How Online Car Buying Works

Picture it: You're on your couch with your laptop. You've got music on in the background, you have an array of snacks, and…you just bought a car online. That's right! With all the conveniences of online car buying, a no-pressure experience can be your reality.

Dealership vs. Online Car Buying

You know all about traditional car buying. The rows of shiny cars, the salespeople, the negotiating, the test drive. It's how car buying has been done for decades.

However, in today's world, you can buy a car completely online. With this option, you'll likely buy your car from a dealership that offers online sales or from an online platform such as a car buying service through a credit union or a direct-buy site. By buying online, not only can you research car and financing options from home, but you also can skip the stressful, face-to-face negotiations.

How to Buy a Car Online in 6 Steps

Depending on how hands-off you want your car buying experience to be, the entire process can be done online — in six steps.

1. Determine Your Budget

Having a clear idea of what you can spend on a vehicle can help you streamline your process. Knowing which vehicles are realistically in your price range can help you narrow the scope of your search.

Then, assessing how much of your monthly paycheck can go toward a car payment can help as you compare financing options.

2. Do Your Research

Doing your research before taking out a loan or purchasing a vehicle can help ensure you find exactly what you want. Whether you have a car in mind or need to browse, here are a few tips:

• Check out online platforms and direct-buying sites such as Shift, Vroom, CarsDirect, Cars.com, and for used-only, Carvana, and TRED.
• Look at manufacturer websites to see photos of cars, lists of features, and estimated prices.
• Don't forget to look for deals. You may still be able to find rebates or discounts on manufacturer websites or monthly specials on sites such as Kelley Blue Book.
• If selling or trading in your current car, remember to research the value of your car to make sure you get what it's worth.

3. Figure Out Your Financing

If you need to take out a loan for your car purchase, and most people do, first, check your credit score. Your credit score helps lenders determine your potential loan amount, term, interest rate, and approval.

Next, decide if you want to get preapproved for a loan through a credit union, bank, or online lender. A preapproval will provide you with an estimated (not guaranteed) loan amount, term, and interest rate.

Once you compare lenders and have some numbers to work with, you can run different prices, rates, and terms through an auto calculator to get a better picture of your estimated monthly costs.

4. Optional Step: Contact an Internet Sales Manager

If you intend on buying online through a dealership, you may want to reach out to the internet sales manager after deciding which car you want to buy and how you plan on financing it. These managers have the expertise to help simplify this part of the process.

Whether you choose to email or talk on the phone, you can tell the manager the year, make, and model of the car you want and have them verify if it's in stock. Then, if you want to negotiate price, you can either mention your preapproval numbers or competitor prices and see if the dealership is willing to give a quote that beats what you were offered.

5. Decide if You Need a Test Drive

Test driving a car can provide you with the peace of mind that you're making the right decision. Yet, requesting a test drive might not require a trip to the car lot.

Certain local dealerships and online platforms will bring the car directly to you at your home or workplace so you can take it for a spin. Just keep in mind, you'll have to research whether the dealership or site offers this service.

6. Finalize

Once you've done all the legwork, you'll likely have a few choices for the phases of this last step.

Trade-in: Simply make sure the online platform or dealership offers a trade-in service and review the details to see what it entails. If purchasing online through a dealership, you'll need to find out if you can complete the trade-in online or if you have to visit the dealership. If you have to take your car to the dealership to be assessed and appraised, bring any trade-in value research you have.

Closing the deal: Even if you're not doing a trade-in at a dealership, you might have to go there to complete the paperwork and get your car. Or, some dealerships go about finalizing the same way most online platforms do, by delivering your deal-closing paperwork, along with your car, right to you.

Advantages of Buying a Car Online

Online car buying comes with several great perks. Let's break down the main benefits.

Convenience

Online car buying allows you to easily compare vehicles and financing options from the comfort of your home. In fact, you can take care of everything at once, from shopping and comparing prices to financing and trading in.

Most sites even have a return policy, which is reassuring for those who have concerns about buying a car online.

Avoid Stressful Negotiating

Many buyers believe the most stressful part of buying a car at a dealership is the price negotiation. Haggling in a high-pressure situation can be difficult, especially when face-to-face.

If you don't enjoy face-to-face interactions like that, online car buying is perfect for you. While many online platforms sell their vehicles at fixed prices with no negotiation, others let you negotiate via email.

This allows you to set the pace of the conversation and document every step. It's far less stressful when you have a chance to think and respond on your own time.

Variety

With online options, you're not limited to the inventories of local dealerships. Plus, you can thoroughly research financing options through a credit union, bank, or an online lender instead of settling for what a dealership offers you.

Saves Time

If you choose to buy a car online, you're spared the task of visiting multiple dealerships to compare selection and prices. Instead, you can compare vehicles and prices online in minutes.

Disadvantages of Buying a Car Online

Handy as online buying may be, there are some drawbacks to consider.

Potential for No Personal Inspection or Test Drive

If a test-driving option isn't offered, you won't have the chance to physically look over your car or drive it to make sure it's fully to your liking. Photos and videos may help, but they're not the same.

Another scenario when you may not be able to inspect or test drive the car is if the car you're buying is in another state.

Possible Trade-In Issues

Most online dealers or platforms offer a trade-in service, but not all. Plus, establishing your trade-in value online instead of in-person could be more difficult.

Warranty Woes

Some online dealers may offer warranties that aren't as inclusive as those from actual dealership locations.

Financing Flexibility

Most online dealers or platforms offer financing, but the options may be limited to one or a few select lenders, which might not include your preferred credit union or bank.

You most likely can secure your financing separately, but that's an added step that could complicate your plan if you're trying to streamline the process.

Online Car Buying FAQs

Still not ready to cruise ahead with online car buying? See if you can get some answers to your lingering questions.

FAQ: How Do Test Drives Work When Buying a Car Online?

Many online dealerships offer the option to schedule an on-site test drive. Some will even bring the car to you for a test drive.

Likewise, most online platforms will deliver your car to you at home or work so you can test drive it. The paperwork will often be brought to you as well, so you can complete it and buy your car right then if you choose.

FAQ: Is Buying a Car Online Safe?

While buying cars online is becoming more common, it's always best to be cautious and aware of how to keep your experience safe. Here are a few tips:

• Use well-known, trusted sites that provide a secure environment for online transactions. Referring to the Better Business Bureau to check your sources is always a good idea.
• Use secure, traditional, and traceable forms of payment, such as a check or credit card. Do not use wire transfers or prepaid credit cards, as they aren't traceable, meaning you won't be able to get your money back if something goes wrong.
• If you found an individual seller online instead of buying from a dealership or platform, make sure to get the seller's contact information, the vehicle VIN and registration, and plan to meet in a public place to close the deal. If the seller won't comply with these requests, do not follow through with the purchase.

FAQ: Can I Still Negotiate on Price?

Some online dealerships and platforms offer fixed prices for vehicles, which means you can't negotiate the price.

But other sites welcome negotiation. If you want to negotiate, you can call or email certain sites to see if they have the year, make, and model of the car you want in stock, and if so, you can ask for price quotes.

Can I Return a Car I Bought Online?

Most online car buying sites have return policies that include a refund for the purchase price of the vehicle you bought. Return periods may vary. If you paid a shipping fee, check to see if the site you used offers a refund for that as well.

On Board With Online?

The convenience factor of online car buying is key. To recap, you can:

• Buy a new or used car completely online
• Test drive the car you want to buy (if buying locally)
• Buy a car online and have it delivered straight to you
• Secure your financing online
• Return your online car purchase and get a refund within a specified time period

Remember, doing your research will keep you in the right lane throughout your online car buying journey. Get ready to take your couch time from passive to productive.

Start Researching Financing Options

See the loan options, rates, and terms we offer our members.