Car Buying Checklist: 6 Steps to Take Before Buying a Car

It’s easy to get caught up in the excitement of shopping for a new vehicle, but it’s a big investment. According to Cox Automotive's analysis of Auto Available Inventory data, the mean advertised price for a pre-owned vehicle in December 2023 stood at $26,446 while the average transaction price for a new vehicle was $48,759.

So what are the steps to buying a car and being smart about it? We’ll help you get everything in order with our car-buying checklist before you take that test drive.

Steps to buying a car

Before you scan car-buying websites or visit your local dealerships, it’s important to plan how to buy a car. Feeling confident about what you need and how much you can afford will help keep your search on track.

Know how much you can comfortably afford

Review your budget and figure out if you can pick up a monthly payment on a new vehicle. You’ll also need to understand how a car loan works. Need help? Try our online calculators to estimate how much car you can afford. It's smart to stick to the lower end of what fits comfortably into your budget to avoid problems making your loan payments over time.

Calculate the other costs of owning a vehicle

When you’re looking at your car buying budget, don’t forget you’ll be spending more than just the monthly loan payment. Get estimates for insurance and try to find out the maintenance costs of your vehicle. Don't forget to figure in the cost of your vehicle's registration and any recurring other state and local fees.

Determine what you really need

While your dream car may be a fire engine red convertible, it may not be practical. Ask yourself what the car will be used for most. Commuting through heavy traffic to the city? Driving four kids to activities? Hauling lumber? Avoid buyer’s remorse and make sure you’re buying a vehicle for the way you actually live.

Consider fuel efficiency

Fuel efficiency can also have a huge impact on your budget. Larger, heavier vehicles use more fuel, so pay attention to significant differences in fuel efficiency among different brands and models. When shopping for a new car, check the Environmental Protection Agency (EPA) MPG rating on the sticker. Although these stats are usually a bit higher than your actual gas mileage, the info can help you compare the fuel efficiency of cars you're thinking about buying.

Choosing a hybrid or flex vehicle can lower your fuel costs significantly but will require charging. You may need to charge the vehicle at public stations, which can cost money, or install a charger in your home which can increase your electricity bill.

Check your credit

If you plan to take out a loan to help pay for your new car or truck, be sure to know your credit history and score as some lenders may base the interest rate they offer you on this information. No two loan providers are alike, and lenders like OneMain look beyond your credit score to get a full view of your financial standing. It is still good practice to understand your score and the factors that may be affecting it. Check for any errors on your credit report that could have a negative effect on your ability to borrow at a lower rate. If you find errors, contact the credit bureaus (Equifax®, Experian® and TransUnion®) to correct them before applying for a loan.

Do your research

An informed buyer is more likely to get a better deal. Before you visit dealerships, find out what the dealer probably paid for the vehicle by researching the invoice price. The sticker price on most vehicles can include thousands of dollars of dealer profit. You can also check the manufacturer's website to find out about any available rebates or other incentives.

You can check the values of pre-owned vehicles online as well, whether you’re purchasing from a dealer or a private individual. Vehicle pricing websites like Kelly Blue Book, Edmunds and Autotrader allow you to input the vehicle’s make, model, year, mileage and condition to obtain an estimate of its market value.

Get in the driver’s seat

Ready to take the next step? Get an online quote from several dealers in your area so you can compare prices and feel comfortable negotiating. If you’re taking out a car or truck loan, get quotes from multiple lenders so you can compare those numbers with the dealer’s financing. (Remember, longer-term loans may lower your monthly payment, but you'll end up paying more for your vehicle in the long run.) Now you’re ready to put your “buying a new car checklist” to work — gather all the documents needed to buy a car and buckle up for your test drive!

This article has been updated from a previous posting in 2021.