New Car Buying Guide

Generally, car Shopping is consistently rated as one of the worst shopping experiences.

If you want to buy a new car, you can get the best deal in town or get ripped off.

And, if this is the first time you’re buying a car, you have a lot to learn.

Buying a new car should be a pleasant experience and not one that gives you a sorry feeling afterward.

So, here, we’ve compiled the ultimate new car buying guide to help you make the best decision including your car insurance options.

The Basics of New Car Buying

Before you buy a new car, there are certain things you must be conscious about. Ask yourself questions regarding:

  • The law
  • If you can drive
  • Your type of car
  • What you need the car for
  • If you can afford the carHow you will finance the purchase

Answering these questions will both give you a hint at what to expect in car ownership and what the law says.

Here’s Something You Should Know About Buying a New Car

It’s against the law in the US. to purchase a new car anywhere other than through a licensed, franchised car dealership. This includes buying new cars from the manufacturer.

So, since you cannot bypass car dealers when buying a new car, you can go through them, and this guide will show you how.

1] What’s Your Budget?

How much you’re planning to spend, and how much can you afford?

This is the question that you must ask yourself before anything else.

Today, the average cost of a new car is about $30,000 before you factor in fees, taxes, insurance, and other expenses. Is your budget over this, and can you afford it?

If you can afford the new car in cash, you’re better off. If you can’t afford it, you might opt for a loan or financing.

Dealers love the financing options, and it is a territory you need to carefully navigate, or you may drown.

If you opt for a car loan, here’s what you need to know:

  • The down payment is often at least 20% of the car’s purchase price.
  • Limit the car loans to 48 months or less to save yourself from paying more interest.
  • Monthly car loan payments should not be more than 15% of your take-home pay (after taxes).

Take your time to see if these conditions are fine with you. If they aren’t, consider buying a lower-priced car.
You can consider used cars or first save for a few months to get a larger down payment.

The secret is to be safe rather than sorry about buying your car.

2] Which Car Do You Want To Buy?

Armed with a budget, you can now start shopping for a car. The next question is the type of car you want. Do you want a salon car, SUV, or truck? Which model do you want?

Your goal is to get the best deal and save money when buying a new car.

Since you probably know the type of car you want, here’s what you don’t know:
“The price of a car doesn’t necessarily determine how much it costs.”

For example, an expensive car that depreciates slowly may end up costing less over the long term than a lower-priced car that loses its value quickly.

This means, when buying a car, you need to take a keen consideration of its depreciation because it makes up the bulk of the car’s cost. Luxury vehicles depreciate quickly, and you may not get much from them when you sell or trade-in.

So, if you want a luxury model car, it will make sense to buy a slightly used one, especially if you’re on a budget.

When buying a new car, you just need to be flexible with your vehicle choice to allow you to shop for the best deals you can access.

But, your choice should also be between performance, reliability, and everyday driving. Get a car that gives you a balance of the three.

3] Buying Options

Since the law doesn’t allow you to buy a car from the manufacturer, your only buying option is a dealership. But you can circumvent your ways and still get the price, cost, and even the color you want.

Your goal is to get a great deal – no matter where you buy the car from.

Your first action should be to locate the car you want to buy before making contact. Most car shoppers find it more difficult to locate the car with the exact options or colors they desire.

So, if you think you might have problems locating the car of your choice, you have two options:

  1. Place a special order of the car from the factory with your exact specifications.
  2. Expand your search to other dealers outside of your location (even hundreds of miles away).

But, locating your car is one thing and getting a great deal is a different thing.

If you find an exceptional deal away from your location, you can consider buying a one-way plane ticket to pick up your car and drive it back home.

While manufacturers have made it more pleasant and convenient to buy a new car, you’ll complete the transaction with a dealer. So, make sure you get a dealer that gives you the best deal on your new car.

4] Car Price and Fees

Don’t be like other clueless car buyers who are never sure about the car prices and potential fees.

When buying a new car, you should be familiar with three prices:

  1. MSRP (manufacturer’s suggested retail price) – never pay this price.
  2. Invoice Price (or wholesale price) – this is what the dealer “supposedly” paid for the car.
  3. Dealer Cost – this is “supposedly” the true price paid by the dealer.

Only clueless buyers pay the car’s MSRP. In many cases, you can negotiate the car to 5-15% below the MSRP.

Some dealers have discounts of up to 35%, but you also need to be careful about the fees after incentives.

The invoice price is never true because of the many hidden incentives that dealers get from the manufacturer whenever they sell a new car. Some of the dealers’ incentives include dealer holdback, credit vouchers, stair-step incentives, or dealer cashback programs provided by the.

Sometimes, a dealer’s true cost may be hundreds or thousands of dollars below the invoice price. Check out these prices and compare them with other dealers before making your decision.

5] Leftover Cars and Incentives

Manufacturers use car incentives to move slow-selling models. You need to check out if the model you want is among the cars the manufacturing has targeted for incentives, such as cashback.

Manufacturers also give car dealers incentives, usually in the form of hidden kickbacks and other credits. This is especially true on slow-moving cars and leftover models.

Since incentives are closely guarded secrets, you need to do intense research before buying a new car to know the kind of incentives available for your car model. If your car model comes with leftover incentives, it can be the best deal you get on a new car.

The problem with leftover cars is that you may not get your desired colors or options.


After considering these five important factors when buying a new car, you then need to consider your timing of buying, car insurance, and legal paperwork. The best time to buy your car is between December and January when nobody is buying cars while dealers are eager to meet end-year goals. This is also the time manufacturers give better incentives.