- Buying & Selling New & Used Cars
Common Car Buying Mistakes And Pitfalls To Avoid
Common Car Buying Mistakes and Pitfalls
Do you know that the biggest common car buying mistake is rushing to buy a vehicle without doing your homework (The proper research) and without planning your finance? If your answer is yes, I know, then you have a basic idea about what should be done in order to have the right car at the fair price it deserves.
Despite that there are so many mistakes and pitfalls that surround the car buying process, the aforementioned two mistakes are the most critical and avoiding them represents the difference between a successful deal and an unsuccessful or futile one.
As a new or used car shopper, you most likely do not want to overpay for a vehicle or afflicted and saddled with a car that may not suit your wants and needs. The problem is that the decision to buy a new or used car for most buyers, is emotional rather than rational. However, when it comes to car purchase which on average costs tens of thousands of dollars, emotions and excitement should be set aside.
Although the car buying process can be exciting for some people, it also can be complex and overwhelming for most people, notably it involves various factors that are integrated together to constitute the car buying process. Apparently, dealers love the buyers who are unaware and who are in a hurry because being so, the dealer can steer the shopper to the vehicle that make him the most profit. Of course, dealers have the right to profit, but profit reasonably not exaggeratedly.
Successful car buyers take a different approach even if they have to research every aspect of the process separately, pre-shop for finance, insurance, warranty. Avoiding the following common car buying mistakes and pitfalls can put you in the safe side as a successful car shopper and eventually a buyer.
What to Avoid When Buying a New Car?
Avoid These Mistakes and Pitfalls, most of them can be applied to used cars as well:
- Impulsive buying: If you just take a look at some of the inferior vehicles that spew black smoke down the road with a bad reliability or condition, you will realize how much most buyers rush into buying a car whether it's new or used on impulse. Recklessness means that you are going to throw a portion of your money. Always have a foresight by researching the retail, resale and wholesale values of the car you are interested in buying. After all, you instinctively don't want to lose much money if you want to sell it or use it as a trade-in to buy a new one in the future.
- Being prey to advertisements or sales pitch: Cars are commodities, and you have a wide range of choices to choose from. Therefore, do not get lured by believing the special offer is available right now because it most likely will be there in the future and maybe you can find a better offer whether on the same car or its competitors.
- Buying without researching beforehand: As mentioned above, one of the biggest mistakes, especially in the age of the Internet, buying a vehicle without researching all the available information and data about it. Even it can be time consuming in most cases, but eventually it can save you hundreds or thousands of dollars that the lazy buyer may incur. You must research rating, reviews, reliability, crash tests, recommendations, pricing and financing opportunities. Surely, you can get the hard way by shopping around, but nowadays you can get most or even all of them by doing your research on the Internet.
- Not using the Internet tools: Nowadays, there is no reason not to use the Internet, especially it can provide you with the necessary tools that can help you research and collect almost every information you need. The following websites can give you the reliability studies, pricing information, the safety rating and crash tests of the different models, and the financing opportunities.
- Pricing: AutoTrader.com, TrueCar.com, KBB.com, Autobytel.com and NADA Guides.
- Reliability: ConsumerReports.com and JDPower.com.
- Reviews, ratings: ConsumerReports.com and Autobytel.com.
- Financing opportunities: Myautoloan.com
- Crash tests: euroncap.com and Safercar.
- At Edmunds.com you can find three of the most valuable tools, TMV, TCO and the affordability calculator.
- Not having an idea about the price: Though your research, you should research the MSRP (Manufacturer Suggested Retail Price) (Commonly known as the sticker price) and the Invoice Price (What the dealer paid to the manufacturer to get the car) of the car you intend to buy. Because you will need to begin your negotiation up from the invoice price not the MSRP. You can even start your negotiation below the invoice price if you figure out the rebates and the holdbacks that manufacturer granted the dealer as incentives. Also, you should get Price Quotes, websites such as, Yahoo! Autos and Edmunds.com offer free online dealer quotes. The more price quotes you get, the better the deal you can get.
- Trying to determine the dealer's net cost: It's difficult for most people and even for seasoned automotive insiders to get the dealer's net cost. Therefore, it's far better to focus on the available pricing numbers such as MSRP, Invoice Price and TMV (True Market Value) which Edmunds.com assigns as the average price the other people are paying for the vehicle in a given area.
- Not taking advantage of the competition: "COMPETITION = SAVINGS FOR YOU", visit several dealerships to get competitive offers, consider the Alternatives/Competitors of the vehicle you are thinking to buy. Always stick to your research-based choices and do not let the dealer or the salesperson take you for a ride. Better yet, lay out your research on a paper or a notebook so that when they see you, they realize that you are an educated shopper. Be wary of letting them decide what is best for you. Instead, be firm and decide which is better, appropriate and affordable based upon your research.
- Not setting a budget: Setting a budget can make you see your financial borders. Always make sure that you are buying a vehicle that you can afford to avoid buyer remorse. And, do not lock yourself in a lengthy loan term that may accumulate the interest rate to the extent that cost you much more money. Stick to your budget and do not let anybody take you for a ride.
- Financing the vehicle improperly: Do not be mistaken, the dealership is not the only place you can finance for your purchase from. You have a multiple places to shop around such as the local banks, the credit unions or the online financial websites. The best idea is to get quotes/offers from the aforementioned utilities, then when you go to the dealership you can assess the offer they slide across the desk. Otherwise, if you go to the dealership failing to pre-shop for financing, you will inevitably accept or pushed to accept the offer that the F&I (Finance and Insurance) guy will give you. The problem is that if they round off values, especially if you trade-in your old car, the values may be taken as a lump sum which may profit them more by muddying the water on the details of the deal.
- Financing when you can afford paying cash: After you've researched the purchase price of the vehicle, consider buying it with cash if you have the lump sum. You may find special rebates and cashback as incentives for buyers who buy in cash. In either way, you need to know the purchase price of the car, whether you pay cash or finance.
- Buying a car based on its monthly payment: One of the biggest common car buying mistakes you can make and it's also a pitfall where you can get locked into a lengthy loan term which most likely cost you much more money than you expected because the interest rate will pile up over the loan term until you finish the last monthly payment. Here is the expected scenario and how to rectify it.
- You focus on the monthly payments and making an offer to a salesperson. You may hear that common question "How much were you thinking of paying each month?" or "what monthly payment you can afford?".
- Do not take the bait (Making an offer to a salesperson), do not rely on the affordable monthly payments to decide whether you buy the car or not. By making an offer to the salesperson or telling him/her what you can afford, you give them the bottom line that they want to hear.
- Considering the monthly payments as a determining factor is a big mistake and it's a pitfall to a slippery slope of other inflated numbers of the deal. Therefore, you should check every single aspect of the deal separately, then you decide whether the monthly payments are attractive or not.
- He/she may make it affordable for you by stretching them over a longer term, which means an attractive lower monthly payment, but also means that the interest rate may pile up more over that long period. So you will pay less each month for a longer period with a cumulative interest rate which will cost you more money in the long-run.
- In a nutshell, do not be tempted by giving the salesperson a number, then you slide into a corridor of other expenses you cannot afford that may last for many years. Know the total price first, then see which monthly payments are the best.
- Start negotiating in a wrong way: Typically, the dealer or the salesperson will start negotiating by asking you "How much monthly payments you can afford each month?" to bring up a deal that matches your situation from their viewpoint. Also, when you start negotiating first the total price of the car to get the best price possible, they may start negotiating down from the MSRP or the sticker price. You on the other hand should take the opposite approach, meaning you should start negotiating up from the invoice price. By doing so and according to Edmunds.com, you will most likely end up paying the TMV (Which are the average value that other people are paying for the same car in a given area).
- Underestimating your credit Score/unawareness of your credit score: Many buyers make the mistake of going to buy a car without knowing their credit score. Indeed, it can be a very costly mistake, especially for the people who have bad credit as they might accept to pay a high interest rate each month due to their bad credit score. There are three credit bureaus (Experian, Equifax, and Transunion) which can help you to get your credit report and your credit score. Knowing your credit score will put you in a much better position and you can find the best interest rate deal. You can find the best deal through FreeCreditReport.com.
- Accepting the deal jointly: Check every aspect of the deal separately.
- Neglecting Comparing insurance quotes: Insurance can be a large part of your annual expenses, especially if you have a model that is a "thieves target" like a Toyota Camry or a sports car. Therefore, it's vitally important to compare auto insurance quotes, to lower your annual auto insurance. Keep in mind that the insurance cost depends on not only your driving record, but also on where you live, your credit score and some features on the vehicle. Esurance and 21st Century Insurance offer online quotes.
- Not considering taxes and license fees: Taxes alone may increase your expenses when buying a car. Always consider the taxes and license fees for the car you buy.
- Letting your budget to be inflated: Always make sure that you buy a car that you can afford and avoid the "Upside down buying".
- Being sensitive or emotional: Shop many different dealerships with a note in hand to show them that you are an educated shopper. Keep in mind that not all the dealerships are the same. Each one boasts its services concerning prices. Therefore, be sober-minded and decisive to judge the services and prices of each one. Being unhurried and calm can be very helpful when it comes the time to negotiate with the salesperson and the F&I clerk. On the other hand, if you show them your emotions and excitement or joy, you will give them the chance to exploit it for their favor. So try to hide your excitement until you agree to the deal. In the same context, set aside the "new car fever" to not let them use it against you.
- Trade-in the wrong way: Before you think of trade-in, research the value of your current car. Never ever trade-in without knowing how much your old car worth. Because it's a very costly mistake and they may evaluate it at a lower price than it actually worth. Therefore, it's strongly recommended that you know exactly how much your current car worth.
- Accepting all the unneeded extras and add-ons: which can blow your budget. For example, do not be willing to accept whatever extended warranty that the dealer gives you. You can get a more affordable extended warranty by shopping around. By visiting more than one company online, you can get free quotes right from their website. Companies, like Smart Auto Warranty, can give you free, no obligation quotes. After you have several extended warranty quotes, you can then compare them to the extended warranty from the dealer to choose the best one. Try to accept only the extras and add-ons that you need.
- Skimping on the safety features: Do not underestimate the importance of today's safety features as they can reduce accidents and fatalities. ABS (Anti-lock Brake System) and ESC (Electronic Stability Control) can be beneficial for most cars notably SUVs. You should research yourself to see which safety features are the best for a given model.
- Being docile or submissive: Always be alert, many buyers think that the sole obstacle when negotiating is the dealer or the salesperson, but there is another obstacle which is the finance person or the F&I guy. But a dealership makes most of its money after the sale, when the finance person takes over and pushes higher-interest loans or expensive extended warranties. So be attentive to every small detail of the deal to decide whether you accept or not. After all, you don't want to unknowingly abide by and sign any contract.
- Hasty or token test drive: Assuming that you are not the kind of people who don't conduct the test drive at all as it can be a really problematic approach, which may cause you the buyer remorse. Check whether everything is ok and fit your needs. Check whether the vehicle is reliable on bumpy roads and highway and every potential road you may run on. Always remember that you will use that car for the next months or years so check whether it's the best choice or not. Hurried or done as a symbolic gesture test drive can be a wasted effort.
VIN stands for Vehicle Identification Number and it's extremely important as you will use it to get the history of the used car that you are going to buy.
You can find it on various places on the car. Also, you can find the VIN on the car's title or insurance card.
What to Avoid When Buying a Used Car?
Avoid These Mistakes and Pitfalls:
- Not using the Internet depository: Nowadays the Internet is very helpful when it comes to buying a used car. It can save you time and money.
- Turning your back to the CPO: Although the CPO (Certified Pre-Owned) Cars are more expensive than plain ones, you can buy them with peace of mind as long as you make sure to buy them from a reputable dealer or website.
- Not doing a thorough inspection: Never ever buy a used car without inspecting the mechanical condition first. When it comes to buying a used car, the condition is everything. Bring along a trustworthy, reputable or accredited mechanic to inspect first and foremost, the engine, chassis, brakes and other components. Even if it can be costly to do that, but it will definitely save you much more money in the future. As if you buy without checking and inspecting the mechanical condition, you will definitely regret your decision.
- Not checking the VIN: You must make sure that all the VIN number across the vehicle is matched (All VIN plates have the same number).
- Not getting a History Report: It's strongly recommended to get a history report on the used car that you think to buy to avoid the used cars that has been flooded, stolen or has undergone major repairs. You can do that by using it's VIN. You can get the history report from two of the most reliable websites like AutoCheck.com and CarFax.com.
- Hasty or token test drive: Always check the brakes, steering wheel, the dashboard, the gauges, the throttle, the existence of any rattles or squeaks from the engine or the suspension system, the tires, etc. The trustworthy or accredited mechanic should help you with that.
- Signing the "As it is" clause in the contract: Never sign the "As is" or "As it is" clause in the contract before you make sure that the used vehicle is up to your standards and the mechanical condition is good.
As we can see, making those costly mistakes and falling into those pitfalls when buying a new or used car will definitely lead to a buyer's remorse. Successful buyers, however, take advantage of the experiences of other people and avoid the common car buying mistakes and pitfalls that those people made and fell into.
I hope that you found this article helpful and if have any additional opinion, please leave it in the comment section below.
Muhammed F Omran wrote this article about the common car buying mistakes and pitfalls. Go to http://muhammedfomran.hubpages.com/ for the latest, strategic, to the point and actionable car buying tips.