How to Shop for a Car Online – J.D. Power

Years ago, a shopping mantra heard over and over again was “let your fingers do the walking in the Yellow Pages.” In the modern internet age, that phrase and the Yellow Pages themselves are hoary ancient memories. But if you updated it to “let your fingers do the swiping,” you could well be describing the way the majority of American consumers shop for a car online these days.

Surveys by J.D. Power and other entities have shown conclusively that the internet is now the chosen medium for car shopping. Its breadth and reach are matched only by its ease of use. Shopping for a car online knows no timetable or location, so you can do it using a smartphone while waiting in a checkout line, or on a laptop from your bed at 3 a.m. on a restless night, or while you’re pretending to listen in to your third consecutive Zoom meeting on a dreary afternoon.

Rather than just aimlessly surf the web, it makes sense to shop for a car online in a rational, ordered manner. That doesn’t mean you can’t have fun. In truth, you should enjoy the process because it is totally pressure-free. But if you hope to land on the best vehicle that will suit your needs, your finances, and, importantly, your personality, we recommend that you approach the online car shopping process with some level of organization.

Shopping for a car online offers multiple advantages. To get you in the mood for your shopping adventure, we’re happy to spell them out for you:

Nearly endless selection of vehicles
No sales pressure
No time pressure
No business hours to hamper your search
Availability of handy “configurator” and “compare cars” tools
Easy access to video and photography
Easy access to deals and incentives information

When you compare these advantages to the hassle of going from dealership to dealership to view vehicles and learn about basic pricing, it shouldn’t be hard to convince you that a disciplined online shopping procedure is the right choice.

One of the critical ways you can bring structure to your online car shopping is by establishing a budget for a car. A good rule of thumb is to plan on spending no more than 15% of your total monthly budget on your total automotive expenses, including the vehicle, insurance, license plates, maintenance, and repairs.

You can use a car loan calculator to determine how your monthly budget for a car translates into a total loan value amount. By adjusting the down payment, the loan’s length, and the interest rate, you can see how much you can afford. Keep in mind that popular financial advice is to avoid loans longer than five years (60 months) if you must take a loan at all.

This guideline enables you to understand how big a monthly payment you can reasonably afford. Of course, you don’t have to spend that much, and some personal finance experts suggest that you avoid getting a car loan at all. Instead, they recommend you save some of your income each month until you have enough money to purchase outright a car or truck – typically a used one in this case.

Whichever choice you make, your online car shopping efforts should be informed by what you can pay for your next car. If you have $15,000 in the bank that you can spend on a vehicle purchase, confine your shopping to vehicles with prices of $15,000 or less. Even if you get a loan to purchase the car, it will likely require you to make a substantial down payment that might be as high as 10% of the purchase price.

Once you know what you can afford to pay, shopping for a car online is much easier.

Another valuable method to learn how much you can afford is by applying for a car loan online. Numerous finance and banking sites let you comparison shop loan rates and availability and apply for loans online.

By going through this “pre-approval” process, which means the institution will grant you the loan when you are ready to purchase a vehicle that meets the loan parameters, you will know what you can afford based on your current credit rating, available loans, and current interest rates.

Getting yourself pre-approved for a car loan an additional advantage. It gives you a baseline to compare other loan offers, including a loan suggested by a dealership finance and insurance (F&I) office.

If you’re pre-approved for a loan, you know your credit rating, and you know the interest rate for which you qualify. Your pre-approval incentivizes a dealership to try to beat the best deal you’ve already received rather than to find a way to artificially inflate your rate and pad the profit on your deal.

Once you’ve arrived at the appropriate amount you are willing to pay for your next vehicle, you can use online information to help you decide if you want to buy a brand-new vehicle, a used vehicle, or essentially split the difference by purchasing a certified pre-owned (CPO) vehicle.

New vehicles have the advantage of warranty coverage that protects the buyer from repair and sometimes maintenance expenses for at least three years. CPO vehicles are used vehicles that are typically five years old or less, and they too are covered by warranty protection that can extend several years. Most often used cars are sold “as-is” with no warranty at all. What you see is what you get. Some online used-car sellers, like Carmax, Carvana, and Vroom, offer limited warranties or return policies.

One way to help yourself make this decision is to use a website like this one and use the Car Finder tool to discover new, used, and CPO versions of the model you’re considering. This is a quick way to compare prices between the three types of vehicles.

As you undoubtedly know, a used version of a particular model will be less expensive than a brand-new version. A CPO vehicle with warranty protection will be somewhat more costly than the traditional used car, but you might find the peace of mind the warranty gives you will be worth the added expense.

For additional advice about finding the right vehicle for you, we recommend reading How to Research a Car Online.

By this point in your online car shopping process, you should have a good idea of the vehicle you’d like to buy. You’ll know the make and model, perhaps details like the trim and options, and you’ll have a good idea if you want a new, used, or CPO version. This is the time to check for deals and incentives on that vehicle.

If you are buying a brand-new car, an excellent place to start looking for deals is on the automaker’s consumer website. There, you can go to the pages describing the vehicle you want to buy, or you can go to a section often called “Shopping Tools” or something similar to that. Look for buttons or links marked “deals,” “incentives,” or “local specials.” This is where you will discover the regional promotions that could save you a great deal of money.

If you are buying a CPO car, the automaker websites are also useful resources to learn about what’s included in a CPO program, search local inventory for CPO vehicles, and learn about any discounts or loan/lease offers on them.

If you are buying an as-is used car, the deal you make depends entirely on your negotiating skills. Start by knowing the average trade-in and retail value of the vehicle. Search for the same make and model using online classified ads to get a sense of what asking prices are, and then negotiate from there.

At this point, you’ve narrowed your shopping to the specific year, make, and model of car that you plan to buy. Now, it’s time to find the exact vehicle you want.

Again, you’ll start online for this process. You can use a third-party website offering access to classified ads for new, used, and CPO vehicles, similar to the JDPower.com Cars For Sale section. Since literally millions of cars are up for sale on the internet at any one time, use the tool’s filters to limit your searches to vehicles that are nearby and meet your make, model, year, and price parameters.

Or, you can search for new, used, and CPO inventory at local dealerships through the automaker’s consumer website or the dealer’s website. This method is best for people who don’t want to travel far, or who wish to support their local economy, or who have an established relationship with a dealership they trust.

Either way, once you find the exact vehicle you want to buy, it is time to start the process of parking it in your lot, driveway, or garage.

When you have used this approach to locate actual vehicles for sale near you that match all your buying criteria — year, make, model, price, equipment, color — you are at the end of your online shopping journey and ready to begin your online negotiation, purchase, and delivery process. And guess what? You can do that online, too. Read our Pros and Cons of Buying a Car Online article to learn more.

Of course, there is the possibility that the vehicle you think you want to buy sells to someone else before you can make the deal. Or the car won’t be exactly as described when you see it in person. Or you may be unable to agree with the dealer on the terms of the sale.

But having gone through the rational online car shopping process, you can back up a step or two, repeat those final steps, and get right back to that vehicle that checks all the boxes for you, the vehicle that will be your next car soon and for several years to come.

Jack R. Nerad has covered car buying, auto retailing, and the automotive industry for more than three decades. He has held editorial director posts at dealership, consumer, enthusiast, and market research publications; appeared on television as a car-buying expert; and hosts a popular podcast. He is the author of several books, including The Complete Idiot’s Guide to Buying or Leasing a Car.