Here's How Capital One Makes Preparing to Purchase Your Next Car Easier

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Buying a car is kind of a big deal. For many if not most, it’s among the biggest purchases they’ll ever make. If you’re not properly prepared, it can put a strain not only on your wallet but also your mind. Fortunately, Car and Driver and Capital One share a similar approach when it comes down to the rigorous testing and methodology around what we choose to drive. In January 2023, Capital One released the results of a survey that asked 2,210 car buyers and 400 dealers about the car-buying process in the 2023 Capital One Car Buying Outlook, and the responses show an obvious disconnect between buyer and seller opinion in areas of transparency and whether it’s a good time to buy. If you’re looking for a new car in today’s market, it pays to be prepared. Equipping yourself with the tools and resources that can help make car shopping easier may wind up saving you money—and putting you behind the wheel of the new or used model that’s just right for you.

Set a Budget and Stick to It

Largely due to supply-chain issues and inflation, new-vehicle prices rose to an all-time high in 2022, and interest rates went with them. In such circumstances, you might be tempted to up your car-buying budget, but it’ll do you no good to shop outside your means. So, determine your maximum and don’t exceed it.

Online tools like Capital One Auto Navigator can help you find a car and see your real rate and monthly payment on cars you choose. Knowing the financial information upfront can help you determine your situation. If the numbers don’t work for you, you may wish to delay your purchase until your financial stability improves—as 35% of surveyed car buyers impacted by economic factors did—or consider reducing the overall cost. This could mean opting for a lower trim level, buying used instead of new, or considering a different car. You’d be in good company: According to Capital One Car Buying Outlook, 25% of surveyed car buyers impacted by economic factors decided to purchase a cheaper car than they’d originally intended.

Of course, the purchase price is only part of the equation. You’ll also want to contemplate how long you plan to keep the car, as that will inform your ancillary costs, including fuel, maintenance, insurance, and potential repairs—all of which you can calculate before handing over any money.

You can estimate the cost of fuel easily enough using the Department of Energy’s Vehicle Cost Calculator. As for maintenance, that’ll depend on what vehicle you’re considering. Many models (particularly those from luxury brands) include scheduled service visits for the first year or two, but you’ll be on the hook after that. Check various online estimators to get a ballpark figure for the annual upkeep. Next, call around to find the best insurance rates—posing the same questions to each provider to make comparison easy—or ask a broker to do it for you. As for repairs, well, that’s going to depend on the vehicle and what kind of driver you are. But in general, premium models command premium prices for parts and labor.

A few notes on electric cars: You likely won’t have to budget as much for maintenance, as their simplified powertrains need minimal attention. And you’ll save on fuel cost. Insurers may charge you a bit more, as EVs tend to be costlier to purchase and repair than internal-combustion models. But on the bright side, the feds and many state governments still offer decent incentives on EVs (including plug-in hybrids). Due to these and other economic factors, 12% of car buyers surveyed noted that government incentives for EVs were an economic factor impacting their recent car purchase. If you’re likewise tempted to change course, make sure to see if your prospective purchase can lower your tax bill before locking in your budget.

Another way to lighten your outlay (and tax burden) is to offer a trade-in. If you’re going that route, though, it’s good to research your car’s worth by getting a few quotes. With used car inventory still recovering from 2022’s lows, a dealership may want your old ride more than you think. Alternatively, if you’re planning to sell your old vehicle to a third party, it’s a good idea to clean it up, repair minor damage, and perform any necessary maintenance on it, as those things could affect what you get for it.

Finance Wisely

According to the Car Buying Outlook, the negotiation and financing stages are when most car deals fall through. While there are many reasons for this, a lack of dealer-car buyer trust is likely playing a part right now. To make car buyers feel more comfortable, dealers must provide excellent and consistent online and in-person experiences. As the buyer, you can prepare in advance so you know what you can afford when you walk in the door.

Using Capital One Auto Navigator, you can start shopping for new or used cars and get pre-qualified for financing without impacting your credit score. If you pre-qualify, you’ll be able to build a sample offer online and calculate your monthly payment using your personalized rate. Then, connect with the dealer on a car you love to get more information or schedule a test drive.

Those who need financing will likely want to put down at least 20% to get a better interest rate. In general, the more you can pay upfront and the shorter you can make your loan, the better it’ll be for your wallet in the long run. Auto Navigator allows you to adjust the amount of your down payment to see how it alters your monthly payment.

Used vehicles have already suffered the worst of the depreciation hit and may be cheaper to insure than a new car. That said, if you need financing, you may find a more favorable rate for a new vehicle than a used one.

Lastly, if you’re in the market to buy, don’t do anything that’ll ding your credit score, such as opening a new card or missing payments. It can affect your interest rate.

Know the (Latest) Rules of the Game

The car-buying landscape has changed, but it’s not all doom and gloom. Today’s new models are better equipped with more convenience, safety, and luxury features than ever before—but you may need to be a little more patient about finding one today than you were with your last purchase. Even three years after the pandemic turned the market on its head, automakers remain hampered by difficulties sourcing parts needed to build new vehicles. This has made some popular models tricky to find. But things are looking up in the new and used car markets. Inventories are rising and dealers are adopting more tools and processes to make the car-shopping experience seamless for buyers.

If you can plan ahead, you can always hit up more dealerships, as 20% of surveyed recent car buyers impacted by economic concerns did. The pandemic brought many in-person-only tasks online, so you may wind up spending less time in the showroom. Nowadays, you can even do a good deal of the car-buying legwork from your couch, including scheduling a test drive, searching local inventories, or spec’ing a model to your liking. Survey results show that car buyers and dealers both agree that at least half of the car buying process is done in person, with over 50% of current car buyers saying that understanding financing options and discussions around financing and pricing are done mostly or entirely at the dealership.

So, if you’re planning to negotiate with the dealer—which over 85% of surveyed car buyers considered a necessity in the car buying process—you’ll likely want to do it in person. Many dealerships now operate on a no-haggle basis, which can make the experience less stressful. At the dealership, you can augment your hands-on experience with a deep dive into your financing options too.

But you don’t have to commit to a car or truck right off the bat. With Capital One Auto Navigator, you can search for cars and explore real financing options without impacting your credit score – giving you the tools you need to make an informed decision, without the obligation—streamlining the car buying process no matter what type of vehicle you’re after.