How to Buy a New Car Online

Whether you’re learning how to buy your first car or looking for your next new vehicle, online car buying resembles traditional car buying in some ways but varies in others. Here are the common steps required to buy a car online. 

1. Review your budget

Your monthly car payment is one of several car-related expenses you should budget for. Additional expenses include: 

• Interest payments
• Insurance
• Registration
• Taxes 
• Titling fees
• Fuel
• Maintenance 
• Parking

Some funds represent annual expenses, while others occur monthly. Ideally, you want to have enough funds in your monthly budget to cover your car expenses comfortably and put away some savings. Building up equity in your car and your emergency savings simultaneously can even help you pay off your car faster near the end of your financed terms. 

2. Request and review your credit report

You are entitled to one free annual credit report from each credit bureau (Equifax, TransUnion, and Experian). Take advantage of this free report to review your credit history and contest any errors. Resolving credit report errors can take several months, so a proactive approach is always best. Checking your credit score can also help you understand what kind of interest rate you can qualify for under present circumstances. 

3. Research cars online

If you’re looking for the most significant research component of your car buying journey, this is it. Buying a car online allows you to research cars nationwide, but the real work often begins before you peruse any dealership websites. First, you should narrow your choices to a particular make and model that fits your lifestyle. You might consider researching: 

• Fuel efficiency with FuelEconomy.gov
• Repair costs and intervals with RepairPal
• Safety ratings with the National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute of Highway Safety (IIHS)
• Expert reviews from Edmunds, Consumer Reports, and Kelley Blue Book 

You may have to pay a delivery fee depending on where and how you buy your new car. Dealerships charge a handling fee of a few hundred dollars up to $1,000 or more, which closely matches delivery fees in most cases. However, you may be able to negotiate including the delivery charge in your out-the-door cost. 

How to value your trade-in 

If you have a trade-in you want to include as part of the deal, this is an excellent time to research how much you can get for it and who will offer you the most. It doesn’t always work in your favor (though it is convenient) to trade your old car in at the car dealer where you buy your new car. Indeed, it’s often better to work your trade-in deal separately and then approach the purchase of your new car with that cash in hand. You can use it as a down payment to reduce your financed amount or as a negotiating tool to get a lower interest rate or better terms. 

4. Create a shortlist of contenders

Through your research, you should identify a handful of makes and models that check off more than a few boxes on your needs and wants lists. Add these to your shortlist to research those models on dealership websites. Then, it’s time to look closely at each candidate. Ask yourself: 

• How much will basic maintenance (i.e., oil change) cost? 
• What are common issues on this particular make/model/model year?
• Are there any open recalls? 
• What is the average resale value?

As you look at each car listing to find the specific models that fit your needs, go beyond asking yourself how many miles is a gallon of gas in this car to if you can see yourself driving this car daily. Review the available features and ensure you check the vehicle history report for any reported damage, title issues, or other red flags. 

5. Obtain financing

You can find financing options for an auto loan through banks, credit unions, dealerships, online lenders, local lenders, and more. You’ll find the best auto loan terms if your credit score is over 700, but lenders are still willing to work with you if your score is lower. Any offers you receive may just have higher interest rates or require a downpayment to offset any risk. 

How to get auto financing online

Many lenders offer online applications for preapproval, which can help you determine what loan terms you can qualify for. These applications may only take a few minutes but typically expire within 30 days. Remember this timeframe if you want a preapproved car loan to use while car shopping.

6. Begin negotiations 

Use your research to inform your negotiations, and don’t be afraid to walk away from a deal if it doesn’t feel right. Even a car that requires no down payment could spell trouble if the monthly payments are more than you can afford. While you want to minimize car depreciation, keep your eyes on the bigger picture of affording the car overall, not just month-to-month. If the company posts “no-haggle” prices, enter the car deal agreeable to those terms. 

How to negotiate a car price online

Many savvy car buyers stick to email to negotiate a car price online. Email allows you to ask for clarification, record the conversation for later reference, and reduce any pressure you might feel if you were dealing in person. You can also leverage email communication and respond according to a particular strategy to obtain better loan terms. 

7. Take delivery of your new car

Before you sign on the dotted line, ensure the contract before you matches the terms you discussed. Ask any questions if you’re unclear about something. It’s much easier to change terms in the contract before you sign it than after. Decide if you want to purchase any additional protection products the dealership or seller might offer, weighing the pros and cons equally.

The traditional car purchasing method hasn’t yet died, but many car buyers experience first-hand the benefits of completing their auto purchase online. Here’s how the two approaches stack up: 

• Inventory: When you search for available cars locally, you’re limited to how far you want to drive. With virtual car sales, you can visit another state without leaving the comfort of your own home. A broader selection also means more options to choose from. 
• Negotiations: If you prefer face-to-face negotiations, the traditional method works best. However, online car buying may best appeal to those who dislike haggling.
• Commitment: Online car buying allows you to dictate how much time and energy you commit. The traditional method requires more commitment, including time, energy, and fuel. 
• Financing: Many dealerships can be enigmatic about interest rates, discounts, and loan terms. Buyers often find that online car deals outline terms clearly and concisely. 
• Delivery: It’s common to take delivery of your new car locally by visiting the dealership, but some marketplaces offer home delivery services when you buy online. 
• Paperwork signing: Following the pattern, traditional car purchasing methods require you to visit the dealer to sign the official paperwork. You can take care of this step virtually when buying a car online.

If you’re looking for Black Friday car deals, you may have the most success finding them online. The best car dealerships understand the potential business buyers from far and wide can offer, so they may be willing to undercut competitors with lower delivery fees, delayed payments, or better terms overall. Buyers may even qualify for holiday bonuses reserved for those with higher credit scores. 

Completing the purchase of your new car online offers several benefits, including the following: 

• Increased inventory: Not only does buying a car online unlock a wider selection, but it also allows you to look beyond local car dealerships to see who else may offer a great deal. With any buying decision, the more options you have, the better deal you’ll likely make. 
• Bypass negotiations: For some car buyers, the negotiation process is more nerve-wracking than any other step. With online car buying, you don’t have to worry about negotiating a price or discussing terms endlessly. 
• Simplification: When you buy a car online, you don’t have to spend time and gas money to visit multiple dealerships and compile data. You can also save energy by researching cars at your leisure, putting you in the driver’s seat of the entire process. 
• Convenience of comparison shopping: Screenshotting a car listing and working out the financials takes less effort and time when you can easily reference those numbers. Having those details in front of you can also help you understand and enforce terms when making a deal.

Although it may seem that buying a car online excludes local dealerships, most, if not all, also have an online presence. Should you select a local dealer from which to purchase your new car, you can easily continue the conversation in person at any point. You’re not required to spend hours walking the lot, cooling your heels in waiting room chairs, or discussing add-ons with the F&I manager. 

Buying a car nearly 100% virtually does have certain drawbacks to consider. Keep the following in mind if you want to buy your new car online: 

• Limited or no haggling: Many online dealers or marketplaces offer no-haggle pricing and require you to pay the amount listed. Unless you contact customer support and inquire about negotiating a car’s purchase price, there’s no option to have any back-and-forth. 
• Lack of in-person verification: What lies on the other side of the screen may not match what you experience in person. When it comes to car buying especially, your eyes are often the last defense against anything the camera overlooks. For now, there’s no virtual replacement for a test drive either. 
• Fraud potential: Buying anything online carries an inherent fraud risk because there’s nothing proving that particular item exists physically. Successful internet scams have also duped many victims based on sophisticated measures that belie a legitimate operation. 
• Information inaccuracy: Similar to the lack of opportunity to verify in person how a car looks, sounds, and drives, virtual car buyers may also experience a lack of accurate information. The listed mileage could vary significantly from reality, the VIN could include a transposed number, and a bevy of other errors could complicate the car buying process.

The best way to approach a car purchase often blends virtual and in-person techniques. Savvy car buyers understand that while the internet holds vast information to help inform a purchase decision, the physical experience matters most. While you may have negotiated via email a deal that fits your parameters, it’s possible that sitting down with a salesman could have afforded you better terms based on subtle cues that inform social interactions. 

You can buy a car online from practically any local dealership or independent auto seller. Online marketplaces also offer vehicles for sale or connect you with a dealership, including Carvana and Autotrader. Even private party cars for sale can be found on sites like Facebook Marketplace. 

After you buy a car online, you must complete titling and registration as you would for any car purchase. Depending on the distance between you and the car’s current location, you may need to wait for delivery. Your auto loan terms will also dictate how payments are handled, including the name of your lender and the corresponding loan terms.