Car buying can feel like a daunting task. In fact, according to a University of Michigan consumer survey, 3 in 4 consumers think now is a bad time to buy a car.
But what if you’re in the market for a car despite the bad timing? As you shop for a car, sometimes the best you can do is avoid mistakes. Here are some of the worst car-buying mistakes to avoid.
When buying a car, one of the best things you can do is have a budget ahead of time. Know how much you want to spend on the car and try to stick to that number.
It’s common for salespeople to ask how much you can afford to pay each month. This is a well-known tactic designed to get you to spend more overall. They can massage the monthly payment by suggesting a longer loan term to make it feel more affordable.
Rather than negotiating based on the monthly payment, stick to the total cost to stay inside your budget.
It can be tempting to stick close to home to buy a car. However, you might get a better deal by driving a little farther. Car shopping website Edmunds points out that one big cost can be sales tax. If you live in a state with a high sales tax, you might be better off going to a neighboring state with a lower sales tax.
Additionally, some states limit other fees from dealerships, such as documentation fees or “doc fees.” By researching ahead of time, you might be able to save money by going a little farther afield. (Although there are a few extra considerations there, such as making sure the vehicle meets emission standards in your state, not the one you buy it in.)
Consider reaching out to different dealerships to find out what the car you’re looking for will cost. Let them know you’re shopping around, so you’re more likely to get access to the best deals each dealership offers. Consider using email to communicate so you have prices in writing.
Your trade-in is designed to help reduce the overall price of your car. If you bring up the trade-in too early, you could be at a disadvantage in negotiating. When a salesperson knows you have a trade-in, they might start with a higher price or not offer as many concessions.
Rather than mentioning a trade-in first, try to avoid mentioning it until you’ve settled on a car price. Then you can use your trade-in to lower the final price.
Shopping around for a good price on a car is a good idea, but don’t forget about shopping around for your financing. Before you go to the dealership, consider lining up car financing.
Compare car loan rates from different institutions, including your bank or credit union, and online. You can also find out what financing deal the dealership offers. If you’re borrowing to buy a car, getting the best rate and term can save you money in the long run.
Don’t just take the dealer’s or independent seller’s word for it on a used car. If you have a mechanic you trust, take the car for an inspection. You want to ensure there aren’t unseen issues that pop up in a couple of months — which can add to the overall cost of the car.
Find out the car’s problems, and get estimates for fixing them. You might find that the “good deal” isn’t that great, and you might be better off getting a slightly more expensive car with fewer issues.
Once you agree to the price of the car, it’s time to sign the paperwork. Edmunds points out that some dealerships start piling on the extra costs here. Before signing the contract, find out exactly what fees are charged in the paperwork and how much it will add to the cost.
You can also research ahead of time to find out which fees are truly mandatory and which are add-ons. Review dealer-installed options, market adjustments, warranties and other potential costs. You might not need these items in many cases, and you can negotiate them out of the contract.
Even if you love a car, don’t be afraid to walk away from a deal that doesn’t serve you. Being able to say no can save you a lot of money down the road. If you’ve compared different dealerships, and the dealer knows you’ve been shopping around, you can walk away confidently, knowing you might get a better deal elsewhere.
Consider looking at different vehicles rather than “the one” to have more options. If there are two or three vehicles you’re interested in, and you’ve been shopping around with different dealers, you’re more likely to ultimately purchase something that works for you — and fits your budget.