The phrase itself—“car-buying process”—can make the idea of buying a car seem like climbing a mountain. Don’t worry: Follow these steps and cut the mountain down to size.
You've found your dream car. You can see yourself behind the wheel. You're almost ready to make the purchase. Now is exactly the right time to take a step back and consider the big picture—so before you sign on the dotted line, make sure you’re following these important steps in the car buying process:
1. Consider your budget
How much are you comfortable paying each month? Can you afford a down payment? These are important questions to answer before buying a car. And as you’re working on your budget, don’t forget maintenance, insurance, gas and repair costs—all part of the true cost of owning a car.
As you’re working on your budget, remember that you may be required to put down a certain percentage in order to secure financing, and that paying more up front means you'll pay less interest in the long run. Using an online calculator, such as the Bank of America car payment calculator, can help you estimate how much you can afford.
2. Review your credit report
Your credit history is one of the most important factors that lenders consider. The better your credit score, the better interest rate you’re likely to get. Before you move ahead with the car buying process, review your credit report to make sure the information in it is correct so you can get the best possible loan rate. Visit annualcreditreport.com for a free credit report
3. Get approved in advance
The process of buying a car can go more smoothly if you research your financing options before arriving at the dealership. Knowing your approved interest rate can be useful as you negotiate your deal—and if you’re a Bank of America Preferred Rewards or Banking Rewards for Wealth Management customer, you may qualify for an interest rate discount of up to 0.50%. Learn more about Preferred Rewards
4. Know the value of your trade-in
If your current car is clean and in working order, it may have value that you can put toward the purchase of a new vehicle. Resources like Kelley Blue Book and the National Automobile Dealers Association can help you determine your current vehicle’s worth before you start your negotiations.
5. Shop around
Knowledge is power when it comes to negotiating a deal, so consult a variety of websites and visit multiple dealers to learn what you should expect to pay for the car you want. The Bank of America dealer network may also serve as a valuable resource.
6. Choose the right loan
The terms of your loan—the interest rate and how long you take to pay off the loan—have an effect on what you'll ultimately pay for the car. (For more information about this, see our article about how car loans work.) Make sure that the terms of your car loan comfortably fit your specific budget.
7. Close with confidence
You’ll enjoy taking your new wheels on the road when you know you've done your homework about the car buying process and chosen both your car and your deal wisely.
Have fun traveling—and drive safely!