How to buy a car online – Forbes Advisor

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The Covid-19 pandemic has changed the way people shop, moving transactions like groceries, daily purchases, and cars from person-to-person to online. In fact, in 2020, nearly 30% of car sales were made online, compared to only 2% before Covid. However, this doesn’t make the buying process any less risky, so having a plan to help you shop successfully online is crucial.

Follow these four steps to buy a car online.

1. Set a budget

Buying a car is a big investment, so setting a budget ahead of time and determining how much car you can afford is crucial. Without a budget, you risk spending beyond your means and ending up with a car payment you can’t afford.

There are a number of ways you can set your car budget, depending on whether you:

  • Own a car. If you are already paying for a car, new or used, use it as a starting point. Decide whether you want to keep the payments at the same rate or a lower rate, or whether you can accept a larger payment, based on your current financial situation. You can also check the value of your current car online to see if it would make more sense to sell it privately or trade it in to help lower the payment for a new car.
  • Does not own a car. Factor in your monthly income, your current payment obligations (rent, mortgage, credit card bills, etc.), and your daily expenses like groceries to see how much extra money you have each month.

Apart from purchasing the car itself, it is essential to also take into account ongoing costs, such as gasoline, maintenance and insurance. All of these are factored into the total cost of the vehicle.

Related: Auto loan calculator

2. Do your homework

Once you’ve set a budget, look for cars you can afford and that meet your needs. For example, if you’re commuting, look for low-mileage cars that get high miles per gallon (MPG); if you have a large family, consider vehicles that are suitable for everyone, such as a pickup truck or an SUV.

Once you have a few vehicles in mind, compare them side by side. Some manufacturers’ websites have in-line spec breakdowns, making it easy to see how they stack up against each other.

Doing your homework gives you a clear idea of ​​what type of car is right for you. This helps you avoid paying more than you can afford or buying the wrong car.

3. Get pre-approved for a car loan

The in-person car buying process can be overwhelming – you’ll need to find the car you want, spend time negotiating the price, and then discuss financing options. All of this can take hours or days. However, you can speed up the process if you get pre-approved for a loan and buy a car online.

When you get pre-approved for a car, a lender reviews your credit report, which usually requires a thorough credit check that temporarily changes your credit score, in order to determine the loan amount and the interest rate you are on. likely to receive. This will give you an idea of ​​your down payment and monthly obligation.

Once you’ve received a pre-approval letter, you can leverage it by seeing if other dealers can beat the rate you’re likely to qualify for. If other dealers can’t beat it, you know you have the best rate for your specific situation.

4. Find your car online

You can search online inventory for nearby dealerships or use sites like Vroom, Shift, or Carvana. Online-only dealerships are a little different from traditional lots, but have a few things in common:

  • They all offer a fixed price, so there’s no haggling.
  • They each offer their own financing, but you can always get it elsewhere, such as from your bank.
  • They usually have a seven day trial window. If you don’t like it, you can return it.
  • Only used cars from other independent sellers are listed.

Carvana and Shift have prequalification options that let you see if you qualify for a loan and what the rate would be without affecting your credit score. You can compare them to your current pre-approval to see which one has the best deal.

You might find the same car on a few sites, so check the price and all the other features that set it apart.

Buying a car online vs. In person

Buying a car online is not for everyone. Compare buying a car online and in person at a dealership to help you determine which one is best for you.

Buying a car online can be a good idea if you:

  • Know what you want. If you have specific needs, like a wheelchair accessible van or all-terrain truck, you might find it online faster. Along with that, if you find a model online available from a nearby dealership with the same specifications, you can use it in your negotiations.
  • I don’t want to test cars. The test drive is one of the most important factors in buying a car. A lot of people have tested whatever car they want, only to come out and think it isn’t the right one. If you’ve watched enough videos online and read enough reviews, you might not need to take a test drive. Since online dealerships usually have seven-day warranties, you can test drive the car for a week to see if it’s the right one.
  • You want a used car. Unless you’re buying a Tesla (where all new cars are sold online), using an online-only dealership means you’re buying a used car. All cars are subject to rigorous inspections and company safety standards. For example, Vroom and Carvana only sell cars that have accident-free CARFAX reports.

Buying a car in person from a dealership can be a good idea if you:

  • You want a new car. Online dealers only sell used cars, with the exception of Tesla. If you want a new car and not a Tesla, find your nearest dealer.
  • Just navigate. If you are just looking for a car in passing, maybe something for the distant future, you can go to a dealership to see what you like.
  • Prefer in-person research. No one can tell you what a car looks like until you get in it. Some will say the inside is cream while others say it is white. You might not know how to assess the size of vehicles without seeing what they look like in front of you. If so, avoid shopping online and go to a local dealership.

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