Auto Loans
How Does LendingTree Get Paid?

How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appears on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

8 Questions to Ask When Buying a New Car

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, commissioned or otherwise endorsed by any of our network partners.

Buying a new car can be intimidating, but arming yourself with some knowledge before you set foot onto a car lot could go a long way in saving you time and money. After all, car dealerships aren’t known for transparency. Here’s what you need to know before you head out to buy a new car, as well as eight questions to ask when buying a new car.

Before you shop for a new car at a dealership
8 questions to ask when buying a new car

Before you shop for a new car at a dealership

Before you head into the dealership to shop for a new car, it’s important to have a handful of decisions made to cut down the time you spend walking the blacktop or waiting for a salesperson. You should know what you want regarding the following:

1. budget: Setting a budget is a crucial factor to consider when buying a car. Start by figuring out how much car you can afford, and use one of our auto loan calculators to see what your payment might be. Don’t forget to include insurance, gas and maintenance considerations in your budget as well as these things can add up.

2. car type:Have an idea of the type of car you are interested in and pick out a few from a dealer’s website that you’d like to see in person. Crossovers and SUVs are some of the most popular types of vehicle on the market because they provide room for people and cargo. Sedans offer better fuel efficiency, and ease of parking and maneuvering in tight city streets and parking lots. Check out our guide on how to choose the right type of car for you.

3. buying vs. leasing Buying is almost always the better financial choice for most consumers in the long term, but the convenience of leasing, along with the alluring promise of a low payment on a new car, could make you consider it a great way to get into a new car. Here’s how to decide whether to buy or lease a new car.

4. financing:Getting your financing lined up before heading to the dealership is always a good idea. Have a plan to pay for the car; whether you have the cash or need a loan, it’s crucial to stay within your budget. Dealerships that arrange consumer financing for auto loans can often increase consumers’ APR, so it’s essential to attain an auto loan preapproval and ask the dealer to beat the rate you got.

5.  trade-in: If you currently have a car that you plan to get rid of when purchasing your new vehicle, you’ll need to decide what to do with it. You could sell it yourself, trade it in or pass it along to another family member. If you decide to sell the vehicle yourself, we have a guide on selling a car on Craigslist and tips and tricks on trading in your vehicle.

8 questions to ask when buying a new car

There are eight essential questions to ask when buying a new car. Your salesperson should be able to answer all of these as you go through the car-buying process. If they can’t, a manager should be able to help. Google is a great backup, too, but if the dealer isn’t able (or willing) to answer many questions, you may want to find another dealer to work with.

Do you have the car I want?

Dealerships often have limited stock that can change by the hour as people purchase or lease vehicles. Before you settle into a relationship with a salesperson and head out on a test drive, make sure that the dealership has the vehicles that you are interested in. Whether you need a full size, 4×4 SUV or a gas-sipping sedan with all the latest technology, confirm that the vehicles you picked on the dealer’s website are available in your price range.

What are the warranty details?

Finding out what the new car warranty covers and its duration are important steps in the car-buying journey. Most brands offer a three-year, 36,000-mile basic warranty, which offers the classic “bumper-to-bumper” coverage, and a five-year, 60,000-mile powertrain warranty, which covers the engine, transmission and drive axle. Both begin when the first owner buys the car. Warranty coverage can vary by manufacturer and even by model, which is why it’s important to ask the salesperson to explain the warranty coverage to you.

Lifetime warranty

A “lifetime warranty” offered by the dealership can be a gimmick to get customers in the door, and it’s generally a waste of money. These types of lifetime warranties are designed so very few people will be able to make claims on them, as they only cover the parts that are least likely to break, and set strict maintenance and record requirements.

Once you establish what kind of warranties your new car comes with, ask about authorized repair facilities close to your house. Many warranties require that repairs are done only at dealerships or mechanic shops that they partner with. Repairs done by non-approved facilities may not be covered. If the closest repair facility is the dealership you just drove two hours to reach, that may play into your choice of vehicle.

Extended warranty

Know that the dealership will most likely try to sell you an extended warranty, which are also called vehicle service contracts (VSC). Purchasing one is not a small thing. Prices on VSCs can range from $1,400 to $5,000, depending on the type of car. It is usually a better idea to not buy one and instead, keep a healthy rainy-day fund. But if your risk appetite is different, check out our extended warranty guide.

What is the ‘out-the-door’ price?

The “out-the-door price” on a car is the total cost of the vehicle including all the fees and additional charges you need to pay to legally own the car. The out-the-door price includes dealership fees and the TT&L, which is taxes, title and license fees. This number gives you an accurate idea of what the car actually costs, versus what the window sticker says. It does not include any financing costs — what you would pay in interest or fees to the lender for the loan.

What are the additional fees?

Ask what the additional fees are on any car deal. New cars usually have a delivery fee or destination charge around $1,000 that may not be included in the manufacturer’s suggested retail price (MSRP). Dealers also charge document fees, which can vary wildly, from $200 to $1,200 depending on the state and the dealership. Here are the dealer fees to watch out for.

Can I see the buyer’s order?

Dealerships must legally tell you everything you’re paying for, and how much it is, on a form called the buyer’s order or the purchase order. Ask to see the buyer’s order after you negotiate the price of the car. This way, you’ll be able to see the car’s price and all taxes and fees set out in writing.

What rebates or incentives are available?

Automakers and dealerships often use new car rebates and incentives as a way to sell vehicles. These can vary from 0% APR financing deals to rebates worth thousands off the car’s price, to a year of free oil changes. The deals available usually change monthly and the best ones may only apply to very specific vehicles of a certain year, model, trim and package. Ask the salesperson when you’re buying a new car what rebates are available on the type of car you want.

Can you hold the car while I make a choice?

If you’re undecided on whether to buy a vehicle, or you want some breathing room before commiting to the large purchase, ask the dealership to hold the vehicle while you take a lunch or even sleep on it. A dealership may say “yes and take the vehicle with you.” If a dealer asks for a good-faith deposit or to furnish your planned down payment now, make sure it is refundable and get everything in writing. Whether a dealer reserves a car or not, it doesn’t hurt to ask, and it’s important to be sure that the vehicle is right for you.

Can you beat my preapproved auto loan rate?

As we mentioned earlier, it’s essential to get a preapproved auto loan before going to a dealer. Dealerships have a network of competing lenders that often allow dealers to raise customers’ APRs so that dealers may increase their own profits. When you apply for financing through a dealership, the dealer shows you the financing offer that is best for them, not the one that is best for you.

However, you could turn the dealer’s network to your advantage. Lenders on the dealer’s network know that they are competing for business. Ask the dealership to beat your preapproved loan rate and see if you can get a lower APR. To get the best auto loan rate, it’s important to both get an auto loan preapproval and ask the dealer to beat it. You may miss out on a lower APR if you don’t let the dealer run your credit application.

Here are some of the best auto loan rates in 2020 from financial institutions that are not captive to car manufacturers.


Compare Auto Loan Offers