. So if you aren’t able to get your fair price for this specific one, you’ll find another just like it for your price someplace else.

Gathering competing offers
Now that you know what you want, you can gather competing offers from dealers. Call or email the sales manager and tell them the exact model and trim level you’re looking for and that you have an offer for it at the real price the original dealer quoted you. See if they can beat it.

When comparison shopping for offers from dealers in your area, there are a few things to keep in mind.

  • The offer is for a specific vehicle that a dealer currently has in stock.
  • The offer is for the same brand and model with the same trim level, mileage and model year as the vehicle you originally found. (Sometimes automakers make significant changes to the engine or transmission from one year to the next but the interior and exterior of the vehicle look the same as it did before. So do your research if you get a quote for a different model year). And different trim levels on the same model of car can add thousands of dollars to the price, so make sure you’re getting quotes for the same trim level (a Honda Accord LX may look the same as a Honda Accord EX-L 2.0, but the LX will cost many thousands of dollars less).
  • The competing offer should include all taxes and fees, just like your original offer, so it’s an apples-to-apples comparison.

  • None of the offers — your original, online or comparison offer — depends on you adding additional items like extra warranties, tire or paint protection, sealant, underbody coating or aftermarket accessories like floor mats or alarm systems. You don’t need any of these items, so smile and politely decline them, no matter what horror stories you may hear.

After you’ve gathered your various offers, now you can negotiate. Whether it’s with the first dealer you visited or the last or a dealer you didn’t even visit but who has the model you’re looking for, now you have a sense of what kind of car you want, what you can afford and roughly what it’s going to cost you. Now it’s time to bargain.

Here are some tips to remember:

  • Remember that the MSRP on the car’s window sticker is generally not a useful starting point for negotiating a price. Instead, use the dealer invoice as a starting point. Aim to spend that amount or a little more.

  • Some dealers will use a “dealer invoice” price as the lowest they can go and you might even hear, “I’ll lose money if I go lower.” Remember that that’s almost never the case; dealerships and salespeople get bonuses and allowances from the automakers for every car they sell, so even if it looks like they’re losing money selling the car to you for a certain price, they’re not.

  • While you may know your target monthly payment, don’t tell the dealer what it is, negotiate the car’s entire price instead. If you negotiate for a monthly payment with the dealer, sometimes they will play around with your trade-in value or your financing terms to get you a monthly payment that looks good but makes you pay more interest over a longer loan term.

  • Be reasonable; when negotiating a deal between multiple sellers, don’t expect a $1,000 difference on a $15,000 car. If there’s that big of a gap, the two models aren’t the same.

  • Be ready to walk away. Remember that you likely have more than one option of where to buy a car, so don’t forget that if you’re not comfortable with the deal, you can always walk away. You could very well hear back from that dealer a day or two later and suddenly they’re able to make the deal you want.

  • Let the dealer do the talking. You’re not obligated to share any info with them that you don’t want to (including your Social Security number). Focus on negotiating just the price of the new car and don’t bring up monthly payments, your trade-in value or where you’re financing. By focusing just on the car’s price, it prevents the dealer from trying to make up more profit elsewhere in the negotiations. State your price and let the dealer fill the void … they often will.

  • Some fees and taxes can’t be negotiated. Sales tax, delivery fees and licensing fees are all beyond the dealer’s control, so don’t beat them up over it. However, some dealers will try to tack on fees like marketing, documentation or general dealer fees. Keep an eye out for these.

On new cars, just say no and avoid the temptation of paying additional money for an extended warranty. New cars today are not only well-built but they also come with a healthy warranty from the automaker that should cover any problems you might have with the car.

If you’re buying used, it’s a little more murky. Consumer Reports surveyed users and found that only half of the people who bought a used-car warranty actually used it in the past five years. And those that did use it ended up spending more on the warranty than they would have on the repairs that it covered.

Thus, it’s often better to pass up the warranty and instead set aside a little money in case of a repair. Particularly if the warranty has a deductible of any kind.

Read our Reliability section earlier in this guide to see how the car you’re interested in stacks up. If it’s an unreliable model or if the peace of mind that comes with a warranty is worth the money to you, then it might be a good idea.

Final offer
Once you have a final offer that you’re happy with, get everything in writing, including that the price does or does not include additional items and warranties. Again, make sure it’s for the specific car you want … with its actual VIN.

Getting your new car!

Now that you have an offer that you feel is reasonable — whether it’s from a competing dealer or your original seller — you’re ready to close the deal.

These days, much of the paperwork can either be done online or the dealer can email it to you. Try to get as much of the deal done from the comfort of your own home so that all that’s left to do at the dealership is sign.

Look over the final offer to make sure it’s what you were expecting, including the pricing details again, the warranty details (is it transferable, what does it cover and what’s the deductible) and any financing agreements like loan length or interest rate.

Once you’re ready to sign, set up an appointment to come into the dealership (or sometimes the dealership will deliver the car to you with the final paperwork to sign).

Go drive!

Buyers Guide End