Most Common Car-Buying Mistakes

Having purchased over 75 cars, covering all genres and for various purposes, I have made all the usual mistakes (some repeatedly). Thankfully, I've also learned some hard, but important, lessons. Most people fork out their hard-earned dollars based on little more than appearance, empty promises or status without actually researching for themselves if the ride for which they've opted is the best fit for budget, lifestyle and tastes.

If you are buying your first car or generally consider yourself a novice in this area, then I hope that by pointing out the most common mistakes (all of which I've made), I can impart some useful wisdom to you.

1. Not Doing Proper Research

   This is the most widespread mistake. People choose a car on the spot without spending any time learning about it, reading comments from owners, etc.
   
   Today, there are several excellent websites to consult. Professional reviews are useful for obtaining specifications regarding the vehicle's equipment, safety features, fuel economy, prices, amenities, etc. All the mainstream magazines such as Car and Driver or Road and Track have great websites. One thing to remember is that the professional reviewers are often drawing their opinions on relatively short test-drives so their comments on things like reliability, service, and operating costs may be rather limited. To get the real nitty-gritty on the cars in which you are interested, look for consumer sites like Epinions or Autos at MSN. or . These sites allow people to submit their own comments regarding the vehicles. The information is often not particularly sophisticated nor all true but, after you read through a few reviews, you will very quickly see recurring comments on things to watch out for and features you will like. If eight out of ten reviews all comment on transmission problems, it is probably a fairly accurate gauge.
   
   Once you are satisfied with the car you are interested in buying, start checking out the prices. Look at dealer's websites to try to determine what the average asking price for that particular vehicle is, look at used car websites to see what the car is worth with various mileage and options on the resale market.

2. Not Buying a Car for Your Lifestyle

   This is a difficult mistake to avoid since it is so easy to become captivated by a sweet looking ride, but try to ask yourself what you really need in a car. There is nothing worse than buying a car that can't fit your suit cases if you travel a lot or that doesn't fit in the underground parking lot at work or that can't accommodate your work colleagues if you drive to and from business meetings often. Perhaps you have a dog - can he or she get in and out easily? Maybe you use public transit or walk to work and only need the car for pleasure use - what kind of things are you going to be doing? Is the car going to be comfortable for long drives, will it fit the golf clubs or allow a bike rack?

3. Buying Too Soon

   Justifying the purchase of a newer vehicle is easy to do, especially when dealerships and salespeople convince you that you can move from your existing financed vehicle by transferring the shortfall between what you owe on your car and what the dealership is willing to give you and add it to the loan for the new vehicle. This actually happens a lot and, frankly, it is frightening. What happens of course is that you end up owing more money for a car than the car is worth. And while the very proposition sounds ridiculous, it is easy to fall for when coupled with the promises of lower interest rates and cash-back incentives.
   
   
   Doing your research before buying a car will hopefully help you avoid this trap of needing or wanting to trade your car in before it is paid for, but, if you do need to go this route don't commit to anything until you have the numbers in writing from the dealership. This way you can, at least, shop around with your bank for better products or rates and, investigate whether you could sell your car privately and get a better price for it than the dealer is asking.

4. Only Visiting the Closest Dealer

   There are very few of us who enjoy going to dealerships to scope out new cars. It is not fun to go looking at cars only to be met with a smooth-talking salesperson trying to manipulate us to a test drive, then a trip to their office. It is, therefore, understandable that most of us tend to wait to go to the dealership until we've almost already made up our minds. The reality is that this mistake has a major flaw. Not all dealerships are the same. Salespeople from one dealership to another follow different rules, practices and cater to the local demographics. Believe it or not, you will find variation in prices and incentives between dealers as well. If you live in an upscale neighborhood, for example, try driving to a dealership in a more modest location. If they know you have the money, they are going to play hardball to get you to spend as much of it as possible.

5. Not Test-Driving the Car

   Doesn't this sound ridiculous? But since the advent of the internet, it is become more and more common. You just cannot get the feel for the car without driving it. If you are buying a new car, especially a newly introduced model, how can you tell how the seats feel, or if you can operate the gauges easily, or if it has an annoying blind spot, or the turn signal is too loud, or whatever. Everyone is different and until you get behind that wheel, you will never know and you don't want the first time you discover things you dislike to be the day you pick up the car.

6. Not Haggling Properly

   Salespeople make their living by convincing you to pay as close to the sticker price as possible, giving you as little as possible for your trade-in, selling you extras and sometimes getting you to agree to a less-than-optimal interest rate. The way they do this is very interesting and extremely sophisticated. They often start by asking you how you are intending to pay for the vehicle. This gives them a pretty good clue of what you are going to be more concerned with - the overall purchase price or the monthly payment. And the sales tactic will differ depending on how you plan to pay.
   
   It is far easier for salespeople to negotiate in terms of monthly payments than it is in the total purchase price because of the variables like rates, term, down payment, etc. If you advise them that you would like to finance the vehicle, they will invariably ask you what you want to pay each month. If you say $300, they might say something like “ok good, $300 up to a maximum of what?” Once they have determined your sweet number (that monthly payment you can live with), then the other factors (like the term of the loan, the interest rate, the down payment) tend to be overlooked.
   
   Instead, try to stick to negotiating the sticker price - it's usually a better starting point and, since by now you will have done your research, you already know what financing that loan will cost you so if they try to pull one over on you during the financing, you'll be able to spot that tactic immediately. Negotiate the sticker price first before anything else. Forget about accessories, forget about additional warranty plans and forget about protection plans. The salesperson will tell you the price for these items as if they are not-negotiable anyways. If these are things that are important to you, remember to research your pricing in advance. But think long and hard about such things before agreeing to purchase them - do they make sense? If you are likely to get rid of the car in three years, then why extend the warranty to seven years?
   
   When it comes to trade-ins, leave this until the end. In other words, no matter how many times they ask - say “probably not”. More importantly, don't agree to let them look at it or give you a price or anything but try to sound 99% not interested in trading it in. You know what it is worth because you will have done your research in advance. The dealership will try to make a great deal of money on your trade in by offering you something ridiculously low - even if the car really is a heap. You will notice they like to deal with the trade-in first because the way you handle the negotiation of the trade-in is a good indication of how the rest of the negotiations will unfold. Why not use this to your advantage? Once you have negotiated the sticker price to your satisfaction, then it is okay to inquire about the trade-in. Tell them that you might be interested in trading in your car if you can get x-number for it. They will rarely just say no - but will take a look and come up with a counter number. You can either keep negotiating or just pass.
   
   Anyways, the point is that you need to take things slowly, negotiate each aspect of the purchase individually - down payment, rate, and term if you are financing, extras, incentives, trade-in and sticker price. If you have done your research before sitting down with the salesperson, this will be a much easier task and you'll definitely spot any sales tricks.

7. Not Considering Insurance

   Most jurisdictions have mandatory insurance laws for automobiles and, regardless, sensible drivers will want to insure themselves regardless of the law. What is it going to cost to insure the car you are interested in? Insurance rates for cars differ greatly due to theft rates, safety ratings, costs of repair and a variety of other factors. Instead of hypothesizing about what your new car might do to your insurance rates, call your insurance company in advance. In fact, let them know that you are shopping for a new vehicle and considering certain models. Most insurers are happy to give you a rough estimate so you know what to expect. While you are talking, ask them which vehicles have lower rates and which have the highest rates in the vehicle class you are considering.

At the end of the day, you should be able to avoid these mistakes by preparing yourself with the best information possible, taking your time and learning everything you can about all the aspects of purchasing a car before taking the plunge.