The “Big 13 Do’s and Don’ts” of car buying
Buying a new or used car is one of the biggest purchase decisions one can make besides purchasing a home. Beyond this, it’s complicated because the dealer knows more than you do about the car you want to buy. All that said, buying a car is also an exciting and stimulating experience, and, because of that, it’s easy to get caught up in the emotion and buy without thinking. That, in turn, could cost you a lot of money and have you end up with a car you don’t like and wish you hadn’t bought.
There are many books, guides, and online resources that give all manner of advice and information about what to do and not do when buying a car. Be sure to make use of these resources before making a purchase decision on any vehicle – they can help you through the whole car-buying process. This section will outline the “Big 13” Do’s and Don’ts of Car Buying… and help you avoid some of the biggest mistakes that car buyers make.
- Never skip the test-drive
One of the most important things you can do when buying a car is to take the test-drive. Earlier in this chapter we outlined all that should be done with regard to the test-drive. Just because a car looks good in an advertisement or even in person doesn’t mean that it’s the right car for you. Many people make the mistake of buying a car with only a cursory testing of a vehicle. And, some don’t even drive the car at all. This is a sure way to end up disappointed after you’ve driven the car off the lot.
Some less scrupulous dealers will even try to have you avoid a test-drive because they know things about the car that might be discovered by you. While most dealers are honest and forthright, you can never be too careful. So, do yourself a good turn and NEVER skip the test-drive.
- Walk away if you need to
Sometimes the deal just isn’t the right one for you. Sometimes the pressure to buy gets “over the top” and things just don’t feel the way they should. That’s the time when you need to stop, think, and get control of your emotions. And that may mean walking away from the deal to avoid making a decision you’re uncomfortable with. Dealers will do all they can to keep you in the dealership if they believe you’re close to making a deal. They know that you’re far less likely to buy if you walk out… even if you say you’ll come back and do the deal later. Because of this, they’ll do all they can to keep you there until you make the purchase. But the truth is, the deal will be there tomorrow… and if you aren’t comfortable it’s okay to walk away.
- Fall in love with your spouse… not the car
One of the first rules in buying real estate is to never fall in love with a house because there’s always another one that will appeal to you. The same is true with a car. Far too many people fall in love with a particular make and model and don’t consider other options that might be better for their situation. Make sure you do your homework on the vehicle you’re thinking about purchasing… comparing it with other options. If you want to make sure you won’t experience buyer’s remorse after you buy a car, you’ll do the right things upfront, before you buy, to make sure you get the right car for you!
- Check out the car BEFORE you buy it
Doing your homework means knowing all you can about the car you’re buying before you buy it. That means checking reviews and reports about makes and models so you know their ratings (and their pitfalls). With used cars, “certified pre-owned cars” have been pre-checked by a dealer and often come with a special warranty to protect you after you have bought the car. You also want to check the vehicle’s maintenance records and run an InstaVIN check (www.instavin.com), Carfax check (www.carfax.com), or AutoCheck (www.AutoCheck.com) to help make sure that the car wasn’t in a significant accident, flooded, or has other hidden problems. If you check out the car before you buy it you’re far more likely to not have issues after you buy it. And an issue-free car makes for a happy buyer!
- Get financing before you go to the dealership
Many people make the mistake of thinking that their best financing options are at the dealership. While that may be true in some cases, many times it’s not. That’s why smart car buyers look at financing options before they go to the dealership to buy a car. If you don’t do your homework on financing before you do the deal, you may negotiate a great price and then lose all you gained with a bad finance deal. Dealers often mark up the interest rate on a vehicle loan. That means you can end up paying a lot more over the life of the loan than you might have paid if you had financing lined up before you went to the dealership. Getting pre-qualified before you go to the dealership can also improve your negotiation position and help you make an even better deal. Make sure you check with local banks and credit unions as well as consulting online credit sites to see what rates you can qualify for. That way, if a dealer can get you better terms, you’ve made an even better deal.
- Negotiate from the dealer cost…not the sticker price
Another big mistake made by car buyers is to negotiate from the sticker price down instead of working from the dealer cost up. Most reputable dealers will share their cost on the vehicle with you. If not, you can often calculate the dealer’s true cost by subtracting sales incentives, dealer rebates, and other holdback items from the dealer invoice price. This will help you get a better start on the price negotiation. Another tip is to buy a car late in the month when they are trying to finish the month to qualify for volume sales figures. This can help you in getting the best price because the dealer wants to “close out the month” with good sales volume.
- Forget the payment…it’s about the PRICE!
For many car buyers, the payment is all there is to a car deal. If they can afford the monthly payment, it’s “all good.” This is a serious mistake that can cost a buyer hundreds and even thousands of dollars. If the monthly payment is all you focus on, the dealer can lump all manner of things into the deal. When you negotiate, it’s important to do it in the right order. First, settle on the price you want to pay for the car. Once the price is established, then discuss what you will get for your trade-in (see 11 below). After that, discuss financing options (see 5 above). Lastly, discuss any add-ons such as an extended warranty or other items you may want to purchase (but see 10 below before you buy these “extras” for your car).
- Never buy the “deal”… what you’re buying is the car!
There are many different “deals” offered by auto manufacturers and dealerships. These can range from zero-percent financing and cash rebates to special pricing and more. While all of these can be good and help you save money when you’re buying a car, it’s important to remember that you’re not buying a program. Discounts and special incentives are great, but if the car they’re attached to isn’t so hot, you’re “great deal” might end up biting you in the… well, you know. Again, you need to do your homework. Discounts and incentives are often placed on slower moving models… and there may be a reason that they’re not flying out of the dealership. Perhaps they have reliability issues or other problems that you aren’t aware of. That could hurt you over the long term and turn a good deal into a bad one. It’s also important to remember that many of these incentives are being provided by the manufacturer so don’t be afraid to be a tough negotiator even if the car has an incentive attached to it. The bottom line: do your research well and don’t get sucked into a special deal on a car you may regret buying in the future.
- Look for modern safety features…they may save your life
Far too often, car buyers discount the value of modern safety features when they are considering a car purchase. But the fact is that these features can save lives in the event of an accident. If you are buying a vehicle, especially one that will be used to transport your loved ones, you should seriously consider not buying any vehicle that isn’t equipped with at least some of these key features. There are many studies that show how features like anti-lock brakes, electronic stability control, airbags, and others save lives and prevent serious injuries. They are worth the money. And if you don’t think so, just ask someone whose life was saved because their car had them. Make sure you research safety features and put vehicles that have them at the top of your list. The money you spend could save your life… and the lives of the ones you love.
- Make sure you know the value of your trade-in
The trade-in is one of the more difficult aspects of any car deal. The problem is that the dealer has far more information about the value of your old car than you do. That’s why it’s critical that you do research on your car and make sure you know the value of it BEFORE you set foot in the dealership. When researching, you want to know both the “used-car retail” value and the wholesale value of the car. In almost every case, you’ll get more if you sell the car yourself. But most folks would rather not go through the headache of listing a car, dealing with potential buyers, and all the other things that you have to do when selling a car. So, in a sense, even though you’re getting less for your car as a trade-in, for you, it may be preferable to the hassle. That said, you’re bound to get more for your trade-in if you can speak intelligently about its value than if you don’t have a clue. And in the end, if you aren’t getting enough for your trade-in, you can always say “no.”
- Don’t buy extras you don’t need
Dealerships have a large number of “extras and add-ons” that they sell to improve their margins and make more money on a sale. Most of them are not worth the money you pay for them. Even though it might be tempting to have paint protectant or rustproofing on your car, it probably isn’t worth what you’ll pay for it. One technique that dealerships use is to show you that it’s only a few dollars extra each month to have these “valuable extras,” but over the long haul, those “few extra dollars” will really add up. Skip these add-ons and save some dough.
- Seriously consider buying the warranty
All new cars come with some type of warranty. Some are better than others. As part of your research, it’s a good idea to see what the new car warranty covers and for how long. Depending on how long you intend to keep the car, you may want to pay for an extended warranty at the time you buy the new car. Don’t buy it if you think you will sell or trade the car before the original new car warranty expires. That’s simply a waste of money.
With used vehicles, many people don’t want to spend the extra money on a warranty. The problem is that when the car breaks down six months after they buy it, they then need to come out of pocket to pay for the repair. Even with a car that you’ve had inspected, hidden problems can exist that are just waiting to manifest themselves… and they can be far more expensive than the cost of the warranty. Check the sticker on the car. A car sold “As Is” means that after you buy it, it’s your problem. So if it breaks down five minutes after you leave the dealership, you’re paying.
Used cars that are “certified” often come with a warranty but you want to make sure what that warranty covers and see if it’s missing anything. It’s also a good idea to research warranties before you enter the dealership to make sure the one they’re offering is good.
- Don’t buy a car (and a payment) that will stress you out!
Just because you can “afford it” doesn’t mean it’s right. Many people have found themselves in the trap of “stretching” to make a deal work and end up paying more than they should. An extra $100 or $150 a month on your payment could cause you a lot of stress – especially if it leaves you so strapped that you don’t have money to deal with unexpected expenses. So, do yourself a favor and make a deal that doesn’t push you over the top in terms of your monthly budget. After the “warm fuzzies” of the new car are gone, the payment will be with you for a long time.