Woman considering buying a car while salesman leans in the window.

Things to consider when buying a car

Trade-ins, payments, purchase price and down payments: These essential elements of how to buy a car can help you find the right one for your needs and wants.

There are a lot of factors to consider when buying a car, from monthly payment to loan rate and trade-in value.  Also, you'll typically need to prove that you have insurance before you can drive it home and it's relatively easy to obtain proof of insurance and to add or replace a vehicle on your existing insurance policy. Here are some car buying tips to help you be more successful in the car buying process.

Don't discuss a monthly payment

It's a common scenario: A car buyer looks to buy a new car from a dealership and tells the sales representative that he or she has a certain amount — say, $300 or $400 — budgeted for a monthly payment. At this point, the salesperson knows that he or she may be able to sell a new or used vehicle to the customer for almost any purchase price, as long as the monthly loan payment falls within the budget. While it definitely makes sense to have an affordable monthly payment amount in mind, don't share it until after you've negotiated the purchase price, which is what you're actually paying for the vehicle. You may be able to lower your payment by stretching out the life of the loan, but make that decision once you've already agreed on the purchase price of the vehicle.


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Be a better negotiator

Ask several dealers for their best "out-the-door" price, including sales tax and any additional fees or discounts. Then use the lowest number as leverage with other dealers by asking them to beat the total. This takes time, but it gives you a measure of control over the negotiations and may help you lower your purchase price.

Increase your down payment

Once you've settled on a final purchase price, you can lower your monthly payments by putting more money down. A larger down payment (typically 20 percent or more of the purchase price) may also help you lower your interest rate and could prevent a scenario where you owe substantially more for your vehicle than it is worth.

Get more for your trade-in

How does trading in a car work, generally? You negotiate the purchase price, then the dealer tells you what he or she will give you for the trade-in. However, you can flip that setup: Don't even mention that you have a trade-in as you begin discussions. Instead, solidify your vehicle purchase price. Then negotiate the trade-in separately from the vehicle purchase. Otherwise, dealers can simply lower their trade-in offer anytime they take money off the sticker price. Start the trade-in process by consulting vehicle price guides and use several resources to get a firm quote. Start the trade-in process by consulting vehicle price guides such as NADA and Kelley Blue Book and consult several resources to get a firm quote.

Prior to visiting a dealership

Make a list of items that are a necessity such as size and safety features and those that are wants. It is important to know your budget — this includes ongoing costs such as maintenance, gas and insurance, how you plan to pay for a vehicle and obtain a preapproved loan. If a new car does not fit in your budget, consider buying a used car to save money. Do your research to understand which brands and models get better reviews and are less likely to be costly to maintain if repair issues arise.

The information in this article was obtained from various sources not associated with State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates). While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. State Farm makes no guarantees of results from use of this information.

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