How to buy a new car

A few weeks ago we were in the market for a new car. Now, I like to think of myself as a cautious buyer: I like to do my research, I’m not much of an impulse shopper and I’m generally suspicious of sales people. A new car is a significant investment; naturally I felt extra prudent. Of course, all my friends kept wondering why I was making such a big deal: you go into a dealership, pick up the car, do the paperwork and walk out, as simple as that. I say good for them! But I sleep more peacefully knowing that I had my bases covered.


A quick Google search on “how to buy a new car” led me straight to the very comprehensive It is probably a great resource for many people. But after spending a few hours clicking through the numerous links on there, I almost felt exhausted. There was way too much (redundant) information, perhaps badly organized and overall just not very easy to consume. As they say, hindsight is 20/20. So, with the experience of having just purchased a new vehicle, here is my attempt at a concise, five step guide to buying a new car.

  1. Figure out what you want: You should know exactly what make and model you want, down to the last detail — this includes the interior color, upholstery and exterior color, as well as any other options and accessories. The more precise you are in what you want, the better off you will be. My first impression while researching new cars was that I could get whatever configuration I wanted — if the dealership doesn’t have it in stock, they’ll simply order it in. Unfortunately, most dealers will only work with what stock they have. So checking for availability is critical. Go ahead and schedule those test drives, but let the dealers know upfront that you are not looking to buy just yet. The dealers will ask for your contact information though, so be prepare for a barrage of emails and phone calls from them, until you’ve made your purchase.
  2. Get the numbers: Once you have identified the configuration you want, find your car on Edmunds will give you the invoice price of your car. Go ahead and add all the options and select the colors to get a final estimated invoice price. The more informed you are, the better your chances are when negotiating with dealers and making an informed decision.
  3. Get a quote from CarsDirect: Buying a car online these days is not only possible, but highly recommended. You save the hassle of driving to dealerships, wasting time over the phone etc. Start your hunt for the best price by getting a quote from They partner with local dealerships and have very competitive pricing. My experience with CarsDirect was fantastic and I’d have definitely bought a car from them had a local dealer not given me a much better deal.
  4. Get quotes from local dealers: Open a spreadsheet, fire up your browser and start calling your local dealerships. Ask for the new car sales department and let them know exactly what configuration you are looking for. Ask them for price and availability. Always ask for out-of-the-door price, including taxes and rebates. This way there will be fewer surprises on the final bill. Make a point to let them know that you are talking to other dealers. Jot down the dealers quote in the spreadsheet (add the CarsDirect quote here as well). This process can take some time because you may not be able to reach them in the first attempt and there might be some back and forth while they get back to you with details. I recommend setting aside 2 slots of 2 hrs each for these phone calls.
  5. Decide and Buy: Once you have all competing quotes, you can make your decision. The final decision will probably depend not just on the price, but other factors such as availability, location of the dealership, your experience with the dealership etc. If you finance your car, most car companies typically have their own financing arm which usually provides great APRs. If not, talk to your bank. For the final paperwork, you should make a visit to the dealership. Be sure to read the fine print and know exactly what service (if any) the dealer will provide above and beyond the warranty and services provided by the manufacturer.

That’s pretty much it! I read a lot of horror stories online about swindling and cheating in dealerships. My personal experience with at least the Toyota dealers in the Bay Area was pretty good. Most of them were very straightforward and to the point. They did not want to waste their time or mine, and did not try to pressurize or hoodwink me into a bad deal. You might also find this guide useful.


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