What to look for when buying a car: Your new car checklist

Knowing how to shop for a new car is especially helpful in a market where prices are increasing. The average new car price was $49,740 in December 2024 — an all-time high, according to data from KBB. Before you start shopping, have a list on what to look for during the test drive and how to make the most of price negotiations. These can help you get a vehicle that suits your budget and lifestyle.

Before heading to the lot: Researching

Much of the work of buying a new car takes place before you even set foot in a dealership. Here’s where to start.

• Set your sights. Decide what vehicle you want, including what features are essential versus simply being nice to have. It’s also important to decide whether you want a new, used or certified pre-owned (CPO) vehicle.
• Check sale prices. Understand market pricing and set expectations for how much you are willing to spend. Kelley Blue Book and Edmunds are good resources for researching current vehicle pricing before arriving at the lot.
• Check your credit score. As with most big purchases, your credit score is a vital factor in your auto loan interest rate. Try improving it before going to the dealership.
• Investigate financing options. There are two primary options for car financing: direct lending and dealership financing. There are pros and cons to both, so explore the financing available to you before making a decision.
• Do the math. The cost of owning a vehicle costs far more than just the sticker price. Be prepared to cover maintenance, gas, insurance, registration, taxes and fees when setting your budget.
• Get quotes from multiple dealers. Shopping around is a crucial part of the purchasing process. Don’t buy a car from the first dealer you visit. Take the time to comparison shop and obtain price quotes from multiple dealers, which can help identify the most competitive offers.
• Apply for preapproval. Compare auto loan interest rates with at least three lenders, then apply for preapproval with your top picks. Loan preapproval gives you the negotiating power of a cash buyer and is valid for 30 days.
• Organize your paperwork. Arrive at the dealership prepared with your driver’s license, payment method and proof of insurance. If you are financing through the dealership, you’ll also need proof of employment, income and residence.

To make sure you get the cheapest car loan, use an auto loan calculator to estimate both your monthly payment and your total cost in interest.

On the lot: Investigating

A test drive is one of the most important elements of your car purchase. Investigate all aspects of your car with your lifestyle and budget in mind.

• Examine the specifics. This will be your vehicle for quite some time. Make sure that it’s the right fit. Are the seats comfortable? Can you easily access the spare tire? Is the trunk large enough?
• Map out a test course. Test the car in the same environments where you will drive it. Drive on the freeway, in stop-and-go traffic, in parking lots and on hills. Ask the salesperson where to go if you don’t know the area well.
• Get behind the wheel. Take your time in the driver’s seat to test the brakes, park in tight spaces and check visibility. You’ll also want to monitor road noise and ride smoothness.
• Compare cars against your checklist. When you’re on the lot, ensure the vehicle aligns with those priorities so you get the best car for your needs and lifestyle.
• Leave your emotions at home. When you’re sitting in that new car on the lot, it’s easy to forget about your budget or must-haves and let emotions take over. If the car you love doesn’t meet your parameters, go home and think before making a decision.

On the lot: Deal-making

Once you have chosen your vehicle, prepare to ask plenty of questions and negotiate a good deal.

• Check for deals. Dealerships typically have special pricing depending on the time of the year or even the time of the week. Search for special pricing or rebates before meeting with a salesperson.
• Don’t talk trade-in. A salesperson will likely push for a trade-in. However, it’s best to negotiate your purchase price before talking about your old car. That way, the dealership won’t have a number in mind based on the value of your previous vehicle.
• Make a counteroffer. Use the number you found when researching market value as your guideline. The key is to push back enough to get the best price while not being so outrageous that the dealer won’t take you seriously.
• Confidently negotiate. Negotiation is one of the most dreaded aspects of car buying. But if you come prepared to negotiate, you may save money. Remember, don’t rush your negotiation and walk out if you’re unsatisfied with an offer.
• Read the fine print. Before signing, read your contract in full. Pay special attention to the money due upfront, including closing costs and unnecessary dealership fees. Many of these fees can be negotiated or waived by the dealer.
• Check the MSRP and out-the-door price: When negotiating a deal, know the difference between the manufacturer’s suggested retail price (MSRP) and the out-the-door-price. The MSRP is less than the out-the-door-price because it does not include other expenses like dealer service or handling fees, or processing fees. The out-the-door price is the vehicle’s final cost after any additional expenses have been added.

Bottom line

Whether you opt for new or used, buying a car will impact your budget for years. If you’re purchasing a used vehicle, be sure to get an inspection before you buy. Once you’ve checked the boxes on your car purchase checklist, start ownership on the right foot by learning how to manage your auto loan.