Buying a new car is exciting to be sure, but it can also be much more expensive than it really should be for most people. If you aren’t careful you can wind up spending thousands more than someone else for the same kind of deal. Let’s review the top 5 new car buying mistakes that many people make and see how to avoid them.
1. Probably the first thing that costs most car buyers money is not doing enough advance research about new cars before they start the shopping process. You may think that you will learn a lot by just visiting the dealership and asking the salespeople about new vehicles, but you will only learn what they want you to know that way. If you want unbiased information that you can trust, you need to do some online research or read Consumer Reports instead. You can find out which vehicles are rated highest for reliability and other factors, as well as get specific pricing information that will help guide you in price negotiations. By doing this advance research you will know what you want and how much you are willing to pay for it.
2. Another common mistake is letting emotions dominate the buying process. Admittedly, it’s hard to keep emotions out of it altogether, and actually you should factor them into the purchase, but they should not overshadow good sense either. Remember that as soon as you allow emotion to cloud your decision making, you are playing into the hands of the dealer and you will most likely be willing to pay more just to get your hands on that shiny new car that you will have to keep paying more for when it’s initial allure has worn off.
3. Not arranging for auto financing in advance is another common and expensive mistake. In fact, this is an area that can cost you sometimes more than any other part of the deal. Dealers will always offer to finance a new car for you and they will try to do their best to convince you that buying the car through their financing arrangements is best, but keep in mind that they don’t sell car loans for free. Somehow they are making money on that loan at your expense. So why not line up your own financing in advance with one of the online auto lenders and then when it comes time to buy the car you want, make a comparison of which loan is truly best, the dealer’s or the one you already have arranged.
4. Using the sticker price as the starting point for price negotiations is costly. These days, a lot more is known about what a dealer actually pays the manufacturer for each vehicle and the sticker price is not the place to start at. Consumer Reports often lists the actual wholesale cost of the vehicle and then you can add on about %4-%8 to calculate a fair purchase price for that vehicle.
5. Dealers also love to load up vehicles with extras that appear to be valuable, but are way over-priced. They then include these into the overall cost of the car so it’s only a tiny amount of your monthly payment. But if you added up the cost of extras and the interest charged on them they could be significantly more than you would pay if you simply paid to have those extras installed on your own after the purchase.