By simply understanding these mistakes, this may help you avoid making them.
8. Not thoroughly researching the vehicle.
You have the most powerful/fastest way of obtaining information: the internet. Therefore, put it to good use and search every car dealership in the state selling that car. Look around for prices, build a profile on the car, and print out proof of all competitive prices – this is a great practice for when you decide on visiting car dealerships. Most importantly, do not forget to research the worth of your current car’s trade-in value!
Dealers everywhere express how far below MSRP they price their vehicles. MSRP stands for manufacturer suggested retail price; the window stickers on cars must show the MSRP to break down the costs. With that said, once you find the ideal low price on the vehicle, you could either go to the dealership with the lowest price or take that ad to another dealership that’s more convenient for you and ask them to meet/beat it. Keep repeating the process until you get what you want for a reasonable price.
7. Not knowing your vehicle’s trade-in value.
Finding the value for your trade-in car is easy. Automotive guides have a range of values that explain what you can realistically get for the car depending on the car’s condition and to whom you sell it. Most people prefer to trade in their old vehicle at the dealership and will almost always offer a price that is less than what the car is worth – this is because you’re paying the dealership to handle the hassle of selling your car for you. By doing prior research, this prevents you from giving up the vehicle for an underpriced value.
6. Not using your research for your trade-in.
There are three industry standards used to determine the value of used cars: the automotive guides Kelley Blue Book, Edmunds, and NADA Guides. The majority of all dealers and lenders will use these standards to determine vehicle prices and worth. If the price listed in one of the guides is below the car’s sticker price, then the car is overpriced.
Bring the proof to the dealer/seller. The car should always be priced around what the guide states is the fair market price based on location and condition. If the dealer/seller doesn’t agree to offer you a price near that figure, find another!
5. Not understanding if the car is greater than the loan.
Ultimately, the ending purchase is that nice smelling car, but remember you’re not just paying for the vehicle – you’re paying for the loan on it. It’s sad, but people will bring a loan offer to a dealership and refuse to talk to the dealership financing office. By not asking the dealership to beat a loan offer is just throwing away money.
In any case, the dealership wants you to finance through them. Lenders often give dealerships a finder’s fee for each customer who gets a loan from them through the dealership. This way works to your advantage, as the dealer will want to beat the loan offer because the lender they partner with will pay them for it. It never hurts to ask!
4. Not setting a reasonable budget.
If you know you can only afford $300/month in car payments (not including insurance), then completely ignore anyone trying to change that. If the only qualifying loan is $400/month, it’s time to find another car. Having to skip meals to prevent it from being repossessed is not worth it.
The two biggest factors are the monthly payments and the down payment. However, if you focus on monthly price instead of total price, you’re giving the dealer an opportunity to overprice the overall price.
3. Speeding up the buying process.
Buying a car is stressful, so it’s understandable why you would want to be done with it as quickly as possible. But it needs to be treated carefully and not be rushed. If you’re unsure about a car or an auto loan and want time to think about it, take the time! Leave the dealership and take a break. Make sure you’re making the right decision for yourself and your future.
A salesperson might say, “The car you want today could be gone tomorrow if you leave without buying it!” It’s true, that specific car could be sold. But keep in mind that manufacturers make thousands of vehicles a day, so you can always find another car to suit your needs. This would be better than getting stuck in a financial situation you haven’t prepared for.
2. Being rude to salespeople.
Ultimately, the salespeople at the dealership are the people you’re relying on to provide a service, which is being honest and willing to go the extra mile and help car buyers.
The best veteran salespeople in the car business are there because they specialize in helping make one of the largest financial decisions in your life. Typically, if you’re rude to them, it may very well take longer to do everything, and it may be harder to negotiate a better price. So, take advantage of a good salesperson’s expertise and don’t allow the others to take advantage of you.
1. Passing up on an extended warranty.
An extended warranty would give you the ability to save or invest your money into something other than your car. A commonly used term to describe what you get from buying a protection plan is “peace of mind.” Most consumers choose to go with a reputable company, like DriveSmart, who will always put the customers’ needs first. DriveSmart is often compared to another successful company, Amazon, who has a similar customer obsession that dedicates value and convenience around customer needs. By putting the customers’ needs first, consumers are always being informed and educated while they’re shopping for a car, in the market to refinance, or enrolling in a protection plan. What truly separates DriveSmart from the rest of the industry is their revolutionary Car Payment Reimbursement program. If your vehicle is in the shop for seven days or more, DriveSmart will pay up to 300% of your car payment. Now customers don’t have to make car payments on a vehicle they can’t drive because it’s in the shop.