Car Buying Mistakes to Avoid

1. Buy on payment rather than price
2. Don't research target price
3. Involve trade-in too early
4. Don't know trade-in value
5. Give bad first impression to trade-in appraiser
6. Don't shop interest rates
7. Reveal hot buttons
8. No down payment
9. Wind up 'upside down'
10. Get clobbered by the 'back-end'

1.  Buy on payment rather than price.
Most of us live on some type of monthly budget, and we all have an idea of how much we would like our car payments to be. But if you negotiate based on payment amount rather than total price, you will probably end up paying too much; even though you might meet your monthly payment goal. Remember, ANY amount divided by the right number of months can equal your desired payment amount. It's called 'stretching the term', and car salespeople do it all the time. Let's look at a typical example: A car salesperson is telling you that the payments on the $20,000 car you want are $500 per month. You tell the salesperson the price is way over your budget of $350 per month. "What if I could get you into that car for $350 per month," the salesperson asks, "would you take it?" You agree that you would, and the salesperson is off for a secret conference with the sales manager. "Great news!" they exclaim upon their return, "We can do it for $360 per month!" What just happened here? It seems as if you just skillfully negotiated a terrific deal. In fact, the term or length of the loan, just changed from 48 months to 72 months, and the price remained the same. You will in fact pay about $2,000 MORE in interest. The bottom line is this, negotiate the price of the car first and any payment terms afterwards.

2.  Don't research target price.
Would you know a good deal if you saw one? Some car salespeople use this line to try and make you commit to a buying price, but it is a good question to ask yourself. Do some research so you will know when to say yes. We offer a free service which can provide you with a free service target price for any new or used car.

3.  Involve trade-in too early.
I can't emphasize this enough...negotiate the price of the new car BEFORE you involve your trade-in. It's easy to get confused because of the trade-in allowance game most dealers play. Do yourself a favor and keep your trade-in out of the equation until AFTER you settle on the price of the new car. More about your trade-in.

4.  Don't know trade-in value.
If you sold your car private sale, you would have to set a price. Perhaps you would look in the newspaper to see what similar cars were selling for, or you could look in a N.A.D.A. Guide to get an idea of price. Why wouldn't you do the same thing when trading-in? Not knowing the value of your trade is like announcing that your car is for sale and taking the first offer you get, and that could be thousands of dollars below fair market value. 5. Give bad first impression to trade-in appraiser. Remember that you are SELLING your old car to the dealer. If you bring it in filthy and full of trash and other junk the appraiser will assume you put a low value on your own car. If you were selling it private sale you would be concerned about the potential buyers first impression, you should be here too. More about your trade-in.

5.  Give bad first impression to trade-in appraiser.
Remember that you are SELLING your old car to the dealer. If you bring it in filthy and full of trash and other junk the appraiser will assume you put a low value on your own car. If you were selling it private sale you would be concerned about the potential buyers first impression, you should be here too.

6.  Don't shop interest rates.
For some reason many people don't consider the cost of financing a car 'real money' because you often don't see it. As long as the payment fits ones budget, the finance rate is often overlooked. Consider this, if you finance $20,000 for a new car for 5 years at 12% you will pay almost $6,700 JUST IN INTEREST. A rate of 9% would save you over $2,000.

7.  Reveal hot buttons.
Buying a car is an emotional experience and sometime our own emotions get in the way of making good decisions and sticking to our plans. Salespeople use your emotions to help them make the sale, so don't help them by revealing your 'hot buttons'. Hot buttons are the things that excite or concern you most about the purchase. If the salesperson knows that you love blue, hate the vinyl interior of your old car and worry about it not having air bags, do you think they will use that to play on your emotions? You bet they will! Don't underestimate this. They can't push your hot buttons if they don't know what they are. 8. No down payment. People are used to no money down or just trading-in. Unless you own your trade-in outright or have significant equity in it, you'll want to use at least some cash as a down payment. Any amount is better than nothing. Borrowing money is very expensive. Down payments will lower your monthly payments, save you money on interest and can sometimes earn you better rates on the money that you do borrow.

8.  No down payment.
People are used to no money down or just trading-in. Unless you own your trade-in outright or have significant equity in it, you'll want to use at least some cash as a down payment. Any amount is better than nothing. Borrowing money is very expensive. Down payments will lower your monthly payments, save you money on interest and can sometimes earn you better rates on the money that you do borrow.

9.  Wind up 'upside down'.
(Owing more on a vehicle than it's worth.) This is more of a situation that you find yourself in rather than a mistake, and it is VERY common. There are, however, things you can do to avoid finding yourself upside-down. First, always make a down payment when you buy. Using no money down sets you up for trouble as soon as you drive off the lot. Second, watch your mileage. High mileage is one of the most common reasons vehicles loose value; and if you are racking up miles faster than you are paying off your car, you are headed for trouble. Third, buy a car with strong resale value. If your car depreciates faster than you can pay off the loan...more trouble. And lastly, get a good deal! Saving money on the price of the car AND getting a good rate on financing means less loan to pay off in the first place.

10.  Get clobbered by the 'back-end'.
Dealers refer to the money they make after the sale as the back-end. Items such as financing, insurance, warranties and other add-ons are areas where dealers can make money... sometimes more money than on the sale of the car (the front-end). These items are typically sold to you by 'the Business Manager' and they can sometimes be slipped into your payments without being clearly disclosed. Keep these points in mind: dealers make money on each of these items, they are often negotiable, you don't need to buy them from the dealer (or at all) and you can shop around for all of them.