How to Buy a New Car: A Step-by-Step Checklist

1. Decide How Much Car You Can Afford

To choose an affordable car, aim to keep total monthly transportation costs (including car payment, insurance, fuel and maintenance) below 10% to 15% of your monthly take-home pay. Since insurance premiums can vary widely, consider getting insurance quotes for different models before you shop.

If you're financing your new car, your down payment (including any trade-in value) impacts how much you need to borrow. Putting down at least 20% helps ensure you won't end up owing more than your car is worth. You can use Experian's auto loan calculator to see how different down payments and loan amounts affect your monthly car payment.

2. Get Your Credit Ready to Buy a Car

A good credit score can help you qualify for the best auto loan terms and lowest interest rates, which can make a big difference in the total interest you'll pay. According to Experian's third quarter (Q3) 2025 State of the Automotive Finance Market report, borrowers in the lowest credit score range paid an average 15.85% interest on a new car loan; those in the highest range paid an average interest rate of just 4.88%.

Check your credit report and credit score before shopping for a new car to see how your credit measures up and identify areas for improvement. You can get your credit ready to buy a car by bringing past-due accounts current, paying bills on time and paying down credit card balances to lower your credit utilization ratio.

Learn more: What Is a Good Credit Score for an Auto Loan?

3. Shop for the Vehicle Make and Model You Want

Research car makes and models online using dealer, manufacturer and automotive websites. Manufacturer sites generally let you "build your own" vehicle by choosing the trim lines and features you want to get an idea of the sticker price. You can then compare this to offers from local dealers to find the best price. In addition to sticker price and other costs of ownership, consider safety ratings, fuel economy and reliability.

Tip: If the car you want is too expensive, consider a used model. Cars less than five years old have many of the same features as new ones, but may cost significantly less.

4. Get Preapproved for an Auto Loan

Auto loan preapproval happens when a lender makes a conditional offer to finance your car. After submitting personal and financial information and undergoing a credit check, you'll find out the loan size, interest rate and term you may qualify for.

While preapproval doesn't guarantee final approval, it gives you more negotiating power at the dealership. The dealer knows how much you're likely to qualify for and can try to beat the loan offers you've received.

You can get preapproved for a car loan through a bank, credit union or online lender. It's a good idea to get preapproved by several lenders so you can compare offers. Limiting all your auto loan applications to a 14-day span helps minimize any negative impact hard inquiries may have on your credit score.

When comparing loans, consider the annual percentage rate (APR), which includes both interest rate and any fees, and the loan term. Although a longer loan term can reduce your monthly payment, it increases the total interest you'll pay and thus to the total cost of the car. Loans with shorter terms usually have lower interest rates and cost less in interest overall.

Learn more: Should You Apply for a Car Loan Before Going to the Dealership?

5. Ask About Dealer Financing

Dealers can often arrange financing, either by submitting your loan application to third-party lenders or through the manufacturer's financing company. Manufacturer financing is usually where you'll find special offers such as rebates, incentives or 0% APR financing.

Compare these dealer-arranged offers to your loan preapprovals, weighing APR, loan term and any special conditions required to get a promotional APR. Keep in mind that qualifying for a 0% APR car loan typically requires a reliable income, an excellent credit score and a low debt-to-income ratio.

Tip: Auto dealers often focus on the monthly payment, but this can make it hard to compare loan offers. Ask them to explain the total cost of the loan instead.

Learn more: How Does Financing a Car Work?

6. Negotiate the Price

To negotiate the price of a new car, research auto dealerships in your area to see how much the car you want is selling for. You can either ask the dealer to beat the lowest price you find or reduce the average price by 10% to 20% and offer that amount.

Also consider the out-the-door price, or the total cost of the car with your down payment, trade-in, taxes, fees and extras added in. This can be significantly more than the manufacturer's suggested retail price (MSRP). States typically charge sales tax when you buy a car, and there are usually title, license and registration fees as well. Dealerships may also charge fees, such as destination or documentation fees.

In addition to unavoidable fees, dealers may try to sell you extras, such as extended warranties, rust-proofing, gap insurance or credit insurance policies. They often roll the add-ons into your loan amount, increasing the cost of the extras and the total interest you'll pay. Such add-ons typically aren't necessary and can be purchased later from the dealer or third parties if you decide you want them.

Tip: If negotiating makes you anxious, consider shopping for a car online. Online auto prices usually aren't negotiable, eliminating the stress of haggling over price.

Learn more: Hidden Costs of Getting an Auto Loan

7. Close the Deal

To close on your auto loan, you'll review and sign the loan contract. Before signing, make sure all documents are completely filled out and match what you've agreed to, including APR, loan term, fees and any add-ons. Ask questions about anything you don't understand. If you're financing the vehicle through a third-party lender, contact the lender and give them the relevant information about the car.

You'll need your driver's license and proof of auto insurance before you can drive your new car off the lot. If you don't already have a policy, start shopping for car insurance when you begin shopping for a vehicle.

Once the car is yours, set a reminder of your loan payment due date or put it on your calendar. Consider scheduling automatic payments so you don't miss a due date. Making timely payments on your auto loan can help improve your credit score.

Tip: If you're trading in a vehicle, be sure to bring the title, registration, keys and remotes, maintenance records and owner's manual.

Learn more: First-Time Car Buyer Guide

Frequently Asked Questions

Buy a New Car With Confidence

Buying a new car may feel intimidating, especially if you've never done it before. Being prepared by doing your research, readying your down payment and understanding your financing options can help you negotiate for the car you want at an affordable price.

To increase your chances of qualifying for favorable auto loan rates, make sure your credit is in good shape. Experian Boost^®ø could help. This free feature adds your eligible on-time payments for utilities, phone, rent, insurance and certain streaming services to your Experian credit report, which could quickly improve your credit score.