The doctor recommends you buy a used car since the value of new cars depreciates rapidly after you buy it. But hey, if you’re hellbent on buying a brand spanking new car, at least avoid the mistakes I’ll outline in this post alright?
I mean, a new car is a huge financial commitment. You’ve either spent the last few years saving up for it or you’re going to get a 60 month auto loan. So it’s important that you not only get the features you want, but also the best price. There are quite a few potholes you could go through along the way, which is why I’ve decided to outline them here.
So if you’re in the market for a new set of wheels, let’s get on with the 5 mistakes you need to avoid at all costs.
Only Shopping At One Dealership
Before you buy a refrigerator, don’t you shop around first? You probably hit up Sears, Home Depot, Best Buy, Lowe’s and even Amazon looking for the best deals. You do this because it’s a big purchase. Well other than a house, purchases don’t get much bigger than buying a car. So it stands to reason that you should also comparison shop for your car as well. By going to different dealerships you’ll get a better idea of what type of deal the salesperson can offer you.
Keep in mind that the salesperson is there for one reason, to make a commission. They get paid based on a percentage of the profit made on the sale. So it is in their best interest to charge you as much as possible. But if you decide to get up and leave, they get zero, zip, nada. This is why will notice that each time you’re about to leave, the price suddenly drops a bit more.
This is how you can assure yourself that you’re truly getting their best offer. So opt to leave the dealer and wait for them to lower the price one final time. If they have your contact information, you will get their absolutely lowest price on the phone later on in the day or the next morning.
Shopping At The Wrong Time Of Year
Dealerships get new inventory at the beginning of the year and start over with the sales goals at the same time. That means they will be less likely to cut prices or make a deal at this time. But at the end of the year, the emphasis is on clearing out old inventory and making the final push to reach their sales goals.
So if you’re in the market for a new car, shop in the late summer or early fall, right before the next year’s models come out. You will still drive away in a new vehicle, but it will cost you thousands of dollars less than had you bought it just a few months earlier.
Believing The Sale Is Valid Today Only
Don’t be fooled by grand opening specials and test-drive incentives. It’s all a façade to lure you in. Don’t be so blinded by all the bells and whistles the dealership has, such as free hot dogs or crazy promotions that are of course valid that day only.
The salesperson will invariably tell you that this crazy insane sale is only valid today. This common sales tactic is used to get people to seal the deal without going to another dealership or taking time to think about the purchase. Even if you’re happy with the price you have negotiated, take time to shop around a little bit to make sure you’re getting the best deal.
Resist the urge to succumb to high=pressure sales tactics and don’t sign on the dotted line until you’re completely comfortable with the purchase. There is usually no return period on new cars, so once you sign and drive away you’re stuck with it.
Focusing Too Much On The Monthly Payment
One of the first things a salesman will ask is what your budget is. But they don’t want to know how much you want to pay for a car, they want to know what kind of monthly payments you can afford. They ask you how much you make every two weeks with the goal of seeing how much money they can squeeze out of you every month.
Auto dealers are experts at making that fancy new car of your dreams look affordable by finding ways to lower the monthly payment. Do not fall for these tricks.
They will tell you that you can drive off with this $16,000 car for only $350 a month and no money down. It sounds amazing, but what if you have to agree to a high interest loan for the next 60 months? That $350 monthly payment translates to a whopping $21,000 over the length of the loan. You have essentially overpaid by $5,000.
This sucks especially because a few years down the line you’ll still be paying top dollar for a car that surely isn’t worth anywhere near the $16k sticker price and most definitely not anywhere near the $21k you will ultimately shell out for it.
Always ask the salesperson this question: what’s the total? No not the monthly total, but the total amount you will pay for the car, including interest. This is the number that is most important and it’s the number you need to feel comfortable paying.
Not Doing Enough Research On Your Trade-In
When you’re buying a new car odds are you’re going to be replacing your current car. The easiest way of doing that is to simply take it to the dealer and trade it in. The value of your trade-in will be deducted from the price of your new car. Sounds good right? Well the problem with this is that you’re going to get peanuts for your car from the dealership.
You can always get a better deal by selling the car yourself. Your current car may only fetch $6,000 as a trade-in, but you might get $8,500 if sold privately. Is that extra $2,500 worth the hassle of selling the car? That’s for you to decide, but keep in mind you could simply take a few pictures and list the car on eBay.
If you don’t want to bother with selling your car on your own, there is another option. You can take your car to CarMax and they will make you an offer on your car that may beat the dealerships’ offer. You don’t even have to buy your new car from CarMax, you can just sell them your old one and then shop around for a good deal on a new car elsewhere.
Shopping around for the best deal on a new car is great, but you should shop around for the best offer on your trade-in as well. Dealers want to pay as little as possible for trade-ins, so it’s important to come armed with information from the Kelley Blue Book app.
Before going to trade in your vehicle, do some homework on the current trade-in price for your car. With this information in hand you’ll have a lot more negotiating power because you’ll come prepared with an idea of what your trade-in is really worth.