How to Be a Smart Car Shopper

What to know before looking for a next vehicle

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Sarah Elizabeth Adler,

AARP

En español

Published February 22, 2019

Looking for a new set of wheels? Whether you want to buy or lease, splurge on luxury features or simply make the best deal, the right preparation can make car shopping a whole lot easier. Here’s what to keep in mind before your first test drive.

The money

You wouldn’t buy a house without a budget, so why buy a car without a financial plan? First, decide how much you’re willing to spend.

Estimates vary, but most experts say to put no more than 20 percent of your take-home pay (or 10 percent of your pretax dollars) toward car-related expenses, including your monthly payment and insurance.

Then, think about whether leasing or buying is right for you. Depending on factors like how many miles you drive, how often you’d like to upgrade your vehicle, and whether you qualify for certain types of financing, either one could be the right fit. In general, buying outright will mean you pay less over the long run. But beware dealer-advertised financing offers, like loans with zero percent interest: Typically, only buyers with excellent credit scores will qualify.

In fact, if you know you’ll be applying for a loan, it’s a good idea to get approved by your bank or lender before visiting the dealership. Preapproval will not only give you a better sense of your budget and monthly payment amount, but can also put you in a better position to negotiate.

On the other hand, leasing lets you drive a better car than you might otherwise be able to afford — and this option seems to be becoming more popular. According to the car research and shopping site Edmunds.com, leases made up a nearly a third of new-car transactions in the first half of 2018, up from 25.7 percent in 2013. But there are some downsides, like limits on how many miles you can drive and the possibility of higher insurance premiums.

The method

Buyers aren't just starting to lease more often, they're also moving the shopping process out of the car lot and onto the computer screen. According to a 2018 study from Cox Automotive, the firm that oversees auto resource and buying sites Autotrader.com and Kelley Blue Book (KBB.com), half of buyers don’t even contact a dealership prior to their first visit — instead, the majority start out on third-party websites. And while most buyers will eventually end up at the dealership for a test drive, online buying, whether through a third-party or dealership website, can help you avoid the stress of aggressive sales tactics.

couple sitting in a convertible at car dealership

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Yet the in-person approach offers something websites don’t: the chance to see models with your own eyes. That’s where auto shows may also come in. According to Consumer Reports, car shows are a “secret weapon” for buyers, offering the chance to compare offerings from multiple manufacturers in person and in one place.

(The only method worth avoiding? The scam kind. Beware of phony dealership websites and fraudulent listings on auction sites and social media.)

Whether your process is in person, online or a bit of both, be prepared to negotiate on the final cost. Get acquainted with the manufacturer’s suggested retail price, or MSRP, of the vehicle you want, and don’t be afraid to break things down at the dealership. Getting individual aspects of your overall cost adjusted, like down payment or lease term, can help you score a better deal than negotiating your monthly payment alone.

Speaking of getting good deals: When you go to the dealership can make a big difference in what you eventually pay. Typically, consumers get the best car deals during holiday sales (like Memorial Day or Fourth of July), at the end of the month when dealerships want to make their quotas, and at year's end when they want to clear their lots of excess cars.

The mileage ... and more

Don’t forget the specs. From basics like fuel economy and horsepower to extras like high-tech safety features and voice control, it pays to get specific about exactly what you’re looking for.

To start, rank which features are your must-haves — all-wheel drive? Bluetooth connectivity? — versus which are nice, but you can live without. If you’re stuck between two models, comparison tools on websites like Cars.com and Edmunds can help.

And watch out for the one-car-fits-all approach: Increasingly, bells and whistles come bundled in automaker packages, so few buyers are able to pick and choose exactly which combination of extras, like seat warmers or a sunroof, they’d like.

According to Autotrader, these packages are “essentially unavoidable” in the market today, but the silver lining is an added boost to your car’s eventual resale value.

Buying used? If you’ve decided on a used or certified preowned vehicle, you’ll also need to take things like mileage and vehicle history into account. Sites like titlecheck.us and usacarrecord.com are approved by the National Motor Vehicle Title Information System to help consumers verify damage history and other important information. Consult them early on to minimize hassle and avoid getting stuck with a lemon.

Sarah Elizabeth Adler joined aarp.org as a writer in 2018. Her pieces on science, art and culture have appeared in The Atlantic, where she was previously an editorial fellow, California magazine and elsewhere.

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