7 Mistakes to Avoid When Buying a New Car
Buying a new car is a stressful process. It's hard to know if you're getting a good deal or falling for high-pressure sales tactics, especially if you've never bought a new car before. Here are some common pitfalls buyers face when shopping for a new vehicle.
Falling in Love
One of the most common mistakes when buying a new car is having your heart set on one make and model. If a salesperson knows how badly you want the car, they know you're more willing to pay more without considering the decision. This also keeps you from considering other options that may actually be a better fit for your needs.
Sometimes you don't know what you want until you get to the dealership. It is a common tactic for salespeople to get you to test drive a vehicle that's out of your price range, knowing you'll fall in love. This can result in you spending more than you can actually afford or choosing financing based on the monthly payment instead of the total cost of the loan.
Not Shopping Around
Don't make the mistake of only visiting one dealership before you select a final vehicle. High-pressure sales teams might tell you their offer is only good for that day, but that's highly unlikely. If they know you're shopping around, they might actually be more likely to negotiate with you. This will also give you the chance to compare vehicles from different makers.
Not Getting Your Own Financing Before You Go
Before you set foot in a dealership, go to your bank or credit union and get pre-approved for a loan. This will let you know what kind of interest rate and loan amount you qualify for. This prevents the dealership from trying to sell you financing at higher rates than you really qualify for. Dealership financing fees and commissions can end up costing you more than if you obtained the same loan from the same bank on your own.
Focusing on the Monthly Payment
When financing a new car, many people fixate on the monthly payment and don't realize how much more unfavorable loan terms will cost them in the long run. If the loan is extended by a year or two, your monthly payments may drop but you'll pay much more interest overall. You'll also pay off the car more slowly which could result in you being upside down on the loan when you want to trade it in.
Not Knowing What Your Trade-In is Worth
Many new car buyers do extensive research on the price and options of the models they're considering, but they fail to spend as much time researching the value of their trade-in. Once you've selected a car at the dealership, you've mentally committed to it in your mind. Knowing this, the dealer will always lowball you, sometimes by thousands of dollars.
Research the value of your trade and print out a physical copy of the report that you can bring to the dealership to negotiate. Better yet, sell your car privately and rent a car while you car shop. You will almost always get more for your vehicle by selling it on your own rather than trading it in.
Getting Talked into Extras You Don't Need
Once you've chosen your car, negotiated the price, and set up financing, you'll be sent to the dealership finance person. They will try to up-sell unnecessary extras like upholstery protection and extended warranties that almost always cost more than they're worth. Don't let them pressure you into add-ons that you don't really need.
Rushing Through the Test Drive
Once you find a car you intend to buy, make sure to take your time on the test drive. It may handle very differently than you expect. Take it on a variety of roads, from the highway to side streets. See how it handles sharp and smooth turns and both high speeds and low.
Luckily for new car buyers today, it's never been easier to do your homework before shopping for a car. You can start researching new cars at KBB.com, a rich source of information for anything from available options to vehicle values.
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.