Buying a car is usually easier to understand than leasing one for most people. You choose a car, finance the purchase, make payments, and eventually own the vehicle outright. However, during the process of buying a car, there are some obstacles along the way. That includes dealer tactics and common mistakes buyers make. Failing to recognize these issues may cost thousands.
Dealer Sales Tactics
1. Using your credit against you
Sometimes the dealer will say you don’t qualify for certain financing or rebates due to your credit. Knowing your credit ahead of time can give you information to question the dealer’s findings.
2. Buying a car as one transaction
While it may seem that buying a car is one transaction, but in reality, it is three. The process involves the purchase of the new car, the value of the trade-in if applicable, and the financing. Negotiate all three separately for the best deal each time.
3. Payment savings
The dealer will often bring down your monthly payment, while at the same time adding to the length of the loan. A lower monthly payment is not always the best deal, so keep this in mind while in negotiations.
4. Balloon Payments
Sometimes, dealers will offer a significantly reduced down-payment and monthly payments with a balloon payment at the end. This means a large payment is due at the end of the loan. If buyers aren’t aware or do not understand this substantial expense at the end of the loan, they may be unprepared from a financial perspective. Be careful entering into one of these deals.
Common Car Buyer Mistakes
1. Buying the wrong car
As discussed earlier, not all buyers are in the market for the same car. If you know you are going to be transporting children all day, don’t leave the lot in a sports car with no back seat. A sedan, Sport Utility Vehicle (SUV), truck or van will probably be a better fit for you.
2. Emotional in the showroom
Often the stress and excitement of car shopping can leave buyers extremely emotional when it is time to sign on the dotted line. Don’t make rash decisions. Try to sleep on your options and go back to the dealership when you’re convinced you’ve picked the right one.
3. Choosing a dealer by location
Although it may be easiest to drive to the closest dealership, not all dealers are alike, and they should not be treated as such. Check with numerous dealers for the best price, as well as the Better Business Bureau to verify their standings.
4. Talking about the trade-in too early
Remember that the new car purchase is really three separate transactions. Discussing trade-in value prior to hammering down the deal on the new car can cost you money.
5. Not over till it’s over
Even when the deal is seemingly done, there are fees that seem to magically appear prior to walking out the door. Be prepared, and don’t get overly excited about the new car until you know the complete package and costs.
Next, we cover the pros and cons of buying new versus a used vehicle.
