Buying a car is a big decision and can be a stressful process. From calculating your budget to finding the right car and finishing all the paperwork, there's a lot to do. To make sure you get the best deal and save money, it's important to be aware of the common mistakes people make when buying a car. Don't enter the dealership without a plan.
Before you set foot in a dealership, make sure you're in a position to take advantage of the best possible car deal and not be fooled into paying for something useless. Assess your family's needs, the demands of your trip to work, and the vehicle's core purpose before narrowing down your selection. Use a widely accepted source, such as Kelley Blue Book, to find out the fair market value and average sales price of the car you're considering. When car dealers know you've done your homework, they're more likely to offer their best deal first.
There is a direct correlation between your credit score and the loan you'll be able to get. Its FICO credit rating, which ranges from 300 to 850, is a rough representation of the risk it poses to lenders. Dealers that share a brand name often have different inventories and different prices or offers. Don't assume that the new cars you're buying are the same at two dealerships, even if both are local.For most people, price is an important determining factor when buying a car, but don't let that be the only factor.
Sacrificing quality for price will likely cost you more money in the long run. Don't fall in love at first sight. When you test a car, it may seem like it's the perfect fit, but you don't have a frame of reference if you don't compare it to similar models. Try different makes and models of vehicles to find the type of car you really want.Compare dealerships that offer concierge test drive service for a sales representative to give you the test drive.
Just like in a poker game, don't reveal your cards until you have to. If you tell the dealer what you expect to pay each month, you give them your leverage.Most people go into the buying process knowing approximately what they can afford each month. But obsessing over monthly payments can cause you to ignore important considerations or cost you hundreds or even thousands of dollars. Sometimes it's just not possible to get a dealer to lower the price of the sticker.But that doesn't mean you can't save money.
Even if they do it to try to get the best rate, dealers can inadvertently hurt you by buying your application from too many lenders at the same time. As the year ends, dealers are looking to dispose of their remaining inventory in anticipation of receiving New Year's models, making early winter a good time to shop for offers.Don't know about additional charges after signing. It's your job to keep “hidden expenses” in mind beforehand. The value of your car decreases the moment you take it out of the parking lot.
But that doesn't mean it's when it's worth more to the owner.Can you help it? Of course you can. The way you can do that is by taking a turn, because different lenders offer different rates. Make sure you have your approval handy, even before you buy your car, as it will help you stay in line and within your budget.An auto loan calculator can also help you determine what type of loan term and interest rate will fit your budget. Unless you're looking for 0% interest rates or other low incentivized interest rates, it's best to buy a car with cash.If you have to borrow, do so conservatively.
Get the best possible rate. Keep Loans for No Longer Than 36 Months and try to put 20%. The average American spends 10 hours buying a car, compared to just five hours buying a home loan.Some buyers become so obsessed with getting the “best deal” that they are willing to spend weeks buying a car. But at what price? And then you try to calculate those things to justify the purchase.You can, for example, tell yourself that you will keep the car for 10 years to justify depreciation.
But that estimation (and similar estimates of the future value of the car) can be too optimistic, thanks to something psychologists call optimism bias.Everyone who marries thinks they will stay married forever, even though sociologists predict that between 40% and 50% of marriages will end in divorce.Buying a car is fun and getting caught up in all the excitement is easy. You leave the parking lot with a big smile, but then, a few days later, you realize that you overpaid for your new car because you made one of several typical mistakes when buying a car. That's when reality strikes and sadly, you discover that it's too late to do anything about it.
Here are 10 common mistakes made by car buyers:
- Don't let the seller drive you to a vehicle you don't want
- Don't fall in love at first sight
- Don't reveal your cards until necessary
- Don't obsess over monthly payments
- Don't assume all dealerships are equal
- Don't sacrifice quality for price
- Don't forget about hidden expenses
- Don't buy without researching lenders
- Don't buy without an approval
- Don't buy without cash