10 Steps to Finding the Right Car for You

Step 1: What kind of car do you need?

If you examine your needs rather than wants, you will quickly discover what the right car is for you. Take a moment to think about what you use your car for. How many people do you need to transport? What type of driving do you do most often? How long is your commute? Is it important that your next vehicle get good gas mileage?

In too many cases people choose a car for its styling or because it is a trendy favorite. If you do, you might either exceed your budget or have to go car shopping again soon. Let your needs, not your wants, drive your decision. Here are a few other questions to keep in mind when you begin your car-buying process:

• Do you want a manual or automatic transmission?
• Do you really need four-wheel drive? Or all-wheel drive?
• What safety features do you want?
• Do you require a lot of cargo capacity?
• Will you be doing any towing?
• Do you have a bad back and need flexible seating positions?
• Will the car easily fit in your garage or parking space?

Step 2: How much can you afford?

Regardless of whether you decide to buy or lease your next car, establishing a realistic monthly payment that fits into your budget is crucial. How much should this be? A rule of thumb is your total monthly car payments shouldn't exceed 20 percent of your monthly take-home pay.

Step 3: Should you lease or buy your next car?

A lease requires little or no money up front and offers lower monthly payments. But when the lease ends, you are left without a car and will need to replace it. Buying a car is more expensive initially and the monthly payments are higher. But at the end of the loan, you will own a car you can still drive or sell.

Advantages of Leasing

• You can drive a more expensive car for less money.
• You can drive a new car every few years.
• There are no trade-in hassles at the end of the lease.

Advantages of Buying

• When interest rates are low, it makes more financial sense to own a car rather than lease it.
• There are no unexpected mileage penalties for increased driving.
• There's more flexibility — you can sell the car whenever you want.

Step 4: Have you considered all vehicles in that class?

In today's crowded automotive marketplace, many consumers have difficulty keeping up with all of the vehicles available.

Step 5: Have you considered all of the costs of ownership?

Here is an often-overlooked fact of car ownership: One car might be cheaper to buy, but more expensive to own. Why? Even if two cars cost about the same to buy, one can depreciate at a different rate or cost significantly more to insure or maintain.

Before you commit to one car, you should estimate the long-term ownership costs of the vehicle you are considering. These include depreciation, insurance, maintenance and fuel costs.

Step 6: Research options.

In the past, car buyers have been trained to visit local dealerships to find the car they want. In the Internet age, this is a waste of time and money. You can quickly cover more ground by shopping online. Car dealers are waking up to this new breed of shopper and have created Internet departments within their dealerships to serve the educated buyer. The only things you have to do in person are test-drive the car and sign the contract. And in some cases, you can even have the car delivered to you by the salesperson.

Step 7: Schedule an appointment for a test-drive.

It's a good idea to make your initial contact with a dealership by phone or e-mail before going there in person. This can give you a sense of the sales style you will be dealing with throughout the buying process. If you deal with a normal car salesperson, he or she will try to start the negotiations at a high price with the expectation of being negotiated down.

Step 8: How to test-drive a car

The test-drive should replicate the conditions the car will be used in after you buy it. If you commute, drive the car in both stop-and-go traffic and at freeway speeds. If you frequently drive into the mountains, try to find some steep grades to climb. Drive over bumps, take tight corners and test the brakes in a safe location. Get in and out of the car several times and be sure to sit in the backseat, especially if you plan on carrying passengers. In short, ask yourself if you can live with this car for a number of years.

While you are evaluating the car, don't be distracted by the salesperson's pitch. Don't drive with the radio on — evaluate that separately. A new car is a big investment; make sure you spend enough time really looking it over. Then consider one last thing: your intuition. If you are uneasy about the car, follow your instincts. A vehicle purchase decision is too important (and expensive) to undertake without total confidence.

Step 9: After the test-drive

After the test-drive, you should leave the car lot. Why? You will probably need to drive other types of cars at other dealerships. It's a good idea to do your entire test-driving in one morning or afternoon. Driving the cars back-to-back will help you uncover differences that will lead to an educated purchase decision.

So, how do you get out of the clutches of the salesperson? Besides, you can say you still have other cars to drive and you can't make a decision yet. Most good salespeople will respect that. If they don't, you won't want to deal with them anyway.

Step 10: Getting ready for the buying cycle

At this point you should have considered all the cars in the class that interest you. You should have a good idea what you can afford. You should know if you want to buy or lease your next car. You should have test-driven your top choices.

Now it's time to narrow your choices down to one car and make a deal.