Do you know how to avoid these 13 car buying mistakes?
A new car is probably the third biggest purchase you’ll ever make. Many people would say it’s the second biggest, but c’mon, weddings are expensive! At any rate, if you’re going to spend that much money it’s worth doing everything in your power to avoid expensive car buying mistakes. Here’s what to look out for:
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- Waiting until it’s too late: If you wait until your car is pumping out smoke and hooked up to a tow truck, you will be in a rush to get a new car. Car dealers love people under time pressure because it means you have less room to negotiate and cannot explore many alternatives.
- Buying any time other than the end of the month: Car salesman and car dealerships have monthly quotas tied to bonuses. These bonuses could be for much more money than the couple hundred dollars you are negotiating on a single car. If either a salesman or dealership is close to hitting their month end numbers, you are probably close to getting a great deal.
- Not doing your homework: Don’t just let the salesman tell you about a car. He’s going to tell you anything he can so you write a check. Make sure you’ve done your research before going to a dealership. Find out what’s important to you like gas mileage, safety ratings, typical maintenance costs, residual value, etc. There are plenty of online resources to find the best car prices, so no excuses.
- Not knowing the going price: Along the same lines as the last item, preparation is key. It’s not enough to only know the MSRP (or sticker price) of a new car. Find out exactly what other people are paying. Edmunds is a great resource.
- Test driving all over town: Plan out your test drives so that you can hit a few dealerships near each other and not spend all day driving. When faced against a hungry salesman, the last thing you want is to be worn out and too tired to go explore alternative options.
- Buying dealer installed items you do not need: Many cars are already configured with dealer installed options that they will not remove. They could be anything from heated seats or GPS to mud flaps and pin-striping. If you are negotiating for a car over email make sure the salesman tells you exactly how the car is configured, so you do not get caught by surprise later. And if you are buying at the dealership, consider if you really want those items and if not, consider another dealership or model car.
- Talking trade-in too early: Refuse (politely) to talk to a salesman about your trade-in until you’ve settled on a price for the new car. Car salesmen will try to muddle the two prices together and make up for any concessions on car price by offering less for your trade-in.
- Not knowing the value of your trade-in: Buying a new car is not the only part of a new car negotiation. Make sure you get the most for your trade in. Find out how much it’s worth on Edmunds or get an online appraisal from Autotrader.com.
- Monthly payment buying: Do not let the salesman talk you into deciding on a “reasonable” monthly payment amount instead of looking at the total price of the car. There are many factors that can be changed like the length of the loan that can make a car look more affordable than it really is.
- Not looking around for the best interest rate: There is nothing that says you have to take a car loan from a dearlership. Not only are interest rates negotiable, but it pays to shop around before buying. A good rate can make a difference of hundreds or thousands of dollars over the life of a car loan. Check with your bank, credit union, up2drive, or MyAutoloan.com and see where you can get the best loan.
- Not planning for the Finance Department: The finance department is one of the biggest profit centers for a dealership. You may think the deal is done, but they will try to make more money off you. You will be offered add-ons such as paint sealant, rust-proofing, or VIN etching. Don’t be pressured to pay for anything you’re not certain you will need.
- Not considering insurance: Many people forget to consider how a new car will affect their insurance premium. New cars have higher premiums than older cars. And you can expect very high rates for cars that are commonly stolen or sporty models because they are more likely to be driven fast and get in accidents.
- Negotiating at the dealership: After you figure out what you want, go home! Get competitive prices from multiple dealers and negotiate over email to make them compete with each other. Negotiating with a single car dealer means you won’t get a competitive price because there is no competition.