Car buying is, or should be, a calculated decision. A new car is a major purchase, one that can be fraught with mistakes if you don’t do your homework ahead of time. Before you head out to the showroom, make sure you’re prepared.
Top 9 car-buying mistakes
Buying a car can be a tricky process; to get the best deal, avoid these common pitfalls.
1. Buying the wrong vehicle
It’s rarely a good idea to buy a car solely based on its price or available rebates. If the vehicle is not good quality, or does not meet your lifestyle needs, then it’s not truly a good deal and will likely cost you more money in the long run.
“Getting a good deal starts with picking the right vehicle in the first place – one that matches your lifestyle, budget and personality,” says LeeAnn Shattuck, creator of The Car Chick website and Car Chick TV.
How to avoid: Research vehicles online before setting foot on a car sales lot and develop a thorough understanding of what you need, can afford and would be happy driving. Websites like Edmunds and Consumer Reports make it easy to compare vehicles and see vehicle quality and reliability ratings, and a loans calculator can help you evaluate monthly costs.
2. Mixing your emotions and your money
If you fall in love with a car, don’t overreact; instead, give yourself some time to sit back and make sure that it’s really the car for you. In short, don’t let your heart rule your head, as doing so could cost you.
“Every buying decision we humans make is an emotional one, whether we realize it or not,” says Shattuck. “But a car is also the second most expensive purchase most people will make in their life, so an emotional decision can cost you money.”
Also, keep a grasp on your budget. If you can afford $20,000 and the object of your affection lists for $30,000, negotiation probably won’t cut down more than, say, $3,000.
If the vehicle you want is out of your budget, consider buying a gently used model of the same car instead, Shattuck says. It’s usually better to buy a used model of a car that has a history of quality and reliability than to buy a new model of another vehicle that may be less reliable.
How to avoid: Never buy a car on impulse or the same day you test-drive it; instead, give yourself a few days to sleep on it. It’s also a good idea to shop around at multiple dealers and compare quotes. Before you make a final choice, look at all of the numbers in the security of your own home, where you can make a more rational, analytical decision.
3. Choosing a dealer by location
Dealers are not all the same, not even for the same exact car makes and models. Most people begin (and end) their car shopping at the dealer closest to their home or office. Yet choosing a dealership based solely on convenience can cost you money and result in a bad car-buying experience.
Instead of sticking to the dealer closest to home, ask around, learn from friends’ experiences and research each dealer’s Customer Satisfaction Index (CSI) score. These scores are developed based on customer feedback and satisfaction and are used by auto manufacturers to stay abreast of how well car dealerships are handling the sales process. What’s more, a dealership’s CSI scores play a role in the inventory they receive from a manufacturer. Dealers with the best CSI scores tend to receive the most popular vehicles from auto makers.
You can also check a dealership’s complaint record with the Better Business Bureau.
How to avoid: Before setting out to test-drive cars, research the dealers in your area. Check out their websites and read reviews to find a dealership with a good reputation.
4. Talking trade-in too early
Don’t jump in too fast when it comes to trade-in chatter. Evaluate the true value of your car before mentioning trade-ins.
“Most dealerships like to negotiate the sale price of a car and the shopper’s trade-in price at the same time. Doing so can add confusion to the process, and shoppers rarely benefit,” says Matt Smith, deputy editor of CarGurus. Negotiate a satisfactory price for the new car first, then bring up your trade-in afterward.
How to avoid: Savvy shoppers will request to negotiate the sale price of their potential purchase first, then talk trade-in.
5. Going alone when you need a helping hand
If negotiation tactics are outside your wheelhouse, turn it over to an auto broker or consider purchasing through a service like the AAA Endorsed Auto Buying Program, which nets members special pricing through authorized dealers.
“Whether you’re a first-time car buyer, you’re not comfortable with the negotiating process, or you simply know that you’re an impulse buyer who needs someone to say NO for you, it’s ok to ask for help with car shopping,” says Shattuck. “It’s a major purchase, so it’s important to make a good decision and to get a good deal.”
How to avoid: Bring a friend or relative who’s knowledgeable and comfortable with the car-buying process and can be your advocate, or consider hiring a professional. Some car-buying services offer discounted pricing on vehicles through dealers in your area, and others offer more personalized service that helps you through the entire selection and buying process.
6. Forgetting that it’s not over until the paperwork is signed
You may think that you’ve bought your car once the sales manager shakes your hand and tells you what a great deal you just got. But beware of the business office, often called the finance office. The finance manager’s job is to sell you soft add-on products, such as extended warranties, wheel protection, interior protection and more.
Dealers often make as much money in this room as they do on the showroom floor. Dealer add-ons, extra fees, insurance and interest rate changes tend to sneak up on you once the signatures begin.
“Each product on their own doesn’t seem expensive but these add-on products can substantially increase the price of the vehicle,” says Scarlett Steuart, lemon law attorney with Burdge Law Office.
How to avoid: Keep your budget in mind when walking into the finance manager’s office. And remember, it is perfectly okay to take a break from this final step in order to go run the numbers on your own and make sure that you’re still able to afford the vehicle with any add-on products.
7. Being afraid to walk away
Many shoppers make the mistake of feeling like they need to close the deal the day they enter a dealership. The reality, however, is that shoppers who keep their options open and visit multiple dealerships before making a final decision are in a far better negotiating position. Shopping around will ultimately make you feel more comfortable walking away if a deal goes poorly. Additionally, if you can show a car salesperson the other vehicles you’re considering, you can use those alternatives to strengthen your negotiating position.
How to avoid: When researching a vehicle to purchase, try not to settle on just one option. Instead, identify as many as two or three different cars that suit your needs and budget.
8. Letting the dealer determine your purchase financing
For many car buyers, financing — or how you will pay for the car purchase — is something they leave to the dealership. However, dealerships may not offer you the best deal on an auto loan. While it’s convenient to let someone else get quotes on your behalf, the dealership may present you with higher interest rates than what you could find on your own. Higher interest rates could cost you thousands of dollars over the life of the loan.
How to avoid: Shop around for auto loans with banks and online lenders that offer competitive auto loan rates for your credit range before going into the dealership. If a dealer can beat the best rate you’ve identified, then great. If not, you’ve saved yourself some money.
9. Forgetting that it’s more than just the sticker price
The sticker price you see on the showroom floor isn’t the end-all of your purchase. In reality, that price is just a jumping-off point for you or your trusted negotiator to lower your final cost. Known as the manufacturer’s suggested retail price (MSRP), it is merely a suggestion that the salesperson follows.
Also keep in mind that your final price could be higher than the MSRP if you include add-ons, fees and more. Some of these costs may not be negotiable, and dealerships may be less willing to negotiate on MSRP if the vehicle is brand-new.
How to avoid: The MSRP is a good benchmark for where to start your negotiations. The car dealer is expecting you to push for a price decrease, so remain steadfast in haggling for the price that is right for you.
How to better prepare yourself for buying a car
Car buying can be an exciting and emotional process. But getting the best deal and the most suitable vehicle for your lifestyle, needs and budget requires removing emotions from the process as much as possible, while also arming yourself with plenty of information and research.
Before putting the key in the ignition, look into multiple vehicle options, research reviews of dealerships and compare quotes from auto loan lenders. The more information you have at your fingertips when doing test drives, the better.