For most people, buying a car is a major investment requiring thought, research, planning and finances. With the multitude of make, model and options available today, this major purchase is enough to make your head spin. And that’s before you’ve even waded through the wide array of financing arrangements. To be sure you make the smartest choice, you’ll need to do some homework. Here are some helpful tips to guide you through the process of buying a car.

Selecting a Car

Evaluate your needs and preferences to determine your current car style. If you know the answers to these questions, you may help yourself determine which car fits you best.

• What are the primary and secondary uses of the car? This may help you determine the best size, gas mileage, and durability for your needs.
• Who will be in the car most of the time? This will determine how much interior space you need.
• How often will the car be used? The more time you spend in your car, the more important comfort is likely to be. Considering frequency of use can also help determine engine needs.

Budgetary Issues

New or used, bought or leased – you need to know all the costs involved in getting your next car. If you’re not sure how much you can afford, talk to a financial advisor or get pre-approval on a car loan from a bank. Professional financial advice will help you know ahead of time how much you can really afford.

Once you set your price range, stick to it. If you’re buying new, don’t be tempted by unnecessary extras that will run up the price of the car, and be cautious about purchasing extended warranties. If you can’t afford everything you want in a car, prioritize the features on your list. Don’t forget that owning a car costs more than the monthly payments. Gas, maintenance, taxes and insurance should all be figured into the cost of car ownership.

Negotiate a Deal

The difference between the dealer’s invoice (estimates are available from automotive magazines, websites, and auto pricing services) and the price listed on the sticker is your bargaining range. The more information you have on exactly what the dealer pays for the standard package and for each option, the stronger your negotiating position. It also helps to know whether the manufacturer is offering any cash rebate offers or factory-to-dealer incentives (which give the dealer more latitude in pricing).

The popularity and availability of a particular car can also play a role in your negotiation with a dealer. And keep in mind that the time of year you shop may make a difference in the final price you pay. The end of the model year (September and October) favors consumers because that’s when dealers are reducing inventory to make room for next year’s models. Late December, when more folks are worried about holiday shopping than car shopping, is another good time.

Leasing a Car

When you lease a car, you make monthly payments in exchange for using the vehicle for a set period of time. Generally, at the end of the contract period, which is usually two or three years, you can simply turn in the car and walk away. Since you don’t own it, you get no trade-in or resale value. If you need to end the lease early, you may face steep charges. Likewise, you may be charged for excessive mileage or excessive wear and tear. Most leases include an option to buy at the end of the lease for a predetermined price. Generally, however, you may pay more than if you purchased the car in the first place.

On the positive side, a down payment may not be required, and monthly lease payments are generally lower than monthly payments when you purchase a car. Be sure you understand the terms of the contract and review it carefully before signing.

Buying Used

Buying used is very similar to buying new: You need to assess your needs, estimate what you can spend and do your homework.

You have one additional variable to consider when buying a used car: wear and tear. However, assessing a used car is better left to the professionals. If you think you’ve found a good option, have your mechanic check it out before you buy. A qualified mechanic can tell if the car is in good condition and worth the price, or if it’s maybe just a good wax job. To figure out the going price for a used car model, consult one of the used car price guides available, such as the Kelley Blue Book, which lists estimated values for used cars based on what car dealers are paying for various makes and models. Keep in mind that price guides aren’t the final word on a car’s fair value and that factors such as mileage can change a car’s value considerably.

Whatever your final decision may be, make it with confidence and make sure it’s the best car for you (and your family).