A recent study showed that 87% of Americans have negative car buying experiences at the dealership and that many feel they were taken advantage of. Car shopping has been an unpleasant experience for many consumers for a long time.
Much of the negativity associated with it can be avoided, though. If you know what you’re doing before starting the process, know what the common car buying mistakes are and how to avoid them, you can feel good about the experience.
So, what are those mistakes, and how can you avoid making them on your next trip to the dealership? Here is a list of 20 mistakes car buyers make when shopping for a new car.
Mistake 1: Not Comparing Prices
This one seems obvious, but the fact is that many car buyers start and stop their shopping at just one dealership. Dealerships have the power to set their own prices, and as a result, these bottom lines vary from lot to lot.
If you find a car you like, take the time to shop around. Look at the bottom line prices at a variety of dealerships around you from the comfort of your phone’s screen. Check that you’re comparing apples to apples with model, trim, and extras.
When you find the best price, you can take that to the nearest dealership and use it as leverage. Either they can match the price, or you know where to go to get the deal.
While this tip may cover sticker cost, down this list, you’ll see some other price tips to consider. There may be other ways to cut costs.
Mistake 2: Ignoring Your Trade-In Value
If you plan to trade your previous vehicle, you need to do your research. Too often, shoppers trust the dealership to determine the value of their trade-ins. Imagine if the grocery store let you set the price of your food.
Take the time to research the value of your trade-in. Many guides can give you a good price estimate based on make, model, year, and condition without your having to leave your bed.
Keep in mind that when you trade your car in at the dealership, they can’t give you the full value of the car. They need to make money on the sale, after all. But the price should be reasonable.
The better option might be selling the car yourself. You are more likely to get the full value out of the car if you do. It does take time, energy, and know-how, though. For many, taking a small hit on the price for the convenience of the trade is worth it.
Mistake 3: Not Shopping for a Loan
Again, it is easy to let a dealership do this work for you. After you’ve picked out your car, they’ll send you to the finance office and give you the loan you need for the car. Done and easy, right?
Yes, but easy can cost you thousands of dollars in the end. If you want to save money on your car, take the time to find an auto loan that is right for you.
Each bank and lender offers its own loan packages and its own interest rates based on several factors. Take the time to talk to a few lenders, seek out an interest rate that can save you money over the life of your loan.
Even a 1% difference can cost you more than $1,000. Some loans can come with penalties or fees that can end up costing you even more.
Mistake 4: Focusing on Monthly Payments
It is a common trick of the car dealership trade to get buyers focused on the monthly payment. When they do, dealerships can more easily add things like extended warranties or additional insurance packages that you may not want.
When a several thousand dollar extended warranty only adds $22 to your monthly payment, it doesn’t seem so bad, and dealerships know this.
Often, these add-on products are bigger money makers for dealerships than the vehicles themselves. So this type of tactic makes sense from their perspective. It may not make sense for you, though.
Consider your monthly payment, but always make sure you know the total cost of add-on products to assess whether or not they will work for you and your budget plan.
Mistake 5: Not Making a Budget
It is vital to understand exactly how much you can afford before starting your car buying journey. If you haven’t already done so, you should create a monthly household budget, including all of your income and outgo.
If you work under the principle that all of your monthly bills should amount to no more than 50% of your monthly income, you can see exactly what you can afford on your regular car payments.
Be sure to include loan interest, taxes, and title costs when you do your calculations. Use a loan calculator to see just what your payments will be at any given sticker price.
When you know what you can afford and how a total price might break down each month, you will be ready to make a smart purchase.
Mistake 6: Rushing Through the Process
Purchasing a car should take time. If you rush yourself or let a dealership make you feel rushed, the chances you’ll make the best decision and get the best deal to decline quickly.
Mistake 7: Being Rude to a Salesperson
Salespeople are your friends during this process, even if it doesn’t always feel that way.
It is the salesperson that can help you find the right model with the right trim package and add-ons. It is the salesperson that can knock a thousand dollars off the sticker price or throw in the alloy wheels.
When you are rude to a salesperson or treat them like the enemy, you risk being treated that way in return.
Mistake 8: Ignoring the Resale Value
Some car brands hold their resale value better than others. Part of your research should be into just this data.
If you intend to trade up in the future, choosing a car that will retain an extra 10% of its value at the time of trade can net you thousands of dollars.
Mistake 9: Ignoring Hidden Costs
Add-ons like extended warranties or specialty insurance packages are added to the price of a car after you’ve decided to make the purchase. Be prepared for that in your budgeting if you plan to include them.
You should also consider things like maintenance fees and gas usage in the planning and budgeting phase of your shopper’s journey. If you don’t, you may end up with more car than you can afford.
Mistake 10: Paying For the Extras
The sticker on each new car lists the price of the car. But it also lists all of the features and extras included with each model.
If you know that you don’t need a sunroof, alloy wheels, or tinted windows, look for these things on that sticker. Tell your salesperson that you want a model without any of these little extras that add hundreds of dollars to the cost of the vehicle.
Finding the right combination of these extras can save you money, even if it takes a few extra days to get the car to your dealer’s lot.
Mistake 11: Buying the Wrong Car
Some people buy a car because it looks nice, it gets great gas mileage, or it can hold a small army. Before beginning the buying process, you need to ask yourself exactly what your needs are and will likely be in the future.
Do you drive a lot in the city? Do you love long road trips? Do you have or plan to have a big family? Do you live in a frigid climate with difficult road conditions?
Your unique life means you have unique needs for your vehicle. Spend the time to write out how you anticipate using your new vehicle to get a good idea of what style, size, and features may be the best fit for you.
The fact is, a convertible sports car just doesn’t fit everyone’s needs.
Mistake 12: Failing to Research the Car
Read reviews about the make and models you like. Take the car you are interested in for a meaningful test drive. Ask a mechanic how often they see your favorite model year and for what issues.
When you fail to research a car before you buy it, you open yourself up to all manner of issues that you could have seen coming.
Mistake 13: Ignoring Deals
Whether it is a model year-end sell-off or a special holiday offer, car dealerships run a lot of deals throughout the year. If you plan correctly, you can make sure you’re shopping at the right time to capitalize on these deals.
Sometimes emergencies come up, and you have no choice. But if you can help it, find out when your favorite dealership is planning their next big event and hold off until then. It could mean thousands of dollars in your pocket.
Mistake 14: Failing to Negotiate
It never hurts to ask. If you want an added feature, a thousand dollars off the sticker price, or a trim package bump, ask with confidence.
Dealerships benefit from sales. Sometimes the sale itself is more important than their cut of the profit. If your request is within reason, there is an incentive to meet it.
You can even increase that incentive if you are willing to ask for the same thing at multiple dealerships.
Mistake 15: Considering a Lease
There are plenty of situations when leasing a car is a good idea. There are plenty more when it is not.
Whether you should buy or lease depends on your unique situation. Research the pros and cons of each before you head to the dealership. When you’ve found the right fit, make it a non-negotiable.
Don’t be swayed by the salesperson’s insistence that you can save on your monthly payments with a lease.
Mistake 16: Not Walking Away
When something doesn’t feel right or when you haven’t had time to research a loan, add-on, or aspect of the car you want to purchase, walk away.
This doesn’t mean you should abandon the deal altogether. But it does mean that you should be willing to leave the dealership without your new car, even when the salesperson pulls out all of the stops to keep you in the room.
Take a couple of days to do the extra research, to find a new lender, or to see how an unexpected price might affect your budget. Sometimes, you just need a night or two to think about the deal.
This is a big purchase and if something goes differently than you expect, be willing to walk away. At least for the time being. The right salesperson at the right dealership will understand and be gracious.
Mistake 17: Focusing on a Brand Name
Certain prestige brands can make you feel good about yourself. People often pay the extra money for luxury cars, not because they are the right fit or have better performance, but because those cars say something about their owners.
It may be better to focus on the technical aspects of a car, how well it holds up, and its fit for your needs when shopping. Sometimes, the “lesser” brands make more sense and save you money.
Mistake 18: Buying Under Pressure
When you allow yourself plenty of time to find and buy the right car, you’re more likely to make sound decisions based on research, budgeting, and rationality.
Salesmen may try to put car buyers under pressure, but when you do it to yourself by waiting until your car is no longer functional or trying to make a purchase at a given deadline, you’re hurting yourself.
Mistake 19: Not Planning for Insurance
Buying a new car can be fun and exciting, but many car shoppers forget this vital step. You may need special insurance packages to drive off with your car. You may need to budget for higher premiums with a car upgrade.
If you don’t take the time to plan for insurance changes, you might be surprised either on the day of the sale or the first time you get the new bill.
Mistake 20: Straying from the Plan
When you’ve gone to all of the trouble to make a budget, research a car, find the right price, and choose the best loan for you, you’re almost there. The last step is simply following through.
Too often, car buyers end up adding something shiny or veering from their budget once they get to the dealership. Do yourself a favor and shop with discipline. If you need to, bring a buddy to help keep you honest.
Car Shopping Done Right
In the end, it comes down to doing a few things right. If you do the research ahead of time, stick to your plan, and take your time to find the right car at the right price, you will be fine.
And don’t forget, the right lender will put the icing on the cake for a winning car shopping experience.
If you’re ready to find your next car, talk to us first. We can help make sure you have everything you need to get started on the right foot.