How to Buy a Car Online

By Renee Valdes 10/11/2023 1:19pm

Quick Facts for Buying a Vehicle Online

Before you buy a vehicle online, set a budget and consider costs for fuel, car insurance, maintenance, etc.
Knowing your credit score and pre-qualifying for a loan is also important.
When those steps are done, you can begin researching vehicles within your budget online and later visit a dealer for a test drive.

Buying a car online is an easy way to purchase a vehicle. The more steps you complete from the comfort of your home, the better. The internet is also a perfect place to launch your shopping research for a car. From researching the most suitable model to browsing nearby inventory to knowing the right price to pay, you’ll have a buyer’s advantage. With more dealerships offering delivery to your door, you might only step into a dealership to take a test drive. By doing your research and following the steps below, you can complete the majority of your car buying online.

In this article, we’ll walk you through each step of the online car-buying process.

Steps for Car Buying Online

1. Set a Budget

Before you do anything, set a budget. It’s hard to choose a car without understanding what you can afford. After all, there is no point in looking at luxury cars on an economy car budget. You should know the limits of your monthly payment if you’re financing a car, SUV, or truck. Additionally, in your budget, consider costs for fuel or electricity, car insurance, etc. Once you know how much you can afford to spend, our New Car Buyer’s Guide can get you a general idea of what the cars in different segments cost. Then, you will better understand where to start looking. If you’re going to sell your existing vehicle or trade it in for your new car, it’s wise to research your trade-in or sales price for that as well.

RELATED: When Will New Car Prices Drop?

2. Know Your Credit Score

Your credit rating or FICO score is important to consider before buying a car online. Credit agencies use this number to determine your borrowing risk. The higher the score, the lower the risk. Car buyers with top credit scores, sometimes referred to as superprime borrowers, usually get the best rates. If you have a low score, banks consider you a higher credit risk, and typically, you’ll pay a higher interest rate. Knowing your score and following tips on how to improve your number goes a long way to lowering your borrowing costs.

3. Pre-Qualify for a Loan

After you select a car, the next step is to qualify for financing, which could include terms and rates you don’t understand. Because let’s face it, most of us don’t just have $20,000-$50,000 lying around the house for a car. We have trade-ins and may even have money for the down payment. However, most of us need a loan to purchase a new car or truck. Dealerships typically try to offer the best car loan deals, but there are other ways to secure a car loan, like from a bank or credit union. The bonus of securing a loan online before you talk to a dealership is that you can ask them to beat the one you have already found if the dealership wants to provide the loan. Our Car Loans tool can help you determine your qualifications for a particular loan amount. Make sure you talk with many different lenders so you can compare interest rate quotes before you get pre-approved.

Recommended Downpayment and Loan Terms

We strongly recommend putting down at least 20% on the car and finance for no longer than four or five years. After all, the longer you finance, the more interest you will be paying, and you don’t want to continue paying interest on a car for longer than you own it. Based on common financial advice, we also suggest you allocate 20% or less of your monthly budget to automotive expenses, including financing, insurance, maintenance, and fuel for gasoline cars or electricity for electric vehicles.

4. Do Your Research

Next, you need to ask yourself, what car is right for me? What are my needs? Do I need a large SUV because of a big family? Is fuel economy important to me because I spend time on the road for work? I go camping on weekends, so would I want something with plenty of ground clearance and off-road ability? Once you assess your priorities and needs, you can compare different makes, models, and trim levels by reading reviews online, including comprehensive expert reviews. Tools like Compare Cars allow you to make side-by-side comparisons of up to four cars on things like mpg, cargo space, horsepower, safety ratings, and warranties.

Manufacturer websites also offer comprehensive deep dives into different models, often with side-by-side comparisons and price differences. Some also provide 360-degree virtual walkarounds with different colors, wheels, and interior trim so you can see how a car looks. Again, knowledge and preparation are your friends here. The more you know during each stage of the process, the better equipped and more comfortable you’ll be.

5. Shop for a Deal

Preparation helps you when buying a car online. The more you know, the greater the advantage and the process will be smoother overall. When you start looking, make sure to first look for car deals. Sometimes, a manufacturer will bring a car to market, and for one reason or another, it won’t sell as much as anticipated. This could mean a surplus of this car on a dealer’s lot. Or, because it’s late in the model year, the dealership wants to make deals on cars from the previous model year. Each of these scenarios would be excellent to know about in advance because dealers might make deals, subsidize a lease or sale, or even offer cashback on a purchase as a result.

So, always explore incentives on the manufacturers’ websites, and don’t forget to enter your ZIP code. Many factory-to-dealer incentives are limited to specific geographic areas, and your ZIP code may open up deals that aren’t available outside your area. Also, look for incentives for recent graduates, military veterans, first responders, and more, depending on your situation.

RELATED: Car Dealer Incentives Defined

6. Connect With Internet Sales Managers

As more shoppers use tools like Kelley Blue Book to do their car research and start the car shopping process, many dealerships have created internet sales departments to help with the influx of online shoppers in recent years.

These people deal exclusively with customers who find the dealerships and ask questions online rather than in person. Internet sales managers tend to have unique expertise and realize that customers who do their research online come more prepared than the average customer simply walking in off the street.

Why Start With an Internet Salesperson?

Internet sales professionals are an excellent place to start your dealer relationship. With them, you can ask questions about deals and what you’re looking for, and they’ll help steer you toward your best option. At this point, it’s best to stay vague about financing but maybe provide your general price target. That’s the advantage of securing financing early or at least being aware of your loan qualifications. And internet salespeople can arrange a test drive once you reach that stage. That way, when you arrive at the dealership focused on a particular model, you won’t have a salesman giving you added pressure.

And this is the key to preparing and doing as much online as possible. Grocery stores never include haggling or negotiations over financing. You see a price on a head of lettuce, and you pay that price. As Americans, we’re not used to the regular hustle and negotiations of sales for most things, so we can get very intimidated when dealing with face-to-face negotiations and questions in someone’s office. Dealing with the internet sales manager from the comfort of your home after you’ve done some research is one of the best ways to eliminate much of the stress from the car buying process.

Additional Benefits for Internet Sales Interactions

Another advantage of interacting with the internet salesperson is that your email or text interactions with them give you a written record of the critical negotiation points:

The negotiated sale price of the vehicle
Financial APR and terms
Trade-in offer from the dealer

Working the deal online also eliminates the hassle of heavy lifting during business hours. And if you find a better deal elsewhere, you have time to evaluate. Online negotiation also helps to remove emotion from the transaction. That’s important because buying a car with a clear head is always better.

7. Plan Your Dealer Visit

If you’re considering a particular make and model, you can call a dealership or if you’ve already started a relationship with the internet sales manager, you can schedule one. Don’t be intimidated by the sales pitch and explain that you’ve already secured financing, but you want to see how the car you’re considering feels and drives. Also, make sure that you get as close to what you want if you are going through a dealership. If you’re thinking of the bare-bones model, don’t test-drive the fully loaded, highest-priced model.

Another option is to rent a car. Some cars may not be available through traditional rental agencies. But companies like Turo offer you the opportunity to rent someone’s car and drive it around for a few days. This service gives you a much better test drive experience than most dealerships can. As a result, you get to drive the car during the day and nighttime. You can also take the roads that are part of your day-to-day driving, investigate legroom and convenience features, and check to see if a child’s car seat fits in the vehicle.

8. Take a Test Drive

The next part of the search is, for some, the most fun: the test drive. Because as much research as you do online, car buying can be a little like online dating. Just because you both like modern art and walks on the beach doesn’t mean you’re necessarily compatible partners. At this stage, you’ve narrowed your car options down to a few choices. The cars you selected have the mpg and the performance or space or ruggedness you require. But it would help if you still had that actual visceral sensation. After all, we spend a lot of time in our cars, from road trips to grocery shopping and our regular commutes.

So, as you do your test drive, ask yourself the following questions:

Does the car feel right?
Do you fit comfortably?
Can you reach the pedals, see out, enjoy the seat, and access the controls?
Do you like the way the car looks inside and out?
Is it comfortable and well laid out?
Is it intuitive to connect your smartphone, play your music, and figure out the various touchscreens and controls?
How does it handle and brake?
What about the sightlines?
Can you adjust the seat to your satisfaction?

You might have researched three or four cars that all seem right, but one still might feel very different. And you won’t know until you drive it around.

9. Shop Multiple Dealerships

So far, you’ve made excellent progress toward buying a car online. You’ve done thorough research about what you want and need, assessed what you can pay, and even secured a loan for your vehicle, virtually all of it online. The next step is finding the car you want. You’ve figured out what car best suits your needs and desires, checked prices, and even picked the make and model, trim level, and optional accessories and color. You’ve done your test drive and decided which specific car you want. Maybe you’ve even secured some offers from a couple of different internet sales managers. Now, you need to figure out where to get the car.

Walking onto the lot and talking to a sales associate is no longer necessary. So, since you’ve done all your legwork online, you can now search multiple dealers for inventory, start negotiations online, and see where you can get the best offer for what you want, plus your trade-in vehicle.

10. Skip the Dealer Add-Ons

Before the car-buying transaction is complete, dealership sales professionals will undoubtedly offer you extras such as extended warranties. They will also offer aftermarket accessories such as custom wheels, window tinting, fabric protection, and paint protection. Likely, you don’t need them, nor must you buy them. Suppose an extended warranty may give you peace of mind. In that case, it’s worth considering, but remember to read the fine print and determine ahead of time precisely what components and systems are covered and what they will cost.

11. Take Delivery!

Congratulations! You’ve done all your research and analyzed your finances, figuring out what you can afford. You thought about your needs, read reviews on Kelley Blue Book, and checked out trim levels on websites. You’ve completed a thorough test drive. You negotiated the price and agreed upon the car trade-in price (if you have one to trade). Now, it’s all down to signing the paperwork, inspecting the car, and taking delivery.

Delivery of a new car after buying online

Many dealerships now offer delivery of the car to your home or office. For many, that’s one of the draws of buying a car online. Much of the paperwork is done electronically now. Often, dealerships even accept digital signatures, so most of the inspections of documents can be completed online. It’s good business for the dealers, too. If you can conclude more of the transaction online, they can spend their time selling more cars.

12. Get to Know Your Car and Your Dealer

While it may be convenient to have the car delivered, it might be in your best interest to take delivery at the dealership. This will allow you to thoroughly inspect the car and drive it around in immediate proximity to the dealership. Make sure it drives well and the brakes don’t squeak. It will also allow you to learn the vital controls and infotainment features, like connecting your phone. Take the opportunity to learn and use features you may not have encountered during your test drive.

While picking up your car, if your salesperson doesn’t offer it, ask to meet the service manager. Find out where to bring the car and what sort of service hours, shuttle services, or car loans are available.

Be Aware of Dealer Scams

There is one last thing we want to warn you about. It still happens, both at dealerships and with deliveries. The old bait-and-switch. You arrive at the dealership, and they say, “Oh, I’m so sorry, but there was a screw-up, and my manager gave your car to another customer. We have another one like yours but with some extra features.

Fortunately, we’ll offer it to you for only an extra $100 per month.” Walk away because it is a scam. If a dealer does that to you, you should consider them untrustworthy, and there will undoubtedly be problems later when it comes to honoring warranties and service. The internet has helped make this a disappearing practice, but you should be aware of it.

Bonus: Tips for Buying a Car Online

Contact multiple dealerships: For the best deal you can find for the car and your trade-in (if applicable), get in touch with several dealerships that offer the car you want for sale.
Know your trade-in value beforehand: Research your car’s Kelley Blue Book value before connecting with any dealerships. Then, allow the dealership to tell you what they’ll be willing to pay before you negotiate the final price of the new car.
Don’t pay for those extras: No matter what, don’t pay for window tinting, fabric protection, or other add-ons you don’t need or want.

Traditional vs. Online Car Buying

The main difference between traditional and online car buying is that most of the transaction is completed without going to the dealership when buying a vehicle online. When buying online, you can still head to the dealership for a test drive and to inspect the vehicle. However, you can avoid spending hours completing the transaction at the dealership when you buy online, thus saving you time.

Benefits of Buying a Car Online

Saves time and money because you can shop different dealers simultaneously.
Less sales pressure and haggling.
Shopping is more convenient because you can do your browsing on your schedule.
Walking away from a deal when it’s online is easier than in person when the pressure may be on.
Delivering a car to you is a big benefit, though don’t pay extra for the service if it’s not needed.

Where to Buy Cars Online

Dealerships, like other online car-buying websites, offer vehicles you can buy online. If you are buying a new or used vehicle, you can start your journey at Kelley Blue Book. For used vehicles, Kelley Blue Book also offers a marketplace for private vehicle owners to sell vehicles through its Private Seller Exchange.