7 Steps to Buying a New Car Without Breaking the Bank

Buying a new car can be an exciting process, but it can also be daunting. To make sure you get the best deal and avoid unwanted upsells, follow these seven steps. First, get pre-approved for a loan before setting foot on a dealership lot. This will give you an idea of how much you can afford and help you stay within your budget.

A good rule of thumb is to spend no more than 20 percent of your monthly household income on a new car. This figure should include your monthly car loan payments and all other expenses, such as fuel, car insurance, maintenance, repairs, and registration fees. Just for the monthly payment, Edmunds suggests you shouldn't aim for more than 15 percent of your income.Next, start researching the vehicles that have caught your eye. Visit car manufacturers' websites and independent automotive information sites to evaluate features that are important to you.

Consider MSRPs (Manufacturer's Suggested Retail Prices) and Invoice Prices. Check the local inventory listings to see what's available in your area.Many car manufacturers offer discounts to students, members of the military, and even members of certain credit unions. These discounts can be cumulated and combined with any model cash back, which must be deducted after negotiating the price. Check the automaker's website for these incentives before entering.When it's time to sit down and talk about pricing, be prepared with the research you've done.

Check if other dealers offer better deals for your vehicle and look for a price match with your seller. If you want to change your current car, save that conversation for after negotiating the sale price of your new car. Having those conversations separately will help you get a better deal on your current car, and you'll do even better if you've researched the value of your current car online.Another strategy is to deposit a deposit on a specific vehicle that is in transit from the factory to a dealer. You can find this status attached to cars that are advertised on manufacturer and dealer websites.

Places like TrueCar, Edmunds and Car Gurus have become popular because of the real advantages they offer, such as a 7-day test drive and free delivery of up to 100 miles.Most new cars have a defense-to-defense warranty that covers at least three years and 36,000 miles, along with a powertrain warranty that typically lasts up to 60,000 miles. The powertrain warranty covers all parts that make the car drivable, such as the engine, transmission and suspension.When you're ready, follow these seven steps to make the most of the car-buying experience and get the vehicle of your dreams at a price that won't ruin you:

  • Get pre-approved for a loan before setting foot on a dealership lot.
  • Keep it simple at the dealership.
  • Don't buy any add-ons at the dealership.
  • Beware of six- or seven-year long-term auto loans.
  • Research vehicles that have caught your eye.
  • Look for discounts from car manufacturers.
  • Check other dealers for better deals.
Whether you're buying new or used, check Consumer Reports road tests and ratings, and look at reliability, owner satisfaction, and safety. I have a friend who says she makes sure she leaves at least one dealership every time she buys a car, so she knows the lowest price when she goes to the next dealership.If you have a car to trade in or sell before buying something new, you can leverage its value against the high price of new cars. Since buying a car without driving it first isn't something Shattuck recommends, she had to be creative.Many automotive sites and car buying apps have a car search tool to help you identify strong candidates, as well as detailed rankings and research guides.

The Bankrate calculator can help you estimate potential purchase or lease cost savings so you can make an informed decision.As Moles and many other buyers have learned, buying a new vehicle today requires ingenuity, patience and flexibility. Pat Ryan, founder and CEO of CoPilot, an app that uses pricing and other data to help consumers make informed car buying decisions, says that the additional fees charged by dealers in addition to the MSRP won't last forever and that things may even start to improve towards the end of the year.Buying a new car without having to go into debt or pay more than you need to is possible if you follow these seven steps. With some research and patience, you can get the vehicle of your dreams at an affordable price.