The average car payment is higher than ever, though the exact figures vary depending on who you ask. The median monthly payment is $644 according to Credit Karma, though Moody’s says it’s skyrocketed to $712 a month.
While the specific numbers may vary, one thing is certain: There’s no need to stretch your budget more than you have to.
Even used cars are more expensive than ever! There’s no telling how long this red-hot car market will last. And sometimes you can’t help when you need to buy a new car (maybe your old car is totaled or the repairs are worth more than the cost of the car itself).
If you’re in the market for a car, being a savvy shopper can save you money, headaches, and unnecessary stress.
Here are key mistakes to avoid when buying a car:
Mistake #1: Purchasing the wrong vehicle for your situation.
Everyone has their dream car, but don’t forget there’s a time and season for everything. Instead of purchasing a car based on your wants, focus on your family’s needs. Consider the following:
- What’s your lifestyle? Are you athletic? For example, will you be driving the vehicle to and from trail runs? If so, then you might want to consider something that can handle some wear and tear. Will you be bringing the kids to sports games? What about long road trips? Be sure to factor in all of these considerations!
- What’s your gas budget? There are many costs associated with vehicles that are more than just your monthly car payment, so be sure to factor in the gas efficiency of the vehicle. The same logic also applies if you decide to go electric.
- What’s the purpose of the car? Yes, vehicles should take you from point A to point B, but beyond the obvious, what is the exact purpose of the car? Is it for your spouse to drive to work? Is this the car you’ll be using to bring the kids to school? Is this for long road trips? Knowing your specific transportation needs will help inform what kind of vehicle you should be shopping for!
By answering these questions, you will be car shopping with a purpose. This will help you narrow down your options so that you can focus on the best deal for your needs!
Mistake #2: Shopping only at a single dealership.
Having “other options” will give you leverage in virtually every negotiation.
Think about it: There’s a reason why most big box retailers price match each other as well as online sellers such as Amazon. It’s because they don’t want to lose your business to one of their competitors.
Similarly, shopping around at multiple dealerships will make you aware of the best deals. Even if a dealership doesn’t negotiate or price match a competing dealership, you’ll have other options so you can get the best deal for you.
Furthermore, shopping around is a form of research. You’ll better understand the fair market value for specific makes and models in your region. If a dealership is overcharging or has shady practices, it’ll be more apparent because you’ll have a strong understanding of the lay of the land in your local market.
Mistake #3: Folding under pressure.
Salespeople, especially at car dealerships, have a wide array of psychological tools they use to get you to sign your name on the dotted line to close the deal. Some of these high-pressure tactics are obvious, but others pull the strings of our subconscious.
To avoid folding under pressure, prepare yourself with these tips:
- Know your budget and stick to it.
- If it sounds too good to be true, it probably is.
- Be skeptical of “Today and today only” offers.
- Remain firm when the salesperson gets pushy.
- It’s okay to say, “No” and walk away.
If you have a hard time saying, “No” to people, a good psychological trick is to pretend that you’re an actor playing a character. This can take pressure off of you personally as you navigate the transaction and negotiate with people who want you to pay the highest price possible.
Mistake #4: Being rude to the care salesman.
While you want to be firm and avoid folding under pressure, don’t overcorrect by being cold and rude. At the end of the day, you want the salesperson on your side. Someone who personally likes and respects you is going to be more willing to cut deals and negotiate with you.
However, if they perceive you as cold, rude, or difficult, they’re going to be less likely to give you a favorable deal.
So while you’re being firm and sticking to your budget, it’s always important to remain polite and professional. The way you treat the salesperson is usually how you’ll get treated in return.
Mistake #5: Banking on the dealership for financing.
Yes… you can finance at the dealership, but that doesn’t mean that you should.
In some cases, a dealership may offer you a better deal on the sticker price and throw in some “freebies” if they know you’re going to finance with them. Why? Because while they’ll lose the money upfront, they’ll recoup it and more through the interest you pay on the financing terms with them.
With that being said, it’s usually better to finance through a bank, especially a local bank that you already have a relationship with.
That’s not to say that all dealerships can’t or don’t offer good deals. Some do. But similar to shopping around for the car itself, it’s also important to shop around for good financing deals. Again, this helps ensure that you’re getting the best terms and keeps you aware of what’s normal in your market.
Mistake #6: Buying the “deal” instead of the vehicle.
Don’t forget: If an offer sounds too good to be true, it probably is.
Dealerships love throwing together packages, deals, and adding in freebies to sweeten the deal. These are just some of the tools in their arsenal to try to get you to seal the deal, especially if you’re on the fence.
Some of these deals come in the form of incentives. For example, you may hear about 0% financing or cash rebates on certain vehicles.
But remember that the deal is only as good as the vehicle it’s attached to. If you suddenly find yourself being swayed by a good deal, take a step back and reevaluate the larger picture. Is the deal for the car you actually need and want?
And even if there is an incentive, that doesn’t mean that you can’t negotiate. Always negotiate the price. Most of these incentives, such as rebates, come from the car manufacturer, not the dealership.
Mistake #7: Not asking for an independent inspection.
If you’re purchasing a used car, you have the right to know everything about it. Has it been in any accidents? Did the previous owners properly keep up with maintenance? Was it driven in ice, snow, or through floodwaters?
Knowing these things can help stop you from purchasing a “lemon.” You should be able to ask a qualified, independent mechanic to inspect under the hood and make sure that everything is ok. Also, it’s best practice to ask for a Carfax report so you can have a written record of the car’s history.
Mistake #8: Not doing a driving test.
Thanks to technology, more and more places are trying to streamline the purchasing process. You may even be familiar with brands such as Carvana that have “car vending machines.”
Making the purchasing process more efficient is a great thing, but there’s at least one area where you shouldn’t cut any corners: Test driving the car.
Not only will this help you get a feel for the quality of the car, but this will be a preview of what life with the car will actually look like. So when you’re doing the test drive, be sure to drive it how you usually would in real life. For example, if you drive on the highway to get to work, as if you can test drive the car on the highway? Similarly, if you do a lot of city driving, then you’ll want to drive around various city blocks and see if the way the car drives is something that you want to commit to.
Mistake #9: Failing to negotiate.
It can feel like the dealership has all the power, but as the buyer, the power is truly in your hands. Remember that it never hurts to ask… so ask for that lower price, ask for the add-on, or ask if there are any ongoing incentives.
When you ask, don’t do so from a place of need. Instead, ask with confidence.
After all, the dealership needs your business in order to profit and stay in business.
And if the dealership isn’t willing to negotiate and you’ve found a better deal somewhere else, don’t be afraid to say “no” and walk away. Do yourself a favor and shop with discipline. It might feel awkward or uncomfortable, especially if you have an agreeable personality, but your budget will thank you later on!
Have more questions about budgeting for a car purchase? Join the TBM Family on Facebook to participate in an excellent exchange of ideas!
