I think about cars daily (hence I have a car blog), and I even had to ease up on my writing because I got so juiced up about buying a car from just reading about them! But there’s some big, big mistakes you and I can definitely make when buying a car that can easily be avoided, such as:
- Thinking only about monthly payments. I used to think like this, and some of my close family members and friends have done so in front of me recently, but it’s the wrong way to think! Think about a) how much the overall cost is, then b) if you can really afford it in the long run (especially if something happens physically or financially) and c) how much will you be spending extra in interest.
- Buying more than you need. Heck, I bought a new car thinking we were going to start a family, but that family never came and we were stuck with a gas-guzzler.
- Adding on extra features without realizing the real extra costs involved. It’s easy to think “I might need All Wheel Drive (AWD) sometime in the 5-10 years I’ll own this vehicle”. You’ll spend extra on the vehicle, extra on gas and extra on repairs since an AWD system is more complex.
- Buying new versus used. Generally, used will save you money, if you get it properly inspected first and it’s a reliable brand/model to start with, because someone else has paid for the depreciation. However, it all depends on what you’re buying and how much you’re spending. Sometimes, factory and dealer incentives bring the price of a new car almost down to the cost of a used car, but don’t forget you can also haggle on used cars.
- Zero Down. If you’re buying, you should have first built up a decent savings for a down payment. Why? Because it 1) brings down your payments, 2) brings down the interest you’ll pay overall and 3) help with financing. Banks feel better about giving you money if you’re putting in a chunk of your own too.
- Test Drives. There’s so much to say about test drives, but not enough room. You’re spending a huge sum of money, but you’re only allowed a few minutes of driving around the car? I call BS! I understand dealers want to keep mileage low, but if you’re serious about buying, then make it known and the dealer will be more comfortable with you taking it out on longer drive. Also, pay attention to every single thing and pretend it’s your daily driver. Don’t get suckered in by the newness of it all. Lastly, make sure you’re driving the model with the specs that you’ll eventually buy. We test drove a Passat 4 cylinder but bought a 6-banger without test-driving it. We wished for the next 12 months of ownership that we had bought the 4 cylinder because that car drank glass like your Uncle Bob drinks eggnog at Christmas!
- Negotiating. Again, so much to say, but basically do your research on sites like Edmunds.com and find out invoice price. Know the dealer spent less than that (called “dealer holdback”), but don’t haggle DOWN from MSRP, but start with the rock-bottom price and see how low you can keep them.
- Shop Around. You’d be surprised with how far a dealer would discount to get your business. Our neighbors recently used the internet to cross-shop a Honda Pilot across a dozen local dealers and ended up getting $5000 off and it was from the best-rated dealer in the area. It took time and patience, but it worked for them and got the car they wanted down into their budget.
- Research Financing Options. Don’t just go with dealer financing unless it’s an amazing rate. If you’re part of a credit union, or your bank is having a financing offer, get pre-approved so you save yourself the hassle of refinancing later (and taking another ding on your credit score).
- Trade In Value. I’ve sold a half-dozen cars now, and I know that selling on your own, rather than trading in, can be a pain. However, you’ll almost always gets much more out of a private party than as a trade-in. Don’t be impatient and just take what the dealer is offering. If you have a Carmax around, get the free appraisal so you have a starting point.
Whew! Any other mistakes you can think of? What about your personal stories?