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2 More Common Goofs When Purchasing A Car

If you’re joining me for the first time, you’ll have missed my previous column that explained 2 of the most common mistakes that people make when buying a car (or, truck or SUV). We talked about how a lot of prospective buyers seem far more willing to spend money on a new vehicle than our parents were. I also explained the danger of letting the dealership salesperson mix the numbers (i.e. trade-in value, monthly payments, sticker price, etc.) when negotiating the price. Those 2 mistakes alone can end up costing thousands of dollars needlessly.

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Today, I’m going to describe 2 more goofs. As I mentioned in my previous article, my goal is to make you aware of things that can drain your bank account unnecessarily. Remember, these are common mistakes. Millions of people make them. Once you learn about them, you’ll be less likely to make them yourself.

#1 – Missing Your Driving Needs

Every dealership is filled with hundreds of great-looking vehicles. The lot can be seductive. In fact, it often is. For example, guys might be attracted to a sleek car that’s low to the ground and offers 400 horsepower. Of course, their pregnant wife at home may feel differently, especially when the baby is born.

Think about your driving routine. If you’re commuting 100 miles to the office each day, consider buying a fuel-efficient model. If you need space for transporting things, think about purchasing a truck or SUV. And of course, if you have small children, they’ll need to actually fit in your car.

#2 – Not Shopping Around

I have friends who will spend a month before choosing a DVD player, yet will only visit one dealer before buying a car. Vehicles are not like bars of soap. A Toyota Corolla at one dealer can carry a far different price than the same Corolla at another dealer. The reason is partially economic. A lot of prospective buyers don’t realize this, but MSRPs usually reflect the income level of the surrounding community. For example, a Ford Expedition at a dealership in Beverly Hills will usually carry a higher sticker price than the same Expedition in lower-scale cities. Shop around.

The Salesperson Is Not Your Friend

It’s important to remember that the folks who want to sell you a car are more than willing to overlook the fact that a particular model won’t meet your driving needs. They’re also very unlikely to say, “You know, you can buy this exact model in the next town over for less.” They may be friendly, but they’re not your friend. Ultimately, avoiding the 2 mistakes above is solely in your hands.

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Common Goofs When Purchasing A New Car

People make a number of expensive mistakes when they’re shopping for a new vehicle. Some buyers are attracted by the glossy and shiny exterior, neglecting safety and fuel efficiency. Other buyers, seduced by the promise of 400+ horsepower, are willing to overlook the 12 mpg and low resale value. Millions of people visit the dealerships each year and end up spending far more than they should for cars that won’t meet their driving needs.

Below, I’ll reveal 2 of the most common goofs that prospective buyers make when they shop for a new car. My hope is that the following list (albeit, a short one) will prevent you from making the same costly mistakes.

#1 – Scratching The Itch

Our parents were more likely to keep their vehicles for several years than drivers today. It was usually an expression of frugality. In effect, the longer you kept your car, the less expensive it was to enjoy the privilege of driving. The auto industry has obviously raised prices dramatically over the years, so owning a car hasn’t become any less expensive. The defining change has been the availability of credit and the flexibility of financing terms.

Drivers are more apt to trade in their cars earlier in order to enjoy the luxury of a new vehicle. Dealerships are happy to oblige, of course. Some will “charitably” offer to transfer the monthly payments directly to a new purchase contract. Be wary about “scratching the itch” to buy a new vehicle. It’s almost always more expensive than keeping your old one.

#2 – Mixing The Variables

I’ve mentioned this in one of my recent columns. The finance managers at dealerships are adept at manipulating numbers. When a prospective buyer approaches them with a potential trade-in, the salesman will try to negotiate by combining the variables. That gives them more flexibility and leverage to sneakily build in hidden profit. For example, they’ll try to offer a monthly payment based upon the trade-in value, financing terms, and sticker price.

Always negotiate each variable separately. Once you arrive at a price for the new vehicle, start negotiating the financing terms. Leave the trade-in value for last; in fact, don’t even mention it until the other variables have been negotiated.

Don’t Be Intimidated

The salespeople who work at dealerships realize that most consumers aren’t accustomed to haggling over financing terms. By contrast, they spend every day doing exactly that. Don’t be intimidated. Know the type of car that you want to buy (it helps to have done some research beforehand) and the amount you’re willing to pay for it. If you’re not able to secure the offer you want, walk away. And remember, driving your old vehicle for a few more years can be a great way to save money.

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