Are you looking for a car or a trick? An SUV or a sports coupe? A compact or luxury sedan? Hybrid or electric? Ask yourself the following:

1. How much time will you spend in your vehicle daily?

2. How many miles will you likely put on your vehicle annually?

3. Will you primarily drive on highways, in the city or off-road?

4. How will you use this vehicle (i.e. grocery shopping, carpooling, vacationing, commuting...)?

Do some research into the fair market price for the vehicle you want to buy. 

Know that the Manufacturer's Suggested Retail Price, or MSRP, is essentially meaningless; the MSRP is an arbitrary number created by the manufacturer and has no bearing on the real price of the vehicle.

Research the Invoice Price, or the price paid by the dealer to the manufacturer, through Edmunds.com, MSN Autos, Autosite or CarPrices.com.

If you have a large sum of cash to purchase a new car, great. If not, you will most likely need an auto loan. Go to your bank and ask about their auto loan options. The dealership where you buy your car may match your bank's terms or offer you a rebate with their own financing package as well. 

You can use The Motley Fool's online auto calculators to determine which financing offer is better, which terms fit your budget and whether it is a better fiscal decision to lease or buy your vehicle of choice.

If you already have a vehicle, you will need to sell or trade it in at the dealership where you buy your new car. NOTE: you will always get a better deal by selling your car independently. 

1. Consult the Kelley Blue Book value to estimate the trade-in or resale value of your old car.

2. Clean your car well so you will get the best value when trading it in.

3. Be honest about the condition of your old car.

4. Don't trade your car in until you're ready to buy your new car. CarBuyingTips.com recommends negotiating a final price for your new vehicle without including the value of your trade-in.

Always test drive a car before purchase to make sure it is the right fit for you.

1. Make an appointment at a dealership in your area. Make sure they have the vehicle you want in stock.

2. Be informed about the vehicle you want before your appointment and ask questions. Be aware, however, that the dealer is trained to play on your enthusiasm to make offers, so don't fall for their ploys.

3. Take the available literature on the vehicle home with you so you can continue to research.

4. Use the Consumer Reports Test Drive Checklist to determine how you felt about the vehicle overall.

5. Do not buy the vehicle after your test drive. Even if they are willing to cut the price significantly, do not buy on the same day you test drive. Make your final decisions away from the high pressure dealership.

To negotiate the best prie, force multiple dealers to bid competitively for your dollar. 

1. Locate eight to 10 dealers within a 100 mile radius.

2. Contact the dealerships' House Sales or Internet Sales Manager via email or phone. You will maintain control of the situation when you are not face-to-face with a salesman.

3. Tell the dealership you're interested in buying a car today or within the next few days. Mention that you're getting multiple quotes.

4. Tell the dealership exactly what you are looking for in terms of price and options.

5. One you have bids from several dealerships, contact them again, telling them the lowest bid you've received and asking whether they can match it.

6. After selecting a dealership, confirm the availability of your car, ask for the vehicle identification number, or VIN, and then ask to be walked through the car's options. You may even want to ask them to put a final offer in writing.

7. Go down to the dealership and finalize the deal.

Before you put pen to paper on that dotted line, make sure of the following:

1. Everything is complete and in writing.

2. Never sign an "As Is" agreement as it will essentially be waiving your warranty.

3. Do not buy anything extra. You can usually get additional "goodies" added to your vehicle at half the price if you do not purchase them from the dealer.