6 Most Common Car Buying Mistakes
As the economy is slowly moving out of the financial crisis the auto makers who depended on the government for bailouts are now in the black. Ford has had its best sales in more than seven years while GM has experience three consecutive quarters in positive income.
This means that many American have opt in to purchase new vehicles. In fact, many auto industry experts are saying that now is the best time to purchase a vehicle. If you are in the market for a few car or truck, please do not follow the crowd.
Research and set realistic goals to avoid the common car buying mistakes that many Americans make each year. Get current auto industry statistics and advice from auto experts from Kelly Blue Book, Edmunds, AutoPacific, NADA Guides, and Bankrate.
Here are 6 things to avoid when buying a new car:
Don't Buy a Car Based on Feelings
Many car buyers make the mistake of purchasing a car based on feelings and comfort, usually stemming from the impression of an advertisement. However, you should be purchasing a vehicle based on your current needs. A “soccer mom” with 5 kids should purchase a Toyota Sienna instead of a Porshe.
On the other hand, a small SUV could be best suited for a couple without kids who live in the city, while someone who haul large loads on a frequent basis would need a large SUV or truck.
The second mistake car buyers make is buying at the beginning of the model year. At the end of the model year most auto makers give incentives to car dealers to quickly move older models out of the dealership to make room for newer models. At this time cars are sold at a discount. This usually happens during the months of September to December. In the months of January to March the newer and more expensive models arrive at the dealership.
Third, many car buyers visit the dealership without doing research on the deals that are available. Auto dealership frequent receive deals and discounts from auto makers. These deals are usually based on volume. They can range from rebates, allowances, discounts, collections, carryover incentives and holdbacks (a discount auto dealers get from auto markers for financing cars on the lot). By knowing these information you will be armed with data to help you navigate the negotiation process.
Many car buyers will purchase a car from the car salesman who works on a commission, instead of taking to an office manager who usually has more information of special discounts that are available. Without these kinds of vital information the prospective car buyer is likely to make an impulsive purchase not suited to their needs and budget.
Fourth, some buyers make the mistake of talking too much and making suggestive remarks like “I really want this car” or “I love this truck” or “I would like to have this car today.” Sharing your feeling with the car salesman may indicate to him that you are desperate.
This gives him the edge in the negotiation process and because of this, will be more likely to add various fees to the price. Ask only about the “bottom line” and act with a slight disinterest.
Fifth, some buyers will lease a car because many lease agreements do not require a down payment. This is usually the case for luxury high end vehicles. In addition, lease payment are usually cheaper per month than car loans.
However, the car buyer should do his research to see whether having a new car every 2 to 3 years with no down payment makes more financial sense than owning a car.
Sixth, many car buyers make the erroneous assumption that car dealers will finance the loan for the new car. 99 percent of the time if they do, it is via a bank and their interest rate will most likely be higher than the interest rate the bank will offer. Car buyers should shop online for multiple loan quotes before accepting a loan. Another option is to visit local credit unions. credit union rates on car loans are usually less than that of banks.
