Car buying is not like buying a television or other household item. There are many different factors to consider, and the sheer purchase price alone makes it worth spending some time researching before you buy. If 2010 will bring you a new set of wheels, then follow these 10 tips to help ensure you buy a car that you are happy driving and that fits your budget.

Start by taking a careful look at your budget.

Even if you have a car in mind, determine your budget before venturing onto a dealer’s lot. Using the home budget calculator, assess your monthly bills and what you need to save to determine how much car you can afford. Try not spend more than 20 percent of your monthly household income on all the family’s cars, including the costs to operate them.

Consider the total cost of owning the car.

Don’t just look at cars whose monthly payment will max out your budget. Instead when car buying, leave yourself some room to cover the costs of ownership, including insurance, fuel, maintenance and repairs. Factoring 5 percent of your monthly auto budget for ownership costs is a start, according to Edmunds.com research. Once you have narrowed your car choices, look up the ownership costs of those specific models using Edmunds’ True Cost To Own tool.

Take your time.

For most people, a car is the second most expensive purchase they’ll make next to their home, so treat it accordingly. Take your time to figure out what you want instead of making a purchase in just one weekend. Use automaker Web sites and third-party vehicle information sites such as AOL Autos, AutoTrader, Cars.com, Edmunds.com, Kelley Blue Book, and NADAguides.com to do your car-buying research, get pricing information and learn about available inventory in your area. Visit local dealerships only after you’ve completed the majority of your research and have just a couple of vehicles in mind.

Determine your insurance costs before buying.

Auto insurance costs can vary widely from one car model to another, so it’s best if you get a good idea of that expense before you buy. Once you’ve narrowed your choices, call your current agent and ask him for quotes on all the cars you’re considering to be sure your estimate is accurate.

Shop around for the best interest rate before you visit the dealership.

While automakers will entice you with low interest rates, you likely won’t qualify unless you have great credit. And, even if you do qualify, you may be better off taking the cash rebate and getting a loan elsewhere. Use Bankrate’s Rate Search tool to see current interest rates and also check with local lenders, including credit unions which are 1 percent to 2 percent lower on average than conventional banks, according to a 2009 survey by DataTrac Corp. Use CUlookup.com to find a credit union you can join. Once you’ve determined your best interest rate, use Bankrate’s Car Rebate vs. Low-Interest Calculator to determine the best deal.

Look for every possible “personal” discount.

While automakers often offer cash rebates on many models, they also offer discounts based on the person who is buying the car, including discounts for students, current or former military members and even members of certain credit unions. While these discounts are smaller than the typical cash rebates — often about $500, they can be combined with each other and with the cash-back rebates, so it can mean a substantial savings. Check the automaker’s Web site for a complete list of discounts offered.

Don’t forget to research dealer incentives.

If there’s a glut of inventory on a certain model, automakers will often offer dealers $1,000 or more as an incentive to sell those cars. This money can be used to further reduce the car’s price, but only if you know to ask for it. Use a vehicle information source like Kelley Blue Book or Edmunds.com to see what incentives are being offered to dealers on the models you’re considering.

Work with the Internet sales manager or fleet manager at the dealership.

When you are fully armed with car buying information and ready to visit dealerships, call and ask to make an appointment for a test-drive with the Internet or fleet manager, who are less likely to try any strong-arm tactics. When you make the appointment, be specific in your request, mentioning features such as the engine size, color or trim level if those items are important to you. Scheduling an appointment will save on time waiting for them to help you. It also will send the message that you are a serious buyer, and that will help set the tone in negotiations.

Be thorough in your test-drive.

Your best bet financially is to keep your car for five years or longer, so be thorough when you take your test-drive. Make sure everyone who will be driving the car actually test-drives it. Check to see that all of your typical passengers and cargo fit well, even if that means spending some time installing a child safety seat or putting your golf clubs in the trunk. Finally, think about your life five years from now and try to imagine if this car will suit your needs then.

Remember to start with the invoice price when you negotiate.

Your pricing research should include listed invoice prices as well as the manufacturer’s suggested retail price, or what’s on the window sticker. While invoice pricing on third-party information sites isn’t 100 percent accurate, it will give you some idea of what the dealer paid for the car, so it’s a good place to start your negotiation. But keep in mind that the dealer does need to make at least a few hundred dollars in profit to cover his dealership costs. Remember too that all discounts should be deducted from the invoice price, not the window sticker, so negotiate the price first and then apply those discounts.

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If you have a car question, e-mail it to us at Driving for Dollars.

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