How To Buy A Car? New Or Used?

Are you tired of public transport and frustrated with the exorbitant prices of cabs? If your answer is yes, then you probably are also thinking of buying a car. Furthermore, how to buy a car.

Buying a car is a decision that involves a lot of different factors. Hence, buying a car isn’t as easy as buying a phone or television. Furthermore, you need to make a lot of well-planned decisions while purchasing a vehicle.

A lot of planning is needed whether you buy a brand new car or a used one. Moreover, understanding these choices you have to make will help you make the best decision.

This article will break down how to buy a car and the steps required to buying a new one.

Choose The Car You Want To Buy

The first step to buying a car is choosing the kind of car you want to buy. So, knowing your needs will help you out immensely. There are a wide variety of cars available for different types of needs.

Types Of Cars

Do you want to buy a car for daily commuting? Or perhaps you want a car for traveling or moving heavy goods? There is a type of car for each of these needs. Let’s look at some of the most popular ones.

  • Sedans – These are your standard four-door cars with a trunk. They provide good mileage and come in compact, medium, and large sizes. Furthermore, they can accommodate five people and are perfect for city commuting.
  • Hatchback – These are compact sedans with a flip-up hatch door at the rear for the cargo area in place of the usual trunk.
  • SUV – These are heavy-duty vehicles. Furthermore, they are perfect for shifting heavy cargo and can accommodate up to 8 people.
  • Minivans – These are the perfect mix of family-friendly and cargo-friendly. They can accommodate a large number of people and have moveable seats to increase cargo space.

Choosing a car which is best for you is essential. So, you should first evaluate your needs before buying a car.

Fuel Type 

Another essential aspect of buying a car is choosing the fuel type. In America, you can either buy a gasoline car or a diesel car. Each has its merits and flaws. 

Petrol cars are significantly cheaper than diesel cars. This is usually because petrol engines are cheaper to produce when compared to diesel engines. They also provide a higher amount of power.

Diesel cars, on the other hand, are more expensive but highly efficient. A study proved that diesel cars are 29% more efficient on a highway. They also use about 15-20% lesser fuel than gas cars thus, reducing CO2 emissions. Diesel engines are also more durable and last longer.

Petrol prices per gallon are also similar to that of diesel. Diesel prices might fall or rise, but they have never risen significantly above gas prices. The only disadvantage of a diesel car is its initial price which is significantly higher than gas cars.

You should choose wisely depending on your budget and your needs.

Set A Budget

Buying a car is much more than taking a suitcase full of cash and buying the car you want. In most situations, you will need to take a loan to buy a car. Thus, setting a budget is the perfect way to plan your financing.

Based on your needs, evaluate what type of car you want to go for. Brands might differ in price, features, and service. Hence, make the choice you think is perfect for you.

Apart from the monthly installments and interest, you have also to consider insurance costs, fuel costs, parking, and maintenance costs. These costs can be divided into the cost to buy and the cost to own.

All of these factors need to be taken into consideration before you finalize your purchase.

Getting A Loan

This is probably the most crucial part of buying a new car. Furthermore, making sure your loan is reasonable and affordable to your current pay is extremely important.

There are many factors to consider before getting a loan. Let’s discuss these.

Use our Car Loan Calculator.

Where Can You Get A Loan?

There are many different financial institutions from where you can shop for a loan. Each comes with different terms and different requirements.

  • National Banks – These large banks give loans based on your credit history. National banks usually have a high-interest rate, and you end up paying a relatively large amount at the end of your term.
  • Credit Unions – A credit union is member-owned as opposed to being shareholder-owned. A credit union is perfect for you if you want a less complicated loan process and lower interest rates. Moreover, they can help you secure a loan on a bad credit score.
  • Finance Companies – A Finance company is similar to a bank, except they only lend money. Some finance companies also help specialize a loan for you if you have a bad credit history.

Choosing The Duration Of Your Loan

Before taking a loan, you must consider the duration of it. Moreover, this duration tells you how much interest you will be paying. Most consumer advocates say that you should take a loan of no more than five years. But why is that?

Some financial institutions offer loans of up to 7 or 8 years. This helps them shell out more money by the end of your term. Furthermore, it ensures you’ll keep pay installments even when your car requires costlier maintenance and repairs.

A short-term loan makes sure you pay a lesser amount in interest, and the total cost of buying your new car doesn’t get too expensive.

Importance Of Down Payment

A down payment of any amount is an excellent way to manage the financing of your car. The down payment essentially means you will pay a certain amount of the car’s cost initially and the rest via a loan.

Paying a certain amount of the car’s price reduces the amount of loan you have to take. Thus, your monthly installments become low.

 The amount of interest you pay also lessens as your monthly installments are low. Hence, the total interest you pay can be significantly lower.

Most consumer analysts and financial advisors recommend that you make a down payment of 20% of the car’s price. This might help lower your term or the amount of your loan.


Insurance is a vital aspect of buying a car. Without insurance, you cannot finance your vehicle. Moreover, you need to have a minimum amount of insurance, as decided by the state, before purchasing your car.

There are three types of insurance coverages –

  • Liability Coverage – This coverage is mandatory for buying a car. It covers the damage you are legally liable to pay in case you hit someone with your car. Each state has a minimum amount of liability coverage you must pay. If the damages cost more than your insurance, you have to pay the remaining amount.
  • Collision Coverage – This means that in case your car gets damaged in an accident or collision, your coverage will pay for the repairs. Collision coverage is expensive but essential when you buy a new car.
  • Comprehensive Coverage – This kind of coverage will get your car repaired if it gets damaged in a situation other than a collision. Thus, this coverage is helpful in cases like weather calamities.


Before registering your car at the DMV, you must get it inspected for its safety and emissions. Moreover, without these, your vehicle might be unsafe for you and the environment.

Safety inspections make sure all the safety features of your car are in working order. The brakes, tail lights, tires, seat belts, and turn signals need to be in functional conditions to pass this test.

After passing the test, you will get a sticker, or your report will electronically be sent to the state.

Emission inspection measures how many pollutants your car emits. If this level is over the state-decided limit, your vehicle will fail the inspection.

Almost all new cars pass these inspections. But in case it’s a used car, it might fail some of these inspections. Hence, you should look into a lot of factors before buying a used car.

How To Buy A Used Car

If you don’t want to spend a lot of money on a brand-new car, a used car might be the best option. These cars are cheap and get the job done. Usually, you should have a used car dealer in your area who can help you out.

Here are a few factors to look for while buying a used car.

  • Mileage – the mileage determines how much the car has run. Lesser the miles on the car, the better. An average of 12000 miles a year should be considered normal. Anything more means that the engine and other essential parts have worn out.
  • Inspections – These will make sure the used car you’ve chosen is safe. You will get information on the seat belts, brakes, engine, gears, transmission, suspension, etc. This will also help you evaluate the price of the car.

Vehicle History Report

The vehicle history report helps you know if the car was involved in an accident before. Furthermore, it can make sure the car you’re buying wasn’t salvaged or completely totaled.

To get the vehicle history report, you will need the car’s VIN. These can be on the dashboard, engine, trunk, or passenger door.

Test Drive

Test drives are critical when it comes to used cars. You understand how well the vehicle drives from its test drive. You should take a thorough test drive and not just drive the car around the block.

A Test drive will make sure the car meets your needs. Furthermore, it’ll make sure you are comfortable in the car and find it easy to operate. Some old used cars are fairly hard to use by today’s standards.


The way to finance a used car is the same as financing a new car. With used cars, your loans are of lower amounts and smaller terms. Thus, you end up paying lower monthly installments and lesser interest overall.

A long-term loan for a used car is not a good option. Used cars require maintenance and repairs reasonably soon. A longer-term means you’ll be paying installments and bearing the maintenance costs. Thus, it would be best if you always opted for a short-term loan.  

Financing your used car can prove to be an excellent and safe financial decision.


Most used car stores or independent sellers take care of the paperwork for you. If you buy a used car from a private party seller, you will have to work out the paperwork among yourselves. This includes the titles, registration changes, and other DMV paperwork.

If you are buying the car from a dealer, make sure the paperwork is correct and complete. Do not sign any paperwork that is incomplete and incorrect. Furthermore, when it comes to financing, ensure that the paperwork is accurate and completed from your dealer’s side.

Incomplete and incorrect paperwork puts you at risk of being scammed. The most common scams are pressuring you into a financial deal you don’t want or need. 

It is vital to keep your paperwork in order, whether it’s a brand-new car or a used car.

Final Thoughts

Buying a car is a big decision. It’s not a walk in the park and needs financial planning and wise choices. Always buy the car you need and not the car you want. You need to research well on the type of car and fuel that would be best for you.

Make sure you carefully read all the paperwork when it comes to loan, purchase, and registration documents.

A lot of people get scammed or cheated while purchasing a car. Dealers and sellers often exploit the customer’s lack of research. Hence, you should do the necessary due diligence before finalizing your purchase.

So, what are you waiting for? Start doing your research and looking at the various car options you have today!

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