Key takeaways
- Buying a car online offers easy access to valuable information that can help ensure you get the best deal.
- After you set a car budget, it’s smart to secure auto loan preapproval before you start your search.
- Online resources can help you determine what car you want to purchase. However, be sure to test drive your potential car before purchasing it.
Buying a car online offers convenience and accessibility that buying at a dealership does not. You have easy access to an immense amount of information, like financing and trade-values, the manufacturer’s suggested retail price and more, to help with the online buying process. Learning the steps to buying a car online will help you be a more informed shopper and get the best deal.
1. Set your budget
Your first step should be determining how much you can afford to spend, including fuel, car insurance and your down payment. These all contribute to the purchase price and ongoing monthly cost associated with owning a car.
Your budget calculations should also take into account the interest you will pay since it is the biggest influence on your monthly payment and the overall cost. Buyers with higher credit scores will be offered more competitive interest rates than buyers with lower credit scores.
Bankrate tip
Experts advise making at least a 20 percent down payment and spending no more than 10 percent of your monthly household budget on all vehicle expenses, including maintenance and insurance.
2. Get preapproved for a loan
To get the best deal on a car loan, research your options and get preapproved by a lender before approaching any dealerships — online or in person. Banks, credit unions and online lenders offer preapproval periods that allow you to see your potential interest rate and monthly payment so you can shop smartly.
And when you have preapproval, you can use it as leverage when negotiating a deal. Dealer financing involves big markups, so getting a loan online first will help you get the best deal.
“When you’ve agreed on a price, show the dealer your financing and ask if they can beat that rate,” says Matt DeLorenzo, senior managing editor for Kelley Blue Book. “Sometimes dealers have little-known incentives attached to manufacturer-sponsored financing, which could save you money.”
Bankrate tip
By securing preapproval for a loan in advance, you’ll know your interest rate, which plays a significant role in how much your monthly payment will be and the total cost over the life of the loan. Be sure to keep your applications within 14 to 45 days, depending on the scoring model lenders use, to avoid the hits of multiple hard credit pulls.
3. Find the right car for you
Most people already use the internet to determine what type of car they want and find out as much as possible about the make, model and options. Websites offer expert reviews and articles on hundreds of vehicles, detailing the best vehicles for multiple lifestyles, says CarGurus Deputy Editor Matt Smith.
“And with YouTube, shoppers no longer need to walk the vehicle lot in order to get a good look at cars that interest them,” Smith says. You can do most of your shopping online to reduce time on the car lot. And in some cases, dealers offer entirely online buying processes, although you may not be able to negotiate the price.
Bankrate tip
Make a list of cars you’re interested in buying and do your research online. Use it to create questions for the dealer, whether you’re purchasing online or in person. This will help you narrow down your choice and determine which car is right for you.
4. Research the value of your trade
Knowing the value of your trade-in and being open to other ways of liquidating your used car can provide more money toward the new car’s purchase price. You can always trade in your car at the dealership, but you should know how much it will sell for before accepting a deal.
Most people search Kelley Blue Book or Edmunds to determine the value of their used cars. In addition, car shopping and research websites like CarGurus use algorithms to determine a car’s expected trade-in value of a car based on characteristics such as its age, mileage, location and features.
There are three common ways to sell your used car — and you can do them online, too.
- Trade in your used vehicle at a dealership, even if you don’t have plans on buying from it. You can also get an offer for your trade-in using the Instant Cash Offer tool on AutoTrader.com, a site for buying and selling new and used cars at participating local dealers.
- Sell it yourself privately for cash. Search your make and model online for price and availability on private-party sale sites such as eBay and Craigslist.
- Sell to a used-car dealer such as CarMax or Carvana. Ask for its guaranteed cash price and compare it with what you’ve found online.
Bankrate tip
Don’t just go for the convenience factor and trade in your used car at the dealership where you’ll most likely get the lowest amount for it. Get quotes and use them as negotiation leverage.
5. Check local inventory
When there is a limited supply of the car you want on dealer lots, there is less of a chance you’ll get a great deal, so be sure to check what local dealerships have in stock. Call a variety of dealers to inquire about the availability of the car you have in mind.
But beyond dealerships that may allow you to submit an online application, look for private sales. Multiple sites, like eBay Motors, Facebook Marketplace and Craigslist, help buyers and sellers connect. You may be able to find a good deal by skipping the dealer entirely.
You may also want to consider shopping with mixed in-person and online dealers like TrueCar. This way, you can easily browse the inventory at both the local and national levels to keep your search broad, especially if you want to buy a specific used model.
It can still be a good idea to go see a vehicle in person before signing a sales contract. You can call the dealership and ask a salesperson to take pictures of the vehicle for you, but you should always go for a test drive and mechanic inspection before buying.
Bankrate tip
Look for vehicles with both the VIN (vehicle identification number) in the listing and pictures of the actual vehicle being sold rather than stock photos.
6. Contact local dealerships for price quotes
Once your online research is complete, contact dealerships for online price quotes. Many dealerships now have departments dedicated to online sales, and whether you email the online sales department or fill out a contact form on the dealer’s website, you should reach someone who has the authority to quote you a price.
With more quotes in hand, you will have more leverage when it comes to negotiating. However, remember that most dealerships will be hesitant to offer the best price unless they are sure you will be making a purchase.
Bankrate tip
Be as specific as possible with make, model and options, and ask several dealerships for their best offers. Compare them with your researched price ranges and one another to determine which is best.
7. Evaluate trade-in value and financing
Once you’ve agreed on a price with a few dealerships, negotiate the trade-in value and financing. Simply ask the dealer for the best offer for your trade.
You can also mention AutoTrader.com’s trade-in value at participating dealerships. Once you receive quotes for your trade, compare them and choose if you’ll accept a dealer’s trade-in offer, sell privately or accept an offer from a used-car dealer, such as CarMax.
Don’t forget to ask about rebates and financing incentives. Manufacturers are bringing back incentives in a big way — spending on incentives hit the highest level since October 2021 in June, according to KBB. If you have a preapproval from your lender, you can , mention it — it’s like being a cash buyer. Ask if the dealer can offer you a better rate.
Bankrate tip
If you qualify for 0 percent financing, evaluate any other rebates or incentives before accepting the deal. Although it may seem like a better offer on the surface, but you may pay less in interest with a third-party lender that charges fewer fees.
8. Negotiate online
If none of the initial price quotes you receive fall within your range between the fair market value and the invoice price, you can use those two numbers to again ask dealers for their best prices.
“It’s best to ask first what’s the dealer’s best offer. You don’t have to share any details of other offers or negotiations that you’re in with another dealer unless it’s to your advantage,” DeLorenzo says. “Use those figures to ask if the dealer can beat the other deals. If not, remember you are in control and can take your business elsewhere.”
Be sure any price quotes are itemized in an email, and remember to ask if any extra fees are withheld or included. Items such as “customer service fees,” options and add-ons — which are negotiable and can be removed — can tack thousands onto your overall price.
If one dealer gives you a price you like, you can email the quote to another dealer to get competing bids, especially if you know exactly what each price quote includes.
Bankrate tip
Never quote your monthly payment budget to a car salesperson. That allows the dealer to pack whatever they can into your quoted payment while still meeting your budget. Focus on the overall cost and use it to negotiate.
9. Sign and drive
By now, you should be working with a dealership that has the car you want and has offered you the best deal. At this stage, you may still have to visit the dealership to finalize the sale, sign any required financing paperwork and pick up your keys and vehicle. But many dealerships are also now delivering cars and paperwork right to your driveway, allowing this final step to be completed at your home.
No matter which approach you take, look over the final contract carefully. Check all of the numbers and ask for explanations of any additional charges or fees that look questionable. Schedule an appointment with a mechanic to check the car over, even if it’s new — and don’t finalize any paperwork until you are sure your financing and vehicle are what you want.
Bankrate tip
The finance and insurance managers may try to sell you add-ons, but be resolute in saying “no.” Only add something to your car loan if there is no better way to get the service or option.
The bottom line
Buying a car online — or doing most of the legwork online before visiting a dealer — can save you time and money. Check up on current rates, view local and national inventory, compare current vehicle prices and prepare yourself for negotiation. Using the abundance of information available on the internet to your advantage can eliminate much of the stress of getting a new car.
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