The old clunker has finally had it, and you’ve decided to shell out the money and get a new car. The prospect of tooling down the highway in a brand new vehicle is invigorating, but there are a lot of things to consider before you sign the papers. Doing your homework before rushing off to visit a car dealer is a wise course of action. Following are five things to think about before buying a new car.

Trade or Private Sale

One of the first things you need to think about is what to do with your old car. Hopefully you have a little set aside in savings so you don’t actually need to use whatever the old car will bring toward a down payment, but it will help lower the monthly payments if you do. Your old car may not be worth a lot, but it does have value. You need to decide whether to sell it yourself or trade it in. Most sources agree that a private sale will bring a better price than a trade in. That is a consideration, but you have to realize that selling the car yourself may take time. If you’re in a hurry, a trade-in is probably best. It may all come down to how much you think the old car is actually worth--to you.

Type of Vehicle

Before you set foot inside a car dealership, you need to be certain what type of vehicle you need. If you carry a lot of large, heavy loads then a pickup truck, cargo van, or large SUV may be called for. Or, maybe a smaller truck would do the job. Stay-at-home moms generally car pool their kids, and their kid’s friends, to school, soccer practice, karate meets, or band rehearsals. They need comfortable seating for multiple people. Business men and women may have to play host to out-of-town clients so a two-seater convertible is out of the question--they’ll need a full-size four-door vehicle. Living in a rural environment, or someplace that gets lots of snow may have you leaning towards 4-wheel drive. If you drive a lot but don’t like spending half your income on gas then a fuel efficient car may be your choice. The point is that you should base your decision of what type of vehicle to buy on what you need and not necessarily on what you want. Knowing this ahead of time can save a lot of frustration when you begin actually looking at vehicles.

Lease or Buy

Another consideration is whether to lease or buy your new car. There is no definitive consensus about this issue. It seems like half the people you talk to swear that leasing is the most economical choice, while the other half contends that buying is the only way to go. The only thing you can do is research the deals offered by various car dealerships and determine which would fit your personality and pocketbook. A leased vehicle will generally cost less per month for the duration of the lease, but then you have to turn that car in and make the same choice again. Buying a car outright means you own it, as long as you make the payments. After it’s paid off you still have the vehicle, but without payments.

Financing

Financing goes hand in hand with the decision to buy or lease because there is usually a disparity between the amounts you will pay per month--frequently less with a leased vehicle. If you lean heavily toward one side of the fence or the other then the next consideration is where to get your car financed. Whatever you choose, it is best to have financing arranged before you actually begin shopping. Borrowing the money for the car from a bank or credit union is usually cheaper than getting the loan through a car dealership--generally lower interest rates. There are exceptions, however, because lenders affiliated with brands, such as Ford Motor Credit or GMAC, frequently offer low interest loans.

Insurance

Another consideration before hitting the road is insurance. If you are making payments on your new vehicle, your lender will more than likely require you to carry full coverage for the duration of the loan. But that doesn’t mean you don’t have decisions to make. Before choosing an insurer you need to compare rates. Shop around and get quotes from a variety of insurance companies before signing any papers. If you have your home and health insurance with a certain company, they may offer discounts if you get your car insurance through them, too.

Guest post from Bailey Harris who writes about car insurance rates and related topics for the Car Insurance Blog.