Buying a car is a significant investment, but sadly many consumers make simple mistakes during the buying process that ends up costing them thousands of dollars.
To avoid becoming part of the club, here are the biggest car buying mistakes people make. The goal is to become aware of them so you don’t make the same mistakes and end up paying more than you planned.
8 Car Buying Mistakes Most People Make
#1. Not Doing Your Research
One of the biggest mistakes you can make when buying a car is not doing your research. This includes researching the make and model of the car you want, its features and pricing, and the dealership’s reputation.
Without proper research, you may end up paying more than the car is worth, or you may not get the features you need. Additionally, you want to call your insurance agent and get a quote on what your new premium will be. Too many people buy a car and then are shocked to find out how much it costs to insure it. By this point, it is too late and now they are stuck with a massive premium.
#2. Focusing On The Monthly Payment
Many car buyers make the mistake of focusing solely on the monthly payment, rather than the overall cost of the car. Dealerships will try to lure you in with a low monthly payment, but if you fall for this trick, you may end up paying thousands more in interest over the life of the loan than if you paid attention to the overall price you wanted to spend.
Be sure to look at the total cost of the car, including interest and fees, before making a purchase. Of course, it helps to know your monthly budget as well, so you know how much you can comfortably afford in regards to a car payment. If you find your monthly payment is too much, you either need to lower your budget or save more money to put down on the car.
#3. Not Negotiating
Many car buyers are hesitant to negotiate the price of the car, which can cost them thousands of dollars. Research the market value of the car and be prepared to negotiate the price with the dealership. Remember, the sticker price is often negotiable, and you can save a lot of money by haggling.
If you are scared to do this, know there are ways to negotiate a car price over email, so you don’t have to be face-to-face with the salesperson. This method also allows you to put two dealerships in competition and you typically end up with a much better price.
#4. Not Getting Pre-Approved For A Loan
If you’re planning on financing your car purchase, it’s important to get pre-approved for a loan before visiting the dealership. This can help you avoid financing through the dealership, which may have higher interest rates and fees. This is because most times you will get a great deal with your bank that you regularly do business with.
With that said, there are some instances where dealer financing is better. They might offer a lower rate or offer a cash back incentive to sweeten the deal. Even if you plan on taking the dealer financing, it is still smart to have a backup funding source just in case you don’t qualify through the dealer.
#5. Not Test Driving The Car
Test driving a car is crucial to ensuring that it meets your needs and preferences. Don’t make the mistake of buying a car without test driving it first, as you may end up with a vehicle that’s uncomfortable or difficult to handle.
At the same time, spend a few hours on online car forums. You can type in the make and model of your vehicle and chances are there is a forum where owners of that vehicle and potential owners talk. There you will learn the biggest issues people have with the vehicle and if there is another vehicle you might want to consider instead. You may even see people posting their purchase prices, which will help you when negotiating.
#6. Buying A Hybrid To Save Money On Gas
Hybrid cars have become increasingly popular due to their fuel efficiency and environmental benefits. However, some people make the mistake of buying a hybrid car because they want to save money on gas.
The problem with this is, many times the purchase price of the hybrid is higher than the traditional gas engine version. So while you are saving at the pump, you are paying thousands more on the purchase price and in interest charges. Make sure you do your research to know for certain if the hybrid is worth it or not.
#7. Buying Unnecessary Add-Ons
Dealerships often try to sell you add-ons such as extended warranties, paint protection, or rustproofing. While some add-ons may be useful, many are unnecessary and can cost you thousands of dollars. Be sure to research each add-on and decide whether it’s worth the extra cost beforehand.
Many dealerships will put a lot of pressure on you to buy these items as they profit the most from them. By being prepared ahead of time to say no, you are less likely to make a costly mistake.
#8. Trading In Your Car
Unless your car is a beater and has many issues, you are better off selling it privately versus trading it in. This is because the dealer will offer you less because they have to turn around and sell it for a profit. So if the car is worth $5,000, they won’t give you this amount because they won’t make any money.
While it can be time consuming to sell your car privately, you stand to make thousands more this way. And this means you can put thousands more towards your next car, lowering the cost of financing it.
By avoiding these common car buying mistakes, you can save thousands of dollars and ensure that you get the best deal possible. At the end of the day, the more work you put into the process when buying, the less likely you will be to overpay for a car or make a critical mistake that costs you money.