The Insider's Guide to Car Buying ☰ 

Common Car Buying Mistakes Exposed

car buying mistakes is like money down the drain. |

We've all made mistakes when buying a new car. Dealers like to drag out the car buying process to give them a better chance that you'll make a mistake and allow them to take advantage of you.

Some of the car buying mistakes I've listed may seem like common knowledge, but it's very easy to get wrapped up in the euphoria of the new car buying process and let common sense fly out the window.

Committing just one of these mistakes can lead to a couple problems. You could end up severely overpaying for a vehicle or end up with a vehicle you don't like to drive or doesn't meet your driving needs.

In my car sales career I've seen many people consistantly make the same mistakes time and time again. I've listed several of them below so you can keep from making them when buying your next new car

Common Car Buying Mistakes People Make

In this section we expose some of the most common car buying mistakes people make during the process of buying a car. You may be surprised on how basic some of these mistakes are and you may even find you've committed a couple yourself.

Not Test Driving the Exact Car You're Buying

I've heard so many car buyers say "I don't need to drive it," "I know what it drives like," "I rented one before and loved it," or the best one is "I just drove one at the dealership down the street." Each vehicle is its own machine and each one is different.

Would buy a pair of $120 shoes before trying them on?

Vehicle's are manmade machines and machines sometimes have faults. There may be 10 of the same car and each one may drive or act slightly different. Not driving the exact car you're going to buy may keep you from realizing the seat may not feel quite the same as the last one did.

When I sold cars, I would insist my customers went on a test drive before signing on the dotted line. The last thing I want to see is the customer back in a month telling me they hate driving the vehicle they just bought from me.

Limit Car Shopping to Only One Dealership

When shopping for the best deal, focusing all of your time and energy on one source or at only one dealership can put you at a serious disadvantage. Competition between dealerships will always get you the best price and you should always gather as much information upfront, from as many sources as possible, to make a good buying decision.

All franchise dealerships buy their new cars at the same price from the manufacturers. It would be unfair if one dealer could buy a car cheaper than another. When it comes to discounting a vehicle to you, it's up to the individual dealer on how much their willing to do so.

The best way to see which dealers in your local area are more aggressive in discounting a vehicle you're considering is by starting an online bidding war by having car dealers compete online. This can be done by requesting free no-obligation price quotes from automotive resource sites and will save you time and aggravation in the long run.

After you've received your online quotes. Take the lowest quote and contact other local dealerships through email to see if they can beat the price. Keep doing this until the dealers stop discounting the vehicle or stop responding altogether.

Learn more about this very effective technique in my detailed guide on how to negotiate with dealerships by email.

Let Your Emotions Take Over the Car Buying Process

You see the exact car you've been dreaming about and OH MY GOODNESS, it's the right color too! In your head you begin to justify and rearrange your finances and life. You tell yourself you can afford it and you must do whatever it takes to BUY THE CAR RIGHT NOW!

A car salesman's goal is to get you emotionally attached to vehicle. If they notice you're getting attached, they're sure to turn the heat up on you. Slow down and take a deep breath and even walk away for a minute.

We all tend to make bad decisions when we let our emotions take over, don't do something that you'll possibly regret later. If you can't get that dream car today, I promise you the manufacturers will still make more tomorrow.

Paying Too Much for the "Popular" or "High Demand" Car

Some car dealer's will excessively mark-up "popular" or "high demand" vehicles well over MSRP. This is called Additional Dealer Mark-up (ADM). If a vehicle is truly popular or in high demand there will be none available on the lot and/or a very long waiting list to get the car. The other option you have is to just wait 6 months or so. While you're waiting, build up your down payment and let the "NEW" wear off.

A classic case of excessive ADM was when the Chrysler PT Cruiser was introduced to the market. I witnessed people willingly pay $4,000 to $8,000 over MSRP just to be one of the first people to own one. Little did they know, the body of the car sits on a Neon frame and the car itself depreciated the same as any other vehicle, if not worse.

If you're one of those people that must drive the latest and greatest vehcile on the road, there's nothing wrong with that. If you're willing to pay the ADM, pay it in cash over and above you of your 15-25% cash down payment. Doing so will keep you out of a negative equity or upside down situation in the future.

Buying a Car You Cannot Afford

You can be your worst enemy when it comes to this situation. You're looking at a certain car and the salesperson says something like this, "For a little more money this car has a 16 way adjustable power seat." Let me ask you a question. How many times have you adjusted the seat in your current vehicle 3 or more different ways?

It's human nature for us to want all the good things in life and all the "bells and whistles" of a new car. Some people must have all the creature comforts and will pay thousands of dollars to get them.

If you want your monthly payment to be $375, don't "bump" yourself into a higher payment once you get to the dealership. Don't forget you still have other ownership expenses such as car insurance, warranty, preventive maintenance, and fuel.

Overall it's your responsibility to know what you can and cannot afford. Review your personal finances, create a budget and determine what you can comfortably afford before you begin your automobile shopping online.

Buying a Vehicle that Doesn't Meet Your Needs

Take the time to shop, review and research vehicles online before you visit a car dealership. The last thing you want to do is buy a car that doesn't meet your driving needs. Will you be towing something regularly or do you have a large family, if so, you probably don't want to buy a two door Toyota Prius.

I've seen car buyers come back a couple weeks, up to 6 months later and try to bring the car back or trade it for another. This puts you and the car dealer in a bad spot.

The customer is normally in a huge negative equity situation (owes a lot more than what the car is actually worth) and the car dealer is the one that has to break the news to them. This makes the dealer "The Bad Guy."

If the customer insists on trading in the vehicle, they'll have to either put down a huge amount of money to cover the negative equity or if approved, roll the negative equity into the next car loan.

Not Realizing the True Cost of Owning a Hybrid Vehicle

The new hybrids use less fuel, however most only offer a couple more miles to the gallon than regular vehicles. The cost of a hybrid is still a lot higher than your normal gasoline powered vehicle.

Make sure you do your homework when selecting a hybrid to justify the total cost before shelling out an extra $4,000 to $9,000 to own one.

The overall gas miles-per-gallon and overall cost of hybrids is starting to come down. However, before you buy you may want to double check your breakeven point to see if it will truly benefit you.

Not Knowing the Best Price You Can Pay for the Car

Car dealers are always having some kind of big sale, they want you to buy a car right now, today only. They also want you to believe you just happen to show up on the last day of their latest and greatest, once in a lifetime sale. Don't fall for it, remember there's a wizard pulling the strings behind the curtain.

Do your research and select the car you want to buy. Then figure the car dealer's true new car cost. Once you know this information, you can then figure a fair profit offer to present to the dealer.

Always do your homework and research new cars online before going to a dealership. This will keep you from falling for the colorful loud advertisements car dealers spend thousands of dollars on to get you to come to their lots. Take advantage of online automotive research and review websites such as CarClearanceDeals and Edmunds.

These free online companies provide a wealth of information about new cars. These companies also provide you with free, no-obligation discounted price quotes from dealerships in your local area. Taking the time to use these free online services before buying a car will save you time and money before ever stepping foot into a car dealership.

Putting No Money Down When Buying a Car

The $0 down ads car dealers run everywhere has literally change the thinking of the car buying society. Even though $0 down sounds very appealing, it's a very big mistake!

Not putting any money down when buying a car will end up costing you a lot more money in the long run. Car dealers and finance companies advertise "$0 down" because they actually can make more money off interest when you buy a car.

If you don't have at least a 15-20% down payment and have to finance longer than 48 months to fit your budget. You may want to consider a less expensive car or wait a while to build up your savings

At the very minimum put down enough money to cover your tax, title, license. Paying interest on TT&L is not a good financial decision and just doesn't make any sense.

Read my section on how much money you should put down on a car to read more detail about how money down effects what you will end up paying when buying a new or used car.

Negotiating from MSRP, Sticker Price, or Addendum Sticker

If you ask for the price of a vehicle and the salesperson goes to the sticker to read it off to you, be cautious. He's setting you up to start negotiating from the MSRP sticker or addendum sticker. This price is always much higher than what you can actually buy the car for.

NEVER negotiate the price of a new or used car from the MSRP (Sticker Price)!

He may say something like, "I'm sure I can get you a $500 or maybe even $750 discounted off the price if you will buy the car today." Some people actually believe this is a good deal and will end up buying the vehicle.

You neverr want to start the negotiation process from the MSRP or Addendum sticker. You want to focus on the factory invoice price and move down from there as much as possible.

This car buying guide will teach you everything you need to know to guarantee you pay the best price in your area on your next new or used car.

Bringing Up Your Trade-in Too Early in the Process

Do not let the car dealership or salesperson know you're planning to trade you current vehicle to early in the negotiation process. You should look at your trade-in as a separate transaction with the dealership.

You'll most likely be asked several times if you're going to trade while going through their sales process. Make sure you agree on the total price of the vehicle you're going to buy before you bring up your trade-in. You also need to know a rough estimate of the true market value of your current vehicle before attempting to trade with a car dealer.

Just because you owe $12,000 on your car doesn't mean it's worth that much!

Although I am totally against trading in your vehicle with a car dealership because a dealer will only give you wholesale value or below. I understand some people don't have the luxury or time to do this.

If you must trade in your current vehicle to buy another one. Make sure you familiarize yourself with how the dealership appraisal process works and take time to increase the value or your trade-in to ensure you get the most money posssible for your car.

Buying a Car Based on Monthly Payments Alone

Walking into a car dealership and telling the salesperson you need a new or used car and want a monthly payment of $350 is a big mistake. Car salesman love these types of customers and they can be easily manipulated into paying too much for a vehicle.

A skilled salesperson will take you to a cheaper car allowing the dealer to mark everything up to get you to your payment ceiling of $350/mo without you expecting any foul play. They may initially present you with $400/mo payments first to let you negotiate down to your original maximum payment of $350/mo. You win, right? Well at least you think you did.

Never buy a vehicle based on monthly payments. Always focus on the final purchase price of the vehicle.

What You Should Not Say to a Car Salesman

This is a tough one for a lot of car buyers. It's human nature when we're excited and wanting to buy something we've wanted for a long time to show exuberance. It's ok to be excited. You just want to be careful on some of the things you say or do.

Professional car salesman watch and listen for signs of emotion and impulse while people are in the car buying process. They also feed off what you say and do to determine what steps to take with you next.

As much as you want the car salesman to know you're a "professional car buyer." You should refrain from talking too much. You will be in much better shape after leaving the dealership in your new car.

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Did You Know?

Receiving the best price on a new car is only one aspect of the car buying process. There's several other areas an unethical dealer can try to make up for lost profits from discounting the vehicle.

The best way to protect yourself from car dealer scams is to do your research upfront and familiarize yourself with all aspects of the new car buying process before contacting a dealership.

How to Get the Best Price

Have local car dealers compete for your business. Start an online bidding war between dealers from the comfort of your computer.

Get local dealers to compete for your business by requesting free, no-obligation price quotes from the following online companies.

Best Car Pricing
Car Clearance Deals

Competition between dealers is the best way to ensure you get the best price. You win when dealers compete!