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 articles to buying a new car, buying a used car, 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 type of driving do you do most often? How long is your commute? Is it important that your next vehicle get good gas mileage?

In too many cases people choose a car for its styling or because it is a trendy favorite. If you do, you might either exceed 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 capacity?
  • Will you be doing any towing?
  • Do you have a bad back and need flexible seating positions?
  • Will the car easily fit in your garage or parking space?

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 fits into your budget is crucial. How much should this be? A rule of thumb is your total monthly car payments shouldn't exceed 20 percent of your monthly take-home pay.

Check the Edmunds.com Affordability Calculator to help you estimate what your monthly payment will be based on purchase price, down payment, interest rate and length of loan. Run the numbers now and print out the results. 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 will 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.

Advantages of Leasing

  • You can drive a more expensive car for less money.
  • You can drive a new car every few years.
  • There are 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.
  • There are no unexpected mileage penalties for increased driving.
  • There's more 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 Edmunds Purchase Calculators to calculate your monthly auto loan payment vs. your monthly lease payment.

Step 4: Have you considered all vehicles in that class?
In today's crowded automotive marketplace, many consumers have difficulty keeping up with all of the vehicles available. Use Edmunds.com to research your choices before you hit the showrooms.

On Edmunds 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 website by searching by make, type, price range or market segment. Once you have chosen your specific car, you will find information on pricing, specifications, features and road tests. You can also use Edmunds Vehicle Comparison to select similar cars to review.

If, on the other hand, you have no idea where to begin, you should consult the Best Cars section of the site.

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. True Cost to Own presents this information in an easy-to-read table.

Another valuable tool is Edmunds.com's True Market Value pricing to find out what a fair price is for the car you are considering. TMV is the average price other buyers are paying for the same car in your area.

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.
In the past, 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 online. Car dealers are waking up to this new breed of shopper and have created internet departments within their dealerships to serve the educated buyer. The only things 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.

On Edmunds 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 or negotiating with an internet manager, take the time to research the cars you are considering. Remember: You don't want to make a large purchase like this 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 or e-mail before going there in person. This can give you a sense of the sales style you will be dealing with throughout the buying process. Additionally, if you can establish a rapport with the internet salesperson, it will boost your confidence before you visit the lot. Call the internet department (sometimes 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.

Make your initial contact with the internet manager either via an e-mail message or a phone call. You can also send multiple dealer requests and narrow your search based on the e-mail responses. Call the internet department and 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 model, and if they can offer the vehicle at a fair price.

If you deal with a normal car 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 right away. 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 test-drive should replicate the conditions the car will be used in after you buy it. 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 and test the brakes in a safe location. 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 if you can 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--evaluate that separately. A new car is a big investment; make sure you spend enough time really looking it over. Then consider one last thing: your intuition. If you are uneasy about the 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? You will probably need to drive other types of cars at other dealerships. It's a good idea to do your entire test-driving in one morning or afternoon. Driving the cars back-to-back will help you uncover differences that will lead to an 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 say you still have other cars to drive and you can't make a decision yet. Most good salespeople will respect that. If they don't, you won't want to 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 "10 Steps to Leasing a New Car". If you are going to buy your next car, read "10 Steps to Buying a New Car" or "10 Steps to Buying a Used 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 move forward with confidence.

Copyright Edmunds Inc. All rights reserved.

More From Edmunds.com