Ideally, your head unit would be used to provide a signal to your amplifiers that is line level and you would not use its internal amplifiers (if any). They usually do not have the power and strength to drive speakers both loudly and cleanly. The line level signal is cleaner than the speaker level outputs on the head unit because it is does not go through the internal amplifiers in the head unit. That being said there are occasions where you would use the head unit's internal power. One situation is when you are on a budget and are building your system over time. The head unit can be used to drive speakers (but not subwoofers) until you can get an amp. The other situation is when you are building a system where the benefits of an amp are not important to you. Read my planning page for more details about what is right for you.
No head unit typically has more than about 60watts of total output power because more would require a real DC-DC power supply (which does not fit in a head unit easily). Using the head unit power can be a temporary solution until a separate amplifier can be purchased, just make sure you do not try to power any subwoofers or insensitive component sets with the head unit's built in power. According to Car Audio and Electronics magazine, most head units use the same chips for the internal amplifiers so they all produce about the same low power. The best they have measured is about 14watts into 4 channels at 1% distortion. Their power level at a better lower distortion figure (like 0.1%) is significantly lower.
Note about using factory head units: Many people ask me about using the factory head unit that came with their car with external aftermarket amps. Typically you cannot get a clean signal from the head unit because factory heads do not have line level (RCA) pre-amp outputs to drive an amp. You can use a speaker level to line level converter but the sound is still going through the factory head's internal amps. Some people are willing to sacrifice some sound quality in order to keep their factory head. Also, if your factory system uses an external amp you may be able to find an adapter so you can use an aftermarket amp instead.
Usability: Your head unit is the part of the car stereo that you interact with most so it is important to get one that "feels" good to you. Always look at a head unit in a store display and use it for awhile. Try to flip through radio stations and tracks on a CD to see if it is quick and easy. If you have problems with small buttons, imagine what it will be like when you are driving! Since many models in the same price range are similar in features and sound quality, usability is often the deciding factor between models.
Power: Even though I just said not to use the built-in power of a head unit I know sometimes it is necessary. Bear in mind that the power specifications given by most manufacturers for head units are not accurate. They often use terms like "music power" or "peak power" which have little real meaning because there is no standard definition of those terms. If the power is quoted in "RMS" terms then it is usually accurate. However, there is still one other place of misconception. Often manufacturers will quote power as "30watts x 4 RMS". The "RMS" seems to mean it is a true indication of power but they are implying that all 4 channels can produce 30watts rms AT THE SAME TIME. With a head unit, this is almost always not true. Because of the small power supplies in head units they can rarely output more than 15-60 watts TOTAL. This means that the power to each channel at maximum loading would only be 1/4 of that total. Some manufacturers are better than others about giving accurate specifications and a few models are available with sophisticated power supplies which have higher power output but they are VERY expensive. If you're paying less than $800 for a head unit (and most of us are!) then your head unit will not put out much power. I have written a more comprehensive explanation of power amplifier specs as well. Speakers which are not producing bass do not draw nearly as much power so you can get away with using the head unit to power them but use passive high pass crossovers (bass blockers) and they will play even louder and cleaner. Bear in mind that the distortion may be higher from the head unit than an external amp however.
Cassette vs. CD: This choice is mostly a matter of preference. If you do not have many cassettes then an in-dash CD player is probably right for you. If you need the capability to listen to cassettes and CDs then a cassette head unit with changer controls should be adequate. Be aware that many in-dash CD head units can control a CD changer as well so you can use both. An in-dash CD is convenient for changing discs quickly while on the road. Because of size of most CD changers they are usually mounted in the trunk or under the seats although there are some newer models which are small enough to fit in glove compartments. Under the seats or in the trunk are not easy places to get to while you're driving!
Theft Protection: Detachable faces are the most common theft prevention scheme in head units today. There are two flavors, fully detachable and partially detachable. With a fully detachable face all the controls on the front come off leaving behind a blank panel, whereas a partially detachable face leaves some features on the head unit but the head unit is still useless without the face. Fully detachable faces are larger and bulkier to carry around than partially detachable ones but leave nothing behind to be seen. Another option is Eclipse's ESN system. With these head units when you first apply power to them you must supply a CD which the unit remembers as the "reference" CD. Thereafter if the unit ever loses power you must insert the "reference" CD before it will work again. Only you know what the "reference CD" is so the head unit is useless to a thief. Eclipse also tracks the units they repair. More than once a stolen head unit was returned to them for service because it was not working. Upon verifying the head unit was stolen they can apprehend the thief as the person who returned the stolen head unit for service. I still wouldn't count on the thief to know that Eclipse does this though so I stick with a conventional fully detachable face. A new twist from Kenwood flips the face around when you turn off the power so the thief can't see the head unit. I think it would work even better if the face then went back into the head unit, giving the appearance that the unit is a detachable face head unit with its face removed.
Pre-amp outputs: These are must for any serious head unit. These outputs allow you to run an amplifier directly without need for any conversion. This is the cleanest output of the head unit. Some units have multiple outputs and sometimes ones that are crossed over. Look for the amount and type that you need for your system but keep in mind future expansion. One is sufficient but having two allow you fade, or adjust the levels of multiple amplifiers right from the head unit. Some head units now offer 4 volt outputs instead of the usual 1-2 volts. This can be very beneficial since cars have a lot of electrical noise in them. The 4 volt output is less susceptible to noise, however, you must be certain that the amplifier or crossover being connected to the output can handle 4 volts or you will not be able to use the extra voltage. If your head unit does not have pre-amp level (RCA type) outputs you can buy an adapter which will convert your speaker level outputs to line level. They range in price from $12 on up but since I have not used them I do not know how much difference there is among them. Another option is to use an amplifier that accepts speaker level signals directly but those are not as easy to find.
Other features: There are many other minor differences in features between head units. Choose the one that appeals to you most. Switch able illumination is nice if you want the head unit's display to match the other instrumentation in your car. Dolby Noise reduction and full logic tape controls are nice as well. Finally, a remote control can be useful or can be a waste depending on whether you use it. A remote control mounted in the steering wheel can be very convenient though. Some CD heads come with a buffer to minimize effects from bumps. This can be useful but in my experience if you mount the head unit securely it will not skip much anyway and using the anti-skip buffer can have a slight negative effect on sound quality because of the way the buffer is implemented.
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