The Typical Car Buying Process in the USA in 8 Steps
Americans have different tastes and different needs when it comes to cars. Some want sleek sports cars, others want budget-friendly pre-owned sedans, others need large family SUVs, and so on. The one thing that unites them all, however, is the similar process of buying the car in the first place. That’s what we’re covering in today’s blog.
In any given transaction in which a new car is bought, the process can be condensed into 8 simple steps:
The first stage of the process has to be to research any and all car models that you are interested in. At first, you should cast a wide net and look at as many brands and styles of car as possible. Many buyers surprise themselves by discovering suitable vehicles in the selections of brands they may otherwise never have considered before.
After casting your initial net quite widely, narrow your search down to a shortlist of only a handful of vehicles, perhaps 3 at the most. It is quite common for people to prioritize car features over pure aesthetic or brand recognition. The ideal approach is to reflect on how a car’s features benefit your particular lifestyle. For example, if you have long commutes and high annual mileage, then fuel efficiency is most important. If you have a big family, lots of kids’ bags, sports gear and other everyday luggage, then cargo space matters, and so on.
2. Budgeting and Financing
When you have a firm idea of what brand and model you are looking for, the next thing people typically do is to plan their budget. Since they are most likely to purchase the car on finance or a leasing agreement, then the buyer works out how much they can realistically afford each month.
The typical approach is to use the 20-4-10 rule where you buy the car that allows you to:
- Put down 20 percent as a down payment
- Finance the car for 4 years (or less)
- Pay no more than 10 percent of your gross income on monthly payments, including the car insurance
While some opt to take their chances with the dealership for a finance deals, others first get a car loan pre-approved by a bank or credit union. In this way, they can put in place a ceiling on the budget that helps them negotiate without straying beyond the borders of affordability. You should also research and get quotes for insurance policies on your shortlisted cars that you could take up when the time comes and you make your choice.
3. Finding a Dealership and Test Driving
In the first step you probably already connected the car you like with a local or nearby dealership. If not, you can do so at this point. Before talking turkey with any dealership, you should arrange with them to test drive the vehicle you want. With your budget in place, you can request the exact trim level you want.
Your test drive of the cars you like should be as thorough as possible. Taking the car for a quick jaunt around the block doesn’t show you enough of what the car can do or what it would feel like driving the car in your regular daily life. Here are some tips on getting the most out of your test drive:
Before You Drive
- Sit in the driver’s seat, front passenger seat and rear seats to get a real feel of the leg room, shoulder room and head room.
- Look around to spy all of the cargo and storage spaces that are in the vehicle
- Get in and out of the car to make sure it’s easy and that you won’t bang your head
- Set your optimum driver’s seat position and check out the visibility
- Explore the controls – are they easy to reach/access, can you easily make adjustments to climate, infotainment, etc.
As You Drive
- Accelerate the car and observe how it feels during gear shifting
- Drive the car at different speeds and observe engine noise and ride comfort
- Test the brakes at different speeds
- Does the suspension offer a comfortable feel on the rough road?
The salesperson accompanying you will undoubtedly continue their pitch. Try to make their words more useful for you by asking them questions about features that are important to you and about any problems you think you detect.
Next comes the negotiation. One thing you can do is to double check what’s being billed in the car’s final price and look for things that could be removed, such as the advertising fee or the so-called “dealership preparation charge.” This can bring the price down more than you imagine.
It’s important during negotiation that you don’t yet mention that you have a trade-in vehicle. You can just flat-out rule it out when you’re first talking numbers with the dealership. The end of the negotiation process should be a final number that takes into account all factors except for your trade-in (if you have one).
5. Factor-in the Trade-In (at this stage, you haven’t told them)
If you have a trade-in vehicle, you can contact the dealership once the main agreement has been reached and then get a price on that. The reason for this is that you’re likely to get a better deal on the trade-in when it’s done as a separate deal rather than as part of your original negotiation. You can just explain that circumstances have changed or that you have changed your mind and decided you don’t want the old car.
6. Read, Sign and Close
At this point, our typical car buyer has negotiated a price, and a rate for the trade-in, and all things are down in writing and confirmed. All that is needed is the signature. The smart typical buyer will take the paperwork and read over it first, and sleep on it before finally pulling the trigger. They then sign the documents and confirm their purchase, closing the deal and securing a new car.
7. Secure Insurance, Registration, Etc.
The car will take a short period of time to be delivered to the dealership, so take the chance to secure the insurance quote that you obtained earlier and get the policy ready for when your car arrives at the dealership. The dealership should handle most or all registration steps, but just be ready to carry out any additional steps just in case.
8. Pick Up and Drive Off
The final step is to collect the car and drive it off. The key to getting to this stage in the most satisfactory way is being as thorough as possible in your preparation, and as rigorous as you can in negotiation. Remember that car dealerships operate in a cut-throat environment. There’s always another dealership, so they are willing to talk more. Don’t let yourself get intimidated.
Conclusion: CarBevy is Making the Typical Car Buying Process Easier
Among the above steps, perhaps the one that people dread the most is negotiation. If you’re in southern California and you’re looking for a great deal on a car, you can cut out the awkwardness and worry of the negotiation by using our unique system that puts your price to the dealers in advance. If they accept, then that’s one giant leap for car-buying kind. To learn more, get in touch with us today.