Why should I consider buying new?
Today's highly competitive incentives like cash rebates and low- or no-interest financing make the prospect of buying new an extremely attractive one. Equally appealing is the benefit of having the latest features designed for safety and comfort and choosing the options and colors you want.

Owning a new car means you'll worry less about maintenance and repairs, and you'll get the peace of mind a manufacturer's warranty brings.

It's hard to deny the allure of that new-car smell and the pride of first ownership. Buying a new car is expensive with a definite depreciation, but it's also very rewarding, especially when you get a great deal.

The following steps are designed to help guide you through the car-buying process, so you can make the best decision for your lifestyle.

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Decide what you can afford
It's important to establish a realistic maximum price of what you can afford and stick to it.

Take a close look at your budget:

• How much can you afford to spend on a down payment?
• What kind of payment can you handle on a monthly basis?

Unless you plan on paying with cash, it's a good idea to get pre-approved for financing up front. Then you'll know what you can afford. See How do I get the best deal? below to learn more about your financing options.

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Narrow your choices online
Determine what type of car you'll be shopping for by considering your wants and lifestyle needs.

Think about different factors, such as:

• How many passengers will be riding in the car with you?
• How much driving will you be doing?
• What kind of driving will you be doing?
• How important is gas mileage to you?

Next, start your search online. Quickly narrow your choices and compare cars by reading car reviews, safety ratings and buying tips (see I want more resources below for helpful research links).

Once you've found three or four models you like, check out financing and rebate incentives from the manufacturers, calculate your payments and get a quote from dealers. Keep any information in your car-buying folder.

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Test drive your top choices
Now that you've researched your top picks, you can visit the dealerships with confidence. Remember, you're visiting dealerships to test-drive your top picks back to back. Make it clear to the salesperson you are test-driving other cars and you can't make a decision yet.

The goal is to learn how well a car handles in a variety of driving conditions and whether you feel comfortable. After test driving several cars, hopefully you'll know which car you liked the best.

Here are some questions to keep in mind:

• Perform turning maneuvers on a side street. What is the turning radius like?
• Are there any blind spots?
• Drive over bumps and dips. How is the suspension?
• Now get on the highway. Does it have the acceleration you need?
• While you're driving, think about comfort:
• Does the seat offer plenty of support?
• Do you have ample leg and headroom?

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Find a dealer you like
It's important to find a salesperson that makes you feel comfortable. By now, you may have requested quotes online, spoken with a salesperson on the phone and gone on several test-drives.

Consider the dealers you've already met:

• Did they respond to your emails or phone calls quickly?
• Did they answer your questions without steering you in another direction?
• Did they ask you questions to best understand what you're looking for?
• Were they straightforward without being too pushy?
• Were they relaxed and patient?

Don't settle on a dealership because you're ready to buy. Shop around until you find the right one—or even a couple that you like, so you have room to negotiate.

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Decide how you'll sell your car
Will you sell it yourself or trade it in? You'll need to know before you visit the dealership. If you sell it yourself, you may make more money on the transaction. Read our tips on How to Sell Your Car before you make your decision.

If you're ready to sell your car, you can place an online ad on AutoTrader.com. You get to post photos, give a detailed description of your car and even edit your ad later.

If you prefer the convenience of letting the dealer take the car off your hands, then trade it in. Either way, it's a good idea to tell the salesperson that you're not sure what you're going to do with your current car. Focus on negotiating a fair price on the new car before you address questions about trade-in, financing or down payments.

Before you sell your car or trade it in, find out what it's worth. Our used-car values page can help you with your asking price. Remember, what you get from trade-in will be a little lower.

Buying a new car can be complicated and even intimidating, but the more prepared you are the better off you'll be. Take the time to research up front, and you'll most likely get a great deal.

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Know your financing options
Shop around for the lowest rate. In the end, you may choose dealer-arranged financing, but comparing loan rates ensures you get the best deal and gives you room to negotiate.

Start with your bank or credit union, and then go online. There are plenty of websites that offer loan information and list the average rates. Our loan resources can pre-qualify you and provide the four best offers from different lenders on the spot.

Remember these financial pointers:

• Put as much cash down as possible. Starting with a lower principal balance will do more to lower your payments than a good rate. Look for a cash rebate to decrease that principal balance. Combine it with a low-interest rate, and you'll save money.
• Be prepared with other options when it comes to special incentives. Most buyers don't qualify for the zero-percent rate when it's available, or the loan term is so short that monthly payments are too high.

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Consider the overall costs
The sticker price is not the only cost to consider. Before you settle on a car, add up all of the long-term costs of ownership.

These include:

• Depreciation
• Insurance
• DMV fees
• Sales tax
• Maintenance and repairs
• Fuel costs

Depreciation is an important factor in the car's overall cost. Your car loses some of its value as soon as you drive it off the lot. Refer to our used-car values page to get an idea of its resale value in a few years.

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Find out the lowest cost and bargain up
Sticker prices posted in the windows of new cars represent the MSRP (manufacturer's suggested retail price). This is the advertised base price and excludes options, destination charges and other fees. The sticker total should include all of these factors.

Before you visit the dealership, find out the car's invoice price. The invoice price comes from the manufacturer and is an ideal starting point in your negotiation. Get a vehicle valuation to find out that number. Or ask the salesperson.

Now you're ready to negotiate. Here are a few tips:

• Don't be reluctant to make a low offer based on the invoice price.
• Once you name your offer, don't speak until the seller responds. It's amazing what the power of silence can do in negotiation.
• Be firm and don't budge unless you absolutely have to.
• If you're willing to move up from your first offer, do so in small increments.
• When you hit your maximum spending limit, tell the seller this is your final offer and you can't go any higher. Don't be afraid to walk away. Hopefully, you won't have to.
• However, if the car you want is in short supply, you may have to pay the full sticker price.
• One last hint: Don't let the salesperson guilt you into thinking you're eating into the dealer's profit. Dealers commonly receive what is known as a holdback—a percentage of the MSRP from the manufacturer on all cars. As such, you should always negotiate for the best possible deal.

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Solicit several quotes
If you don't have the stomach for high-pressure bargaining, shop around for price quotes. Stop by or call several dealerships, and tell the salesperson what model you wish to purchase, including the options you want. Request a best offer based on the invoice price.

Once you get several quotes, visit the salesperson you feel most comfortable with. Give the lowest quote you received and ask the salesperson to match it.

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Be flexible on car options
The dealer may not have your model with the exact options you want and in the color you like. At this point, you can special-order the car, have one transferred from another dealer or settle for a model off the lot that's close to what you're looking for.

The more flexible you are, the wider range of choices you'll find available and the better bargaining power you'll have. Usually, options come as part of a package the dealer ordered. Compromising on options and color will get you a better deal.

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Keep the new-car price separate
Make a deal on the purchase price of the new car before you begin discussing trade-in, financing or leasing. The same goes with revealing what you can afford to pay monthly. The salesperson can easily juggle the figures by offering a great deal on one end while recouping his loss on the other.

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