If you’re in the market for a new or new-to-you vehicle, there are many aspects to consider, such as buying new or used, purchasing from a dealership or private seller, and determining what make and model are best for you. All of these options come with financial implications, and you’ll want to weigh them carefully beforehand so that you don’t make a purchase you’ll regret later on.
To help you avoid auto buyers’ remorse, we’ve compiled a list of some of the most common car-buying mistakes and tips on how you can avoid making them. Plus, we’re sharing a special offer for Penn Staters that can help you save when you’re ready to buy.
Not Planning Ahead
Don’t just jump into the car-buying process and purchase the first vehicle you take out for a test drive. Thoughtfully planning and preparing for your purchase beforehand will pay off. Make sure you avoid the following mistakes.
1. Skipping Research
The more you know about cars and dealerships before you start car shopping, the better off you’ll be.
You can find a lot of information about them both online. Visit 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 work within your budget. You can also use these resources to get a sense of 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 have 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 – who owns the same model. Have they experienced any problems since the purchase? Are repairs expensive or relatively affordable? What kind of gas mileage do they get?
2. Forgetting to Contact 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, interest on 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, what loan rates and terms are available, and whether or not you can get approved for a loan will help you keep your expectations in check when you begin car shopping.
You’ll 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. In addition, they can help you choose the policy that’ll offer the best coverage and protection for you. Depending on the coverage you have on your existing vehicle, buying a new car might involve an increase in premium, so be sure to include the additional insurance cost when calculating how much you can afford and reviewing your budget.
This may also be a good time to shop around for a policy with a different provider – request quotes from different agents on similar policies to see if you can save money.
3. Ignoring the True Cost of Car Ownership
Regardless of what car you choose, there will be ongoing costs, such as fuel, maintenance, and as mentioned above, insurance. These costs are important to factor into your monthly budget.
When it comes to fuel, the type of car you drive (i.e., a sedan vs. a pickup truck) and where you’re driving it can impact how many miles per gallon you’ll get. It’s important to note, too, that some higher end models may require midgrade or premium gas to function properly, which is typically more expensive. While it may not seem like much, having to pay an extra ten cents or so a gallon each time you fill up can add up. 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 car that uses both.
Maintenance costs are also important to factor in. You’ll need to consider the cost of oil changes and tire rotations for your specific make and model. Some vehicles require higher priced parts or more expensive oil to run properly.
Lastly, it’s a good idea to consult with your insurance agent before buying a car to understand what the premium for that specific make, model, and year will be. This can help you determine if the car is truly something you can afford.
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 fits within your budget and meets your needs.
1. Visiting Just One Dealership
One mistake to avoid making is only visiting one dealership when car shopping. 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 find at the first dealer you go to, you may miss out on a better price elsewhere.
2. Buying at a Bad Time
It seems natural to visit a dealership during the weekend; however, this is when sellers expect to move merchandise. To get the best deal, shop during the day on a weekday.
Monday through Wednesday is often the best time to look for a car, as dealerships see less foot traffic and may be 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 month’s or year’s end. If you can wait, try to make your purchase during one of these times or keep an eye out for holiday sales. The end of summer is also often a great time to buy, as many dealerships are transitioning to newer models and looking to sell their older inventory.
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. Going for a test drive is your chance to see the car in action and get an idea of whether it works for your driving style.
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. Heading to the Dealership Without Knowing Your Trade-In Value
If you have a car to trade in, make sure you know the value before you take it to the dealership. You can use online 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. Being Shy About Negotiating
Negotiation is part of the car-buying process. The better you are at negotiating, the better the deal you’re likely to get.
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 commit to more than you can comfortably afford or take out more than you wanted to borrow.
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. It’s common to wrap the costs of these add-ons into the overall car loan. But before you do, 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 loan, such as higher monthly payments and an overall increase in the car’s cost.
Not Understanding Financing Options
You have several options when it comes to getting an auto loan. Many dealerships offer financing, or you can get a loan from your credit union. Often, a loan from a credit union will give you a better rate, but it’s still a good idea to shop around and compare offers before you make your choice.
It’s important to understand how a car loan will affect your finances. Ask yourself these questions before securing a loan:
- How long will you have to repay the loan?
- What will your monthly payment be?
- How much of a down payment can you make?
- Can you afford a loan with a shorter repayment period but higher monthly payments, or do you need to spread the cost out over more time?
As you’re considering your 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 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 payment will be and whether that payment and the overall cost of car ownership fits within your monthly budget.
A Special Offer for Penn Staters
Are you ready to take the next step toward buying a new car? If so, check out this special offer for Penn Staters. For a limited time, you’ll receive a $200 cash bonus* when you take out a PSECU auto loan and meet promo requirements.
*ABOUT THE $200 ALUMNI AUTO LOAN CASH OFFER: From 4/1/21 to 12/31/21, PSECU is running a Promotion for those who establish a Qualifying Direct Auto Loan by using the designated PSECU promotional offer page. To receive $200, members must establish the Qualifying Direct Auto Loan between 4/1/21 and 12/31/21 and satisfy the promotion requirements. PSECU will deposit $200 into the Regular share within 60 days after the requirements are satisfied. A $5 minimum Regular share balance is required to be eligible to receive the $200, and the PSECU member must be in good standing as defined by PSECU’s Bylaws, Article II, Section 1. The Annual Percentage Yield on PSECU’s Regular share account is 0.05%. This variable rate is current as of 06/28/2021 5:27 PM EDT and may change. Withdrawals and fees may reduce earnings on the account.
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