NerdWallet’s Guide to Buying a Car

We break down everything you need to know about buying a new or used car.
Funto Omojola
By Funto Omojola 
Updated
Edited by Julie Myhre-Nunes

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10 steps to buy a car the NerdWallet way

The car-buying process can be draining and daunting, from navigating auto loans to determining affordability and ownership costs. And the process can get even more difficult in the current market, where low inventory and higher-than-usual prices can make it hard to find the exact car you’re looking for.

Here’s a NerdWallet car-buying guide to help simplify the process and assist you with making the smartest financial decisions throughout the journey.

1. Set your budget

Setting a budget is the first step to take when buying a car — before you even start looking for a vehicle or set foot in a dealership. If you’re paying cash, this step will be easier and faster for you. Even then, you'll still want to be aware and prepared for the other costs associated with buying a car, like registration fees, taxes and insurance.

Most Americans finance their vehicle purchases. In 2022, 80% of new vehicles were financed and 40% of used cars were financed, according to research from Experian Automotive, an auto data research company. Setting a budget means determining how much you can afford for a down payment and for monthly car payments.

Here are the basics for setting a budget:

Loan details

2024

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Include taxes & fees in loan?
Your loan estimate
Monthly payment

$368.47

Loan amount
$16,000.00

Total interest cost
$1,686.50

Total loan payments
$17,686.50

Payoff date
06 / 2028

2024

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Payment datePrincipalInterestMonthly paymentPrincipal balance
Jun 2024$301.80$66.67$368.47$15,698.20
Jul 2024$303.06$65.41$368.47$15,395.14
Aug 2024$304.32$64.15$368.47$15,090.82
Sep 2024$305.59$62.88$368.47$14,785.23
Oct 2024$306.86$61.61$368.47$14,478.36
Nov 2024$308.14$60.33$368.47$14,170.22
Dec 2024$309.43$59.04$368.47$13,860.79
Jan 2025$310.72$57.75$368.47$13,550.08
Feb 2025$312.01$56.46$368.47$13,238.07
Mar 2025$313.31$55.16$368.47$12,924.76
Apr 2025$314.62$53.85$368.47$12,610.14
May 2025$315.93$52.54$368.47$12,294.22
Jun 2025$317.24$51.23$368.47$11,976.97
Jul 2025$318.56$49.90$368.47$11,658.41
Aug 2025$319.89$48.58$368.47$11,338.52
Sep 2025$321.22$47.24$368.47$11,017.29
Oct 2025$322.56$45.91$368.47$10,694.73
Nov 2025$323.91$44.56$368.47$10,370.82
Dec 2025$325.26$43.21$368.47$10,045.56
Jan 2026$326.61$41.86$368.47$9,718.95
Feb 2026$327.97$40.50$368.47$9,390.98
Mar 2026$329.34$39.13$368.47$9,061.64
Apr 2026$330.71$37.76$368.47$8,730.93
May 2026$332.09$36.38$368.47$8,398.84
Jun 2026$333.47$35.00$368.47$8,065.36
Jul 2026$334.86$33.61$368.47$7,730.50
Aug 2026$336.26$32.21$368.47$7,394.24
Sep 2026$337.66$30.81$368.47$7,056.58
Oct 2026$339.07$29.40$368.47$6,717.52
Nov 2026$340.48$27.99$368.47$6,377.04
Dec 2026$341.90$26.57$368.47$6,035.14
Jan 2027$343.32$25.15$368.47$5,691.82
Feb 2027$344.75$23.72$368.47$5,347.07
Mar 2027$346.19$22.28$368.47$5,000.88
Apr 2027$347.63$20.84$368.47$4,653.24
May 2027$349.08$19.39$368.47$4,304.16
Jun 2027$350.53$17.93$368.47$3,953.63
Jul 2027$352.00$16.47$368.47$3,601.63
Aug 2027$353.46$15.01$368.47$3,248.17
Sep 2027$354.93$13.53$368.47$2,893.24
Oct 2027$356.41$12.06$368.47$2,536.82
Nov 2027$357.90$10.57$368.47$2,178.93
Dec 2027$359.39$9.08$368.47$1,819.54
Jan 2028$360.89$7.58$368.47$1,458.65
Feb 2028$362.39$6.08$368.47$1,096.26
Mar 2028$363.90$4.57$368.47$732.36
Apr 2028$365.42$3.05$368.47$366.94
May 2028$366.94$1.53$368.47$0.00

Calculated your loan?
Now find your car!

Compare a wide range of new and used cars in one place to find the right match for the loan amount and terms you calculated.

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