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Steps to buying a car

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Getting a new car can be an exciting experience, especially if you’re looking to upgrade. But buying a car isn’t as simple as walking into a dealership with your wallet open. There are some important steps you need to take before your first test drive, particularly when it comes to insurance.

If you’re in the market for a new vehicle, you’re in luck—we put together an in-depth look at the car buying process. Use this article as your car buying checklist to make the experience as easy and enjoyable as possible.

Set your budget

The first step isn’t the most fun, but it’s essential. You need to set a budget for yourself. The budget should include the cost of the vehicle, the price of car insurance, maintenance, registration fees, gas and parking. Before you start car shopping, do some calculations to figure out how much you can afford to spend on car ownership as a whole. Make sure your car budget leaves plenty of room to cover the cost of things like your mortgage, student loans or childcare, or other similar expenses. 

Research makes and models

Once you’ve set your budget, do preliminary research into car makes and models that you’re interested in. Use websites like Kelley Blue Book to gauge the average cost of different cars, both new and used. You can also view popular cars based on price. While you’re researching, don’t forget to look into the ratings and reliability scores for various models. If you choose a car that is known for having random maintenance issues, you could end up spending a lot of money out-of-pocket for frequent repairs. Often the make and model of your vehicle impacts insurance costs, so keep that in mind.

Consider a used vs. new vehicle

Educate yourself on the benefits of buying a new vs. used car, and think about what makes sense for your situation. Used cars cost less upfront, and they’re typically cheaper to insure. However, used cars don’t last as long as new cars, and they often require more maintenance depending on their condition. With a brand new vehicle, you don’t have to worry about past accidents or poor upkeep. And if you want the latest and greatest features, you might only find what you’re looking for in a new car. Some new cars have safety features that might net insurance discounts on what would otherwise be more costly insurance rates.

Decide to buy, lease, or finance

Along with deciding on a new vs. used vehicle, decide how you’ll pay for the car. If you have your heart set on a brand new car but don’t want to pay the full cost upfront, a loan might be a good option. Before you start car shopping in-person, you can get pre-approved for an auto loan to save time and ensure your loan fits within your budget.  

Another option is to get a lease, which allows you to trade in your car every few years for a new model. Keep in mind that leases typically have mileage restrictions, so it’s not the best option for drivers who take frequent road trips or those with lengthy commutes. 

The last option is to purchase the car with cash or in full, in which case you would fully own the car and you wouldn’t have to deal with any monthly payments. Lenders and lessors both typically require you to have insurance, often with higher coverage limits and options, but buying the car outright gives you more flexibility over coverage.

Get an auto insurance quote

The next step is to get a few car insurance quotes for the vehicles you like, and that meet your needs and budget. Because insurance can be costly, it’s best to comparison-shop in advance so you are prepared and informed. Certain cars are more expensive to insure than others, and that can influence your buying decision. You don’t need to purchase a policy just yet, but you should have a good idea of what you can expect to pay for insurance on a new car. 

Shop around

Once you have your budget set, and you’ve decided how you want to pay for your car, it’s time to start seriously shopping for a new vehicle. If you’re looking at new cars exclusively, visit a few local dealerships to see what they have in inventory. For a used car, sites like CarMax and AutoTrader can be useful, or platforms like Craigslist or Facebook Marketplace for local sellers.

Take a test drive of each car, find out about the car’s history of accidents and ask to see maintenance records. You can also use Kelley Blue Book or CarFax to get a full vehicle history report to help guide your purchasing decision. Remember that a car can look pristine from the outside, but it’s a different story under the hood. Having a mechanic evaluate the condition of the car is essential if purchasing from a private seller.

Negotiate the price

At this point, you may have one or more cars in mind that you are ready to buy. Now it’s time to negotiate the price so you can close the sale. Whether you’re buying a new or used car, pull reports from sites like Kelley Blue Book to determine the car’s average value. Most dealerships (although not all) and private sellers include some room for negotiation in the asking price, so have a conversation based on a comparable valuation. Once you and the seller have agreed on the price, you will finalize financing or payment.

Sign an auto insurance policy

Before you finalize the deal, or shortly after, you will need to purchase an auto insurance policy. If you already have car insurance, you can simply contact your provider and have the new vehicle added to your policy.

If you don’t already have insurance, or you want to switch to a new provider, revisit the quotes you gathered as a starting point, then decide how much coverage is necessary for the new vehicle. Keep in mind that if you’re getting a leased car or are taking out a loan, you will probably need to carry full coverage car insurance, which includes collision, comprehensive and liability insurance. 

Head to the DMV for registration

If your dealership doesn’t take care of this step for you (as is common with a car under lien), the final step is to visit your state’s department of motor vehicles to register the car. You’ll need to present the title, proof of insurance and your driver’s license, in addition to some other paperwork. Some states require drivers to pay a registration fee. Before you leave the DMV, you’ll be given temporary license plates to use until the permanent ones arrive in the mail. 

How Long Does It Take to Buy a Car?

With numerous steps involved, purchasing a car can be a time-consuming process. Here’s about how long it takes for each step:

  • Set your budget: 1 hour
  • Research makes and models: 2-3 hours
  • Consider a new vs. used car, and decide on a loan: 2 hours
  • Get an auto insurance quote: 1 hour or less, depending on the provider
  • Shop around: 10 hours
  • Negotiate the price (and finalize sale): 1 hour
  • Sign an auto insurance policy: 1 hour or less
  • Head to the DMV for registration: 2 hours or more

After-purchase steps to take

After you purchase a car, there are additional steps you should take once the keys are in your hands. 

Maintenance

Take your car to a local mechanic and have them do a thorough inspection, if you didn’t already do this during the purchase process. There’s a chance you may need essential repairs, particularly if you buy used. It’s better to diagnose any potential issues early on rather than leave unaddressed issues to become a bigger problem in the future. Taking care of repairs can also reduce the likelihood that you’ll get into an accident or need to file an insurance claim. 

Continue to compare auto insurance rates

Your auto insurance rate doesn’t stay the same forever. It can change on an ongoing basis depending on your claims history, your driving record and the insurance company’s financial performance. It’s important to review your auto insurance premium and get new quotes every six months to a year to make sure you’re getting the best rate.

Making regular, on-time payments

If you’re paying for car insurance on a monthly basis, make it a priority to pay on-time. If you miss payments, your insurance company can cancel your policy. If that happens, you run the risk of driving uninsured, which is illegal. Having a lapse in your insurance coverage can also make it harder to buy another policy in the future.

The takeaway

  • Buying a car is a multi-step process and it shouldn’t be rushed.
  • Take your time when purchasing a new car, and make sure to account for the entire cost of car ownership when creating your budget.
  • Insurance is a key consideration of the car-buying and owning process.

Conclusion

Buying a car takes a lot of thought, planning and research to ensure a successful purchasing process. You need to create an accurate budget, find cars that meet your needs and make sure you have the right amount of car insurance to be covered against risk. Unless you need a car right away, take the car buying process one step at a time and give yourself plenty of time to make the best decision for you.

Elizabeth Rivelli

Elizabeth is an insurance writer for coverage.com, where she covers insurance providers and reviews policies to help consumers find comprehensive and affordable coverage for every area of their life. She has more than three years of writing experience for top online insurance and finance publications.

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