Buying a new car is exciting! However, it’s easy to end up overpaying by hundreds of dollars or more if you let the excitement cloud your judgment. Here are the 10 most common mistakes and how to avoid falling prey to them.
Setting Your Sights on a Specific Model or Dealership
Most cars cost at least $10,000. When you’re making this kind of purchase, you shouldn’t target a single model and ignore all others. Time may be a factor in your purchase, but there could be alternative vehicles that could actually be better for your family and budget.
Before you head to the dealership, go online to compare ratings, reviews, safety, reliability, and pricing. Becoming a knowledgeable buyer will make you much more confident.
Shopping around at different dealerships also conveys that you’re keeping your options open. Don’t be shy about telling the salesperson which other dealerships you’re talking to.
Skipping the Test Drive
If you’re shopping long-distance, it’s easy to assume that what looks good on paper translates to real life. However, shiny brochures and catchy descriptions aren’t enough — you need to feel how the car drives for yourself and make sure there aren’t any hidden surprises.
Spend at least 30 minutes test driving and inspecting the vehicle inside and out. Even if you have to travel a long distance, it’s worth the effort to avoid buyer’s remorse.
Not Digging Deeper into a Used Car’s Condition
It’s easy to hide the true condition of a used car. Test driving is a useful way to catch hidden problems, but it’s not a fail-safe. Be sure to look up the VIN to learn about the car’s maintenance and accident history.
Negotiating Down Instead of Up
It’s always wise to haggle with the salesperson, but you’re doing it backward if you negotiate down from the sticker price. Instead, you should ask what the dealership paid for the car and negotiate up from there. This gives you a better idea of the dealer’s profit margin, allowing you to determine a reasonable price range that allows both parties to benefit equally.
Only Focusing on the Monthly Payment
One of the first questions you may hear is, “What kind of monthly payment are you looking for?” Don’t take the bait! If this becomes the main focus of negotiations, the salesperson may lump the vehicle price, trade-in value, and loan or lease terms together, giving the dealer far too much latitude to fabricate the appearance of a “good deal.”
Instead, negotiate one thing at a time, starting with the vehicle’s price. Then, discuss the trade-in value, followed by financing or leasing to determine the monthly payment.
Forgetting to Research the Value of Your Trade-In
If you don’t know what your current car is worth, the salesperson may make you a trade-in offer that’s lower than what your current car is actually worth. To avoid this, look up your car’s retail and wholesale price on Kelley Blue Book.
Also, don’t worry about fixing minor problems with your car before trading it in. New tires, wiper blades, and an oil change won’t add much value. Put that money toward the new car.
Skipping the Call to Your Insurance Company
If the car you’re considering is significantly newer or higher in value than your current ride, you could be in for sticker shock when you update your insurance coverage. For a look at the big picture, give your insurance agent a call and explain what you’re considering. You may need gap insurance, which you might not have thought of, or you could be required to increase your coverage depending on your financing decisions.
Ignoring Other Long-Term Costs of Ownership
Certain cars come with higher long-term costs than others. For example, fuel efficiency, fuel type, maintenance costs, and other factors could raise the long-term cost. Many high-end vehicles also tend to have higher repair bills.
Agreeing to Buy Unnecessary Extras
It’s common practice for salespeople to upsell you on extras you don’t really need. These may include rust-proofing, paint and fabric protection, or VIN etching. Decline all of these add-ons.
Reliability surveys show that rust isn’t a serious concern with modern vehicles because they’re already coated to prevent corrosion. You can also treat the paint and fabric yourself with inexpensive products. If you want VIN etching, you can purchase a do-it-yourself kit for a fraction of the cost.
Failing to Pre-Qualify for an Auto Loan
You might be an expert at negotiating the price, but you could lose everything you saved if you don’t choose your financing carefully. Too many shoppers enter the dealership without considering where they might get an auto loan, assuming the salesperson will secure something for them. However, dealers often mark up the interest rate over what you actually qualify for to boost their profit. This could cost you significantly over the course of the loan.
This is why it’s critical to shop around and get pre-qualified before you go to the dealership. Compare several lenders to find the best rate and term to fit your needs. If the dealer ends up offering you something better than you found on your own, you can always take this offer. Otherwise, you can rest assured that you have secured the best deal possible.