If you’re in the market to buy a new or new-to-you vehicle, you’ll want to find the best vehicle possible to meet your needs while avoiding overpaying by hundreds or thousands of dollars.
Car buying is a complex process that has many aspects to consider, such as buying new or used, buying from a dealership or private seller, and deciding what make and model are best for you.
To help you through this process, we’ve compiled a list of some of the most common car-buying mistakes and tips on how you can avoid making them.
Not Planning Ahead
Don’t just jump into the car-buying process and purchase the first vehicle you take out for a test drive. Advanced preparation and research will pay off when you are buying a car. Make sure you avoid the following mistakes.
1. Skipping Research
The more you know about cars and dealerships before you start looking in person, the better off you’ll be.
You can find a lot of information about particular vehicles and dealerships online. Look for trusted and reputable websites, such as Kelley Blue Book® to learn more about vehicle values. Reviews, ratings, and valuation websites can help you learn what types of cars will best meet your needs and what cars will work within your budget. You can also use these types of resources to get a sense of how much cars are worth or how much you can expect to pay for a vehicle based on its model year, make, and features. By reading reviews on dealerships, you’ll gain a good understanding of what types of experiences customers had at them, which can help you determine where to start your search.
Another smart way to research a vehicle is to talk to someone — or multiple people — with the same model. What problems have they experienced since the purchase? Are repairs expensive or relatively affordable? What kind of gas mileage do they expect to get?
2. Skipping Calling Your Credit Union and Insurance Agent
Don’t forget that there’s more to the cost of a vehicle than the sticker price. You’ll also need to pay for insurance and, if you’re financing the purchase, the loan. Although some people head to the dealership before getting their financial details in order, the best option is to call your credit union or financial institution first if you plan on applying for an auto loan.
Knowing how much you can afford to borrow and whether or not you can get approved for the loan will help you keep your expectations in check when you visit the dealership. If you know that you can afford a specific amount, you’ll be less likely to be drawn to a more expensive car.
You also want to make sure you’re in touch with your insurance agent before you finalize the purchase or even start looking at vehicles. Your agent can give you an idea of how much it’ll cost to insure a particular type of car. If you’re considering buying a new car, they can help you choose the insurance policy that will offer the best coverage and protection for you. Depending on the type of coverage you have on your existing vehicle, buying a new car might mean an increase in premium, so be sure to include the additional insurance cost when calculating how much you can afford.
3. Not Understanding the True Cost of Car Ownership
Regardless of what car you choose, there will be ongoing costs, such as refueling costs, maintenance, and insurance. These costs are important to factor into your monthly car budget.
When it comes to refueling costs, the type of car you drive (i.e. a sedan vs. a pickup truck) can impact the size of the gas tank and the efficiency of the car – namely how many miles per gallon you’ll get. Having to refuel a larger tank more frequently will cause gas costs to add up quickly. It’s important to note, too, that some higher line car models may require a more expensive gas to function properly. While it may not seem much on the surface, having to pay an extra ten cents or so a gallon each time you fuel up can add up to big costs in the end. Additionally, your refueling costs could be impacted by the type of car you get – a traditional gas-only car, an electric car, or a hybrid that uses both.
Maintenance costs are also important to factor in. Depending on the vehicle and how much you drive it, you’ll need to consider the cost of oil changes and tire rotations, for example. To make sure you fully understand the costs, it’s important to check into the specific model you’re considering to determine if the car requires any higher priced parts or more expensive oil to run properly.
Lastly, as mentioned above, it’s a good idea to consult with your insurance agent before buying a car to understand what the premiums for that specific make, model, and year will be for you. This can help determine if the car is truly something you can afford and if you’ll need to consider an alternate vehicle instead.
Not Being Thorough at the Dealership
If you have the option of taking your time when buying a car, do it. The more thorough you are when researching and test-driving vehicles, the more likely you’ll be to end up with a vehicle that works with your budget and checks all of the boxes in terms of your needs.
1. Visiting Just One Dealership
One mistake to avoid making is only visiting one dealership when trying out cars. There are a few reasons why it pays to shop around. You’re likely to have more options the more dealers you visit, and getting written pricing sheets from multiple dealers will allow you to compare costs and possibly negotiate a lower price. If you buy the first car you drive at the first dealer you go to, you may miss out on vehicles that better meet your needs and that are available at a better price elsewhere.
2. Not Considering the Best Time to Buy
It seems natural to visit a dealership during the weekend when you’re off work. However, this is when sellers expect to move merchandise. To get the best deal, shop during work hours on a weekday.
Monday through Wednesday is often the best time to look for a car, as dealerships see less foot traffic and are more willing to offer a deal. You’ll also get more personal attention from the salesperson, so you can ask plenty of questions.
Like many businesses, car dealerships have sales quotas they must meet by the year’s end. If you can wait, try to make your purchase during October, November, or December. The end of summer may also be a great time to buy as many dealerships are transitioning to newer models and will be looking to sell their older cars.
You can take advantage of holiday sales as well. For example, on Black Friday, sellers showcase deals similar to other businesses.
3. Taking an Improper Test Drive
While online reviews and descriptions of cars can give you the basic facts about a vehicle, you never really get to know a car until you take it out on the road. The test drive is your chance to see the car in action and to get an idea of whether it works for your driving style or not.
But don’t rush through the test drive or let a dealership pressure you into wrapping things up until you feel ready. If possible, test drive the car in the same conditions you plan on driving it in. If you primarily drive on country roads, test drive the vehicle on country roads. If you spend most of your commute on a highway, take the vehicle there.
As you drive the car, pay attention to how it handles, how smooth or bumpy the ride is, and how it accelerates and stops. Also keep an ear out for strange sounds that could indicate a problem.
4. Not Doing an Appraisal of Your Trade-In
If you have a car to trade in, make sure you know the value before you take it to the dealership. You can use resources to determine how much your car is worth based on factors like the year, make, model, and condition.
Having this information will allow you to negotiate a trade-in value when you’re shopping for a new car. If you feel the dealer is offering you less than the car is worth, you don’t have to take their first offer. Make a counteroffer and be prepared to back up your argument with the information you researched on your own.
If, in the end, you can’t get to a trade-in value you’re comfortable with, remember that you don’t have to trade your car in at the dealership. You could opt to do a private sale instead if you have the time to manage it.
5. Not Negotiating Properly
Negotiation is part of the car-buying process. The better you are at negotiating, the better the deal you are likely to get. Don’t feel shy about negotiating, either. Car dealers are in the business of selling cars and have seen it all. They understand that you are going to try to get them to lower their price, and they are most likely ready to work with you.
As you go into the negotiation process, try to stay calm and neutral. Even if you love the car and know it’s “the one,” keep your emotions off the table. If you and the dealer can’t come to an agreement, there will be other cars and potentially better offers elsewhere. Don’t let yourself end up spending more than you can comfortably afford or end up taking out more than you wanted to borrow to pay for a car.
6. Rushing the Paperwork Process
While finalizing your car purchase, you’ll likely be offered add-ons such as anti-theft devices, fabric treatments, window-tinting, etc. for the car. It’s common to be able to wrap the costs of these add-ons into the overall car loan. Before you do so, make sure you take time to consider your options thoroughly. Only purchase add-ons that bring value to the car and understand the impact of rolling these into your car loan, such as higher monthly loan payments and an overall increase in how much you’ll pay for the car.
Not Understanding Financing Options
If you’re going to borrow money to pay for your new vehicle, make sure you understand what that will mean before you take out the loan. You have many options when it comes to getting a loan for a vehicle. Many dealerships offer financing, or you can get a loan from your credit union. Often, a loan from a credit union will give you better rates and terms than a dealer loan, but it’s still a good idea to shop around and compare rates and offers before you make your choice.
It’s also important to understand what taking out a car loan will mean. How long will you have to repay the loan, and how much will your monthly payment be? How much will you pay up front? Can you afford to make a larger down payment to reduce your monthly payment? Would you be able to take out a loan with a shorter repayment period, but larger monthly payments? While you might be offered a lower monthly payment, the term of the loan makes it more expensive in the long run.
As you’re considering your car purchase, remember that the amount of your down payment will likely have a significant impact on the overall cost of the car. The less money you put down initially, the more of the car cost you’ll have to finance through a loan. This means higher monthly payments and an increase in how much interest you’ll pay.
Be sure to crunch the numbers ahead of time so that you know what your total monthly payments will be and if those payments, as well as the other costs of car ownership, such as fuel, insurance, and maintenance, work with your monthly budget.
To find more money-management tips and resources, visit our WalletWorks page.
Kelley Blue Book® is a registered trademark of the Kelley Blue Book Co., Inc.