Introduction
The following steps are devoted to helping you select, price, locate and test drive the vehicle that is best for you. After reading and completing these steps you will be ready to move on to the 10 Steps to buying or leasing a new car.

Step 1: What kind of car do you need?
If you examine your needs rather than wants, you will quickly discover what the right car is for you. Take a moment to think about what you use your car for. How many people do you need to transport? What kind of driving do you most often do? How long is your commute? Is it important that your next vehicle get good gas mileage?In too many cases people choose a car because it has an eye-catching style or it is a trendy favorite. If you go in this direction, you may either break your budget or have to go car shopping again soon. Let your needs, not your wants, drive your decision.

Here are a few other questions to keep in mind when you begin your car-buying process:
- Do you want a manual or automatic transmission?
- Do you really need four-wheel drive? Or all-wheel drive?
- What safety features do you want?
- Do you require a lot of cargo-carrying capacity?
- Will you be doing any towing?
- Will the car easily fit in your garage or parking area?

Step 2: How much can you afford?
Regardless of whether you decide to buy or lease your next car, establishing a realistic monthly payment that will fit into your budget is a crucial first step. How much should this be? A rule of thumb is your total monthly car payments — whether you own one car or more than one — shouldn't exceed 20 percent of your monthly take-home pay. Check the Edmunds.com "Financial Calculators" to help you estimate what your monthly payment will be based on purchase price, down payment, interest rate and length of loan.

Take the time to run the numbers now, before you go car shopping, print out the result and put this information into your car-buying folder. It will not only show you what you can afford, it will also help you control the numbers when you negotiate with a car salesman.

Step 3: Should you lease or buy your next car?
A lease requires little or no money up front and offers lower monthly payments. But when the lease ends you are left without a car and a need to replace it.
Buying a car is more expensive initially and the monthly payments are higher. But at the end of the loan, you will own a car you can still drive or sell.

Other key factors that differentiate leasing and buying include:
Advantages of Leasing
- You can drive a better car for less money
- You can drive a new car every few years
- No trade-in hassles at the end of the lease
Advantages of Buying
- When interest rates are low, it makes more financial sense to own a car rather than lease it
- No mileage penalty
- Increased flexibility — you can sell the car whenever you want

If you are still unsure whether to lease or buy, try letting the numbers help you make the right decision. Go to this Edmunds.com "Decision Calculator" and see how much leasing or buying will cost for the same car.

Step 4: Have you considered all vehicles in that class?
Today's new car (and truck) market is filled with great products. Most shoppers have difficulty keeping up with all of the vehicles manufacturers introduce and the changes they are making to their older vehicles, so it's important to do your research. Use Internet sites like Edmunds.com and Edmunds.com New Cars and Trucks Buyer's Guide to research all your choices before you hit the showrooms.
On Edmunds.com you can pick a specific car and bring up a list of similar cars in the same class. If you already have a car you are considering, this will be your starting point. Find the specific car you want on the web site by searching by Make, Type, Price Range or Market Segment.

Once you have chosen your specific car, you will be on a Vehicle Detail page. This page has links to all the Car Pricing, Features, Reviews and Shopping options. Down the left hand side of the Vehicle Detail page there is a section called "Find a Related Vehicle" all of the links in this section help you to locate similar and competitive vehicles.If, on the other hand, you have no idea where to begin you should might want to consult the Best Cars section of the site, or you can begin by searching by Make, Type, Price Range or
Market Segment.

Step 5: Have you considered all of the costs of ownership?
Here is an often overlooked fact of car ownership: one car might be cheaper to buy, but more expensive to own. Why? Even if two cars cost about the same to buy, one can depreciate at a different rate or cost significantly more to insure or maintain. Before you commit to one car, you should estimate the long-term ownership costs of the vehicle you are considering. These include depreciation, insurance, maintenance and fuel costs. The Edmunds.comWeb site has a feature called Cost to Own, which presents this information in an easy-to-read table.

Another tool you should use is Edmunds.com's True Market Value (TMV®) pricing. By following the prompts you can find out what a fair price is for the car you are considering. The TMV price is the average price other buyers are paying for the same car in your area. TMV represents a good price for you and a fair price for the dealer.By using TMV and TCO, you can make a smart decision up front and then save hundreds of dollars over the life of the car.

Step 6: Research options.
By completing steps one through five, you should now have a good idea about what car will work for you. Maybe there are a few cars that fit your criteria. It's time to narrow it down.Car buyers have been trained to visit local dealerships to find the car they want. In the Internet age, this is a waste of time and money. You can quickly cover more ground by shopping on-line. Car dealers are waking up to this new breed of shopper and have created Internet departments within their dealerships to serve the educated buyer who already knows what he wants and what he's willing to pay.

The only thing you have to do in person are test drive the car and sign the contract. And in some cases, you can even have the car "delivered" to you by the salesperson.Edmunds.com is your link to the automotive world. By reading our Web site you can not only educate yourself about cars, but also find local dealers, check interest rates for buying or leasing and calculate your exact monthly payment. Before ever heading out the door, you can answer almost any question you may have by searching Edmunds.com. Remember, you don't want to go to the dealership until you're really ready.

Step 7: Schedule an appointment for a test drive.
It's a good idea to make your initial contact with a dealership by phone before going there in person. This can give you some sense of the business atmosphere you will be dealing with throughout the buying or leasing process. Additionally, if you can establish a rapport with the Internet salesperson, it can boost your confidence before you visit the lot. Call the Internet department (sometimes also called the fleet department) and ask if the car you're looking for — in the right color and trim level — is actually on the lot.

You make your initial contact with the Internet manager either with an e-mail message or over the telephone. You can also send multiple dealer requests and narrow your search based on the tone of e-mail responses. If you called the Internet department, tell the salesperson that you want to set up a test drive — but that you won't be buying right away. However, assure them that you will buy there if you decide to purchase this particular make and model, and if they can offer the vehicle at a fair price.Keep in mind that if you deal with the standard salesperson, he or she will try to start the negotiations at a high price with the expectation of being negotiated down.

However, the Internet manager will often quote you a "rock-bottom" price as soon as negotiations begin. A few minutes taken to set up an appointment with the Internet manager can save you both time and money.

Step 8: How to test drive a car.
The goal of a test drive is to experience — as closely as possible — the same type of driving conditions the car will be used for after purchase. If you commute, drive the car in both stop-and-go traffic and at freeway speeds. If you frequently drive into the mountains, try to find some steep grades to climb. Drive over bumps, take tight corners at aggressive (but not dangerous) speeds and test the brakes in a safe location, such as a deserted parking lot. Get in and out of the car several times and be sure to sit in the backseat, especially if you plan on carrying passengers. In short, ask yourself what it will be like to live with this car for a number of years.

While you are evaluating the car, don't be distracted by the salesperson's pitch. Don't drive with the radio on — you can evaluate that later. A new car is a big investment; make sure you spend enough time really looking at it. And then, consider one last thing: your intuition. If you are uneasy about this car, follow your instincts. A vehicle purchase decision is too important (and expensive) to undertake without total confidence.

Step 9: After the test drive.
After the test drive, you should leave the car lot. Why? Because you will probably need to drive other types of cars at other dealerships. It's a good idea to do all of your test driving in one morning or afternoon. Driving the cars back to back will help you uncover even minor differences, which will lead to a more educated purchase decision.So, how do you get out of the clutches of the salesperson? Generally, Internet salespeople are pretty mellow and won't pressure you to buy on the spot. Besides, you can remind them you still have other cars to drive and you can't make a decision yet. Most goodsalespeople will respect that. If they don't, you probably won't be coming back to make a deal with them anyway.

Step 10: Getting ready for the buying cycle.
At this point you should have considered all the cars in the class that interest you. You should have a good idea what you can afford. You should know if you want to buy or lease your next car. You should have test driven your top choices.
Now it's time to narrow your choices down to one car and make a deal. If you plan on leasing, read the "10 Steps to Leasing a New Car." If you are going to buy your next car, read "10 Steps to Buying a New Car." In either case, take a moment to congratulate yourself. You have done your homework to find the right car for you. Now you can ove forward with confidence.

Checklist
- Examine your needs to determine what the right car is for you.

- Check the Edmunds.com "Financial Calculators" to estimate what your monthly payment will be.

- Decide if you want to buy a new car, buy a used car or lease a car. Use the Edmunds.com "Decision Calculator" and see how much leasing or buying will cost for the same car.

- Consider all vehicles in the class of cars you are looking at.

- Review all the costs of ownership by going to Edmunds.com Cost to Own.
On Edmunds.com find local dealers and schedule a test drive.