Car Buying Guide

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Steps 4-6 of the new and used car buying guide. The BIG money steps to buying a car that can save you thousands in minutes!

4. Budget & Shop Cars Online

It's very important to figure a budget prior to getting to the dealership. Not only do you want to figure one, but you'll want to stick to it once at the dealership.

I mean that! If $300 a month is all you can afford, then don't settle for anything more...No matter how much you like the car. Once the excitement wears off and you are struggling to make $400 a month payments, I promise you won't like the car near as much.

I've seen more than one customer take on way more payment than they could afford and it usually doesn't end well for their credit.

Use this car payment calculator to get a feel for what type of payments you can expect for the car you want. Don't forget to add for taxes, warranty, GAP insurance, etc. in your estimated amount financed.

If you have excellent credit, figure between 4%-7% for your rate, for above average credit figure 7%-9%, for average credit figure 9-14% and for below average credit, then use a rate between 15% and 24%.

FYI - I would highly recommend you not take a payment larger than 10-12% of your gross monthly income. Remember, you will be making these payments for the next 5, 6 or possibly 7 years and $600 a month payments with a $2000 a month income will get old real fast!

Ready, Set, Shop!

Competition is key to getting large discounts fast with little to no haggling and the Internet has made it easier than ever to save hundreds, more likely thousands of dollars before you even leave your house.

Shopping online is crucial to saving BIG money and there are two sites that I highly recommend you take a look at. First off, you can get Free Price Quotes at

Not only are they free, but you'll get up to 4 competing quotes by filling out 1 simple request. The dealers know they are competing and you'll see that with just a few clicks of your mouse you can knock thousands of dollars off MSRP.

If you really want to avoid a car salesman altogether, then you'll love CarsDirect and their new car buying service. You'll eliminate the salesman, see MSRP, Invoice and the CarsDirect guaranteed lowest price. It doesn't get much easier than that!

5. Your Cars Trade In Value

Don't forget about your trade ins value, this fifth step of the car buying guide is often overlooked and can cost you thousands!

You can get a great price on the car you're planning to buy and possibly even buy it a $1 over invoice, but still let the dealership profit thousands of dollars more than they could have, because they "low balled" you on your trade.

Low balling is a term used to describe a dealership showing you $7,000 for your $10,000 car. Instant $3,000 profit to them if you've got no clue what your trade in is worth.

Two of the largest sites for figuring used car values are Kelley Blue Book (western states) and NADA (most others).

Take a look at whichever one is used most in your area to get a feel for your trades value. Keep in mind that these are simply guides and their used car values are not set in stone, but they'll give you a good starting point.

FYI - If you are using Kelley Blue Book, I'd suggest that you take the average of the trade in value and private party value to figure what you'll want for your car on trade. You may not get it, but if you can get close, then you've done good!

6. Dealers New & Used Car Cost

The sixth step of the car buying guide is a fun one. Figuring out how much the dealer owns their cars for...

New cars are much easier to figure and finding the invoice is simple. Use either one of the car buying websites mentioned above, or CarsDirect, and you'll quickly find MSRP, invoice and be able to get competing quotes.

Figuring a used cars cost is quite a bit different. The easiest way to do this, but not necessarily the most accurate way, is to get the trade in values from either Kelley Blue Book and/or NADA.

Take those trade in values and figure about $400 - $800 (reconditioning cost) on top of those figures to get a rough estimate of what a dealer owns a used car for.

To really master this, I'd suggest you take a look at my dealers used car cost page, because there are quite a few factors that can affect the cost.


Gas 'er Up and Let's Head to the Dealership!

Let's move on to steps 7-10 of the car buying guide where you'll learn the basics of inspecting a used car, how to negotiate like a pro, scams to watch for and one of my top car buying tips that will virtually guarantee you get a great deal and avoid buyers remorse.

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