So, you’re buying a car? This guide on – 9 Mistakes To Avoid When Buying Cars – will help out. Buying a car can be a huge decision. You want to pick the one you like the looks of, that’s dependable, that fits your needs, and that fits your budget. If you want to avoid the most common mistakes keep reading.
- Purchasing a car can be one of the biggest purchases you make
- Being prepared by planning ahead and doing your research before buying a car is key
- According to Statista, in 2019, close to 5 million passenger cars were bought
- Over 60% of people buying cars want to buy from a dealer
- New versus used car sales used to be closer to par but used car sales have doubled in the last couple of years
9 Mistakes To Avoid When Buying Cars
1. Not Preparing Yourself to Buy Your Car
Know upfront if you’ll be buying your car outright or signing up for a car loan with a monthly payment plan. Knowing what you can afford and how you’re going to pay for it will give you a bit of leverage in your purchasing negotiations.
2. Not Knowing Your Credit Score
Check out your credit score before you go into a dealership. If you have a good score then getting good interest rates and terms will be easier. If your credit score is bad you may only be offered high rates and terms that make it harder to repay your loan. Even one-half of one percent on the loan or an extra year of financing can make a big difference to your budget.
Even worse, you may not be able to get financing when you need it.
3. Not Being Prepared to Walk Away From a Possible Car Buying Mistake
If you aren’t ready to walk away from negotiations when you’re offered poor terms then you may end up paying a lot more than you planned. Dealers know how to hook you in emotionally and when you’re sitting there you may feel like this is your only chance to buy this car but if you’ve done your research you’ll know that probably isn’t the case.
4. Not Considering Purchasing a Used Car versus a New Car
New cars are enticing but remember that they begin to depreciate the minute you drive them off the lot. In fact, in the first year, their value can drop by as much as 25%. That’s huge. For that reason, always consider a used car perhaps one that’s 1-2 years old with low mileage so you can stay within your budget. Check to see if the car is still within its warranty period. If you buy from a dealer you can usually opt for an extended warranty which usually works out to a lot less than the 25% the car lost in its first couple of years when purchased new.
5. Not BringingWhat You’ll Need to Buy Your New Car
Once you’ve done your research, locate the right car and know how you want to pay for it you’ll need to have certain information ready to go. Bring these things with you if you are ready to buy so there is no delay:
- driver’s license
- some proof of insurance (in most states)
- a method to pay for your car i.e bank transfer, check, etc.
if you are financing your car with the dealer and depending on your credit score you may or may not need to bring proof of income, a utility bill with your current address, and if necessary someone to co-sign your loan. If you have bad credit you may be able to get your finance from other sources.
6. Buying the Wrong Car
Are you a commuter in lots of stop-and-go traffic? Then a manual car will help you get better mileage. Is it just you and/or one other person using the car? Buying something smaller that fits your needs. Buy a car of the right dimensions. I heard of someone in Boston who bought a car they thought would fit in their parking space but it did not! List why you need the car and what you’ll be needing it for.
7. Not Totaling ALL The Costs of Buying Your New Car
There are so many extra costs with cars that you might lose sight of in the excitement of choosing and negotiating that new car. Check these out before you buy:
- Auto Insurance goes way up depending on the car value. That could mean a difference of hundreds more per year for certain cars
- Don’t make the mistake of not factoring in high service costs for oil, filters, brakes, etc.
- Expensive replacements cost for tires, etc.
- Poor Gas Mileage
If you drive a lot and know your approximate annual mileage calculate how much you’ll be spending on gas for your commute or travels each year.
8. Not Buying At the Best Time and Paying Too Much
Sometimes you may not be able to control when you need that new-to-you car but if you can plan, watch for dealer specials and end-of-year sales. End-of-year sales usually crop up due to the end of the model year rolling around. Sales are especially valuable to watch for when there is a brand new model coming out that’s quite different from the old one.
Having said that, shopping at the beginning of the month may be more relaxed as car sellers have quotas that start on the 1st of the month. For this reason, there isn’t a mad rush to find buyers to fill that quota. On the flip side, buying at the end of the month sellers may be more concerned about filling quotas and are ready to deal.
9. Not Watching for Deals on Financing
Dealers may offer you something that looks great but beware of things like no-money-down offers. Don’t just snatch one up without studying what you’re getting into. No money down ends up being a larger loan amount. Larger loan amounts mean you’re paying more for that car – more than it’s worth. Plus, you’ll have larger monthly payments that could last an extra year or two.
So, while no-money-down sounds like a good deal and could get you into that car now, down the road you will probably regret it. One big problem is that in the future if you go for a home loan or a personal and lenders see that you have outstanding debt on your car they may not lend to you. Other possibilities are that they will not offer you great terms and/or they may extend a smaller loan amount – not the amount you asked for or needed.
In addition, if you decide to buy a new or new-to-you car before the loan is paid off on the old one you’ll need to either pay it off in cash or roll that amount into your new loan. Yikes!
If you consider other financing options other than your car dealer, look for a lender broker like Funding Zest who can give you the best terms and rates for you. They have lenders who will consider bad credit loans as well.
You may also want to read How Can I Save Money On My Car?
Follow the suggested tips above to make the most advantageous car purchase. It can mean the difference of hundreds or thousands of dollars in savings over the life of your car.