How to Buy a New Car for the Lowest Price: A Step-by-Step Guide

This is a guide on how to buy a new car. To buy a new car, finance properly and research the cost of ownership. Negotiate with dealerships for a fair price and get insurance before driving off the lot.
Written by Jacoba Bood
Reviewed by Kathleen Flear
Buying a new car can be an intimidating purchase—but it doesn’t have to be. Drivers have a limitless amount of resources at their disposal to make sure they’re getting the right vehicle for an affordable price.
If you’re wondering how to buy a new car for the lowest price,
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1. Budget your options for a new car

Ideally, you want to have at least 20% of the list price saved up for a
good down payment
. Putting down 20% will help you land good loan terms and pay less in the long run. It will also reduce the risk that you end up owing more than your car is worth on your loan, which is called an
upside down loan
Once you know how much you can afford to pay upfront, use a loan calculator tool to figure out what loan terms will work with your budget. Don’t forget to factor sales tax,
cost, and insurance into the equation.
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2. Find the right make and model

Now that you know how much you can afford to spend, it’s time to start shopping!
It’s easy to get swept up in the car buying process, so always prioritize practical considerations. Knowing your budget will help you narrow down the search and reduce the risk that you get sucked into the idea of buying a car that you can’t afford.
Now, make a list of features that you need and eliminate any cars that don’t hit the mark. For example, you might want to prioritize ample cargo space.
If you have a camper, towing capacity is a must. If you plan to use the vehicle to transport supplies, a hatchback trunk will make your life easier.
Dealerships usually have car-finder tools that can make your life easier. You can use automotive meta-search engines to speed up the process. Use "filter options" to narrow down vehicles according to your price range and the features you want and need.
Key Takeaway A ‘must have’ and ‘nice to have’ list can help you narrow down your options and ensure that you don’t get your heart set on something that you can’t afford.

3. Research reliability and insurance costs

As you start getting a better idea of the models that work for you, use online search tools to research their features, safety, and reliability ratings in more detail. This should give you a good idea of which cars may cost more for things like
, repairs, and depreciation.
Don’t forget to factor insurance costs into the equation. The type of vehicle that you drive is one factor that determines your insurance rates, and choosing a model that costs less to insure can help you save thousands on insurance in the long run.

4. Find your new car with a dealership

By this point, you probably have a good idea of the make and model you want to buy.
Now’s the time to get into the nitty-gritty details—things like color, transmission type, features, and extras. Start with your ideal filters and widen your search as needed until you find something that fits your budget.
Don’t hesitate to take advantage of online new car buying tools to simplify the process and make your life easier. Simply input the type of vehicle that you’re looking for and the number of miles that you’re willing to travel to find it. From there, you can find a nearby dealership.
You can also search through local dealership pages or manufacturer websites to see what they have in stock.
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5. Take your potential new car out for a test drive

Once you’ve located your top choices, it’s time to test them out.
Rather than swing by the dealership spontaneously, call in advance. When you schedule a test drive, your ride will be ready and waiting.
Try to schedule all of your test drives on the same day. That way, it will be easy to recall which one felt best to drive.

6. Research prices

Before you negotiate, use pricing guides like
Kelly Blue Book
to better understand what you should be paying.
Keep in mind that seemingly random aspects like the color of the vehicle can sometimes affect the price. Be sure to look into the car’s trade-in value, as well—especially if you might want to upgrade in the future.
Now is also the time to check dealership and manufacturer rebates and incentive programs to see if you might qualify. And don’t forget to research the warranty details so that you know what to expect.

7. Negotiate a better price when you buy a new car

Before you buy a new car, you should negotiate a better price.
Requesting dealer quotes online is an easy way to bypass the stress of a face-to-face negotiation process.
Some third-party sites will allow you to get quotes from multiple dealerships in your area with just one simple request. If you have your eye set on one particular car, you can also email the dealership directly to request a quote.
Once you have your quotes, you can easily compare them to the average market price for the same vehicle.
Once you start negotiating, make sure that you’re always discussing the price of the car rather than the monthly payments on the vehicle. You’ll also want to clarify whether you’re talking about the price tag on the car or the total cost, which includes things like taxes, freight, and other fees.
If things are moving too fast, ask to slow down.
Be sure to bring a pen and paper to write down any numbers that come up. And if things aren’t working out, don’t be afraid to walk away—there are always other options out there.
Key Takeaway The negotiation process can seem daunting, but online quotes can help reduce the stress of in-person negotiations. Be sure to clarify whether you’re talking about the price tag on the vehicle or the total cost, which includes all taxes and fees.

8. Review the contract before buying

Always review the vehicle contract carefully before you sign.
At this stage, the finance manager might offer up additional purchases like extended warranty protection plans. Review the warranty protections you already have before signing onto any additional coverage.
A dealership might also offer to beat out any pre-approved loan terms that you have. Before you sign, ensure the interest rate and loan terms are the same or better. Don’t get sucked into lower monthly payments—you’ll probably end up paying more in the long run.
Finally, you need to be fully aware of all prices and fees. The sales price should be the figure you agreed on. You will also be charged for state sales tax and contract documentation fees.
You can always ask to have the registration fees removed from your contract and register the vehicle yourself, if you prefer.
If you see any fees you don’t recognize, ask the dealer to break them down before you sign.
Key Takeaway Read your contract details and the pricing breakdowns in full before you sign and ask the finance manager to explain anything you don’t understand.
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9. Purchase car insurance

You must have car insurance before you can drive off the lot, so you’ll need to become familiar with your state’s minimum insurance requirements. And yes–some dealerships will verify insurance.
Since you’ll have a new car, you might want to consider upgrading your policy to include full-coverage options like
comprehensive insurance
collision insurance
Shopping around can help you find the best insurance, and there’s no easier way to do that than with
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What do you need when buying a new car?

When buying a new car, you'll need to bring your driver's license, proof of insurance, and payment. If you're getting a car loan, you may also need to bring pay stubs as proof of employment, and you'll want to review your credit score to ensure you're getting a good deal.

How do you research when buying a new car?

To research all the best options for your new car, you should take advantage of car-buying resources. Kelley Blue Book is one such resource, and you can also learn a lot about potential cars from
Above all, check with your local dealership and compare their prices with prices for similar makes and models.
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