What Do I Need to Buy a Car?
Avoid hassle and show up prepared to close by having these four things on hand.
Getting the right deal on the right car can be a lot of work, with all the back-and-forth haggling, phone calls and emails, and multiple trips to the dealership.
(It doesn’t have to be that way, by the way. Here’s how we spare you hassle and save you time with our “one low price” promise.)
When you go to seal the deal on a new car, here are the things you’ll need to have on hand:
1. Your Driver’s License
Eager as dealers are to sell you a car, they won’t let you drive away without proper ID. You can actually buy a car with just legal documentation like a passport, but you’ll need to have a driver’s license in order to drive it off the lot.
2. Proof of Car Insurance
You also can’t zoom off the lot in a car that isn’t insured.
If your sights are set on a particular car, your best bet is calling your insurance provider ahead of time to set up a new policy for it. Your provider will send you a card to bring to the dealership.
If you’re stuck between sets of wheels, you may also be able to call your provider during operating hours once you make a decision at the dealership. Just tell them the new car’s vehicle identification number (VIN) and they’ll fax over the card, says Edmunds.
It gets a little trickier if you’re buying on the weekend, when not all insurers are open. If you’re replacing your old car, you can apply your current policy to the new car, if you owned the old one, you’re paying cash, and your policy gives you a 30-day window to report the purchase, says the National Association of Insurance Commissioners (NAIC) via AllState.
If you only had liability for the old car, you won’t have certain coverages (collision, comprehensive) for the new one, the NAIC says. Add them as soon as you can.
3. Your Title, Registration, and Account Number for Your Trade-In
The dealership will need proof that you own your old car. If you still owe money on your trade-in, find the loan’s account number on a paystub or call the lender for directions on how to transfer the loan, advises Edmunds.
4. Your Payment
Unless you’re paying for your car in cash, you have two options: Finance the purchase through either an outside lender or the dealership.
If you remember to plan ahead, you can collect competitive bank rates before discussing loans with the dealer. Auto loan rates rise and fall with some regularity, and vary from lender to lender. In the first quarter of 2018, for example, the average interest rate for a new car loan was 5.17 percent, up 31 basis points from a year prior, per Experian data.
Your move: Visit Bankrate to compare auto loans from multiple lenders in your area.
You can also use Bankrate’s Auto Loan Calculator to estimate your monthly payments. If you find a rate you like, contact the lender to get pre-approved for a loan. (You’ll need proof of assets, income, employment verification, and driver’s license and social security numbers.)
Even if you don’t choose to go through a bank, do the research anyway and keep the best rates in your back pocket.
For your down payment, most dealers accept a cashier’s check, personal check, or credit card (max limit: $5,000). If you’re a rookie buyer, you probably don’t have as many assets or the kind of credit history that a veteran car owner does. In that case, one solution is to find a lender that accepts first-time buyer applicants. For example, Ford Credit has a first-time buyer program.
Many credit unions, for example, work with new borrowers. Use the National Credit Union Administration’s locator tool or a resource like ASmarterChoice to find the right credit union for you.
Boost your odds of getting pre-approved by partnering with a co-applicant or cosigner, like a parent or spouse. When you apply with someone else for the same auto loan, it means you’ll both be responsible for paying for the car—and thus, owning it.
Your cosigner, meanwhile, will lend his or her good credit to you on the loan and is obligated to make missed payments. The twist? He or she won’t actually own the car. Make sure to consult with your insurance provider before designating a co-applicant or cosigner.
5. This List of Questions to Bulletproof Your Deal
Dealerships that haggle can employ a lot of sneaky techniques to make you pay more than you should. Take this free guide with you the next time you shop — and watch how it cuts through the typical BS you run into when negotiating.