Buying a car is exciting. It’s hard not to let emotion influence your decision. Don’t get too antsy. Balance out your intuition with a healthy dose of logic. Let me help. Here are seven common car shopping mistakes to avoid (#1 sounds backwards but it’s true!).
1. Buying a car at tax time
It makes sense to spend your tax refund on a down payment. That sounds like a productive use of money, but it would be better to deposit that check in a savings account and wait a few months.
Have you ever noticed that car dealers are REALLY busy during tax time? That’s because everybody else had the same idea! It’s hard for a buyer to find a good deal in a seller’s market (supply and demand, folks!).
The best time to buy a car? September. Click here to find out why.
2. Failing to make a budget
Never spend above your means.
Track your income and expenses for a few months.
Find some unnecessary expenses that can be cut with ease.
Calculate how much money you could afford to spend on a monthly loan.
Don’t forget to factor in extra car purchase costs like loan interest and extended warranties.
3. Putting style before safety
The average driver logs 13,476 miles every year (whoa!). A lot of things go wrong in that many miles.
It’s fun to drive fast, but don’t forget you’re operating a dangerous vehicle. In 2013, 32,719 people died in fatal car accidents. You don’t want to be a part of that statistic.
Please choose a vehicle that can protect you. Check out crash ratings at trusted sources like the National Highway Traffic Safety Agency and the Insurance Institute for Highway Safety.
4. Only shopping at one dealer
Shop at a minimum of three dealers. Do some car shopping online first to see what kinds of offers are available in your area (hint: here’s your chance to do some price research, which will help you negotiate a good deal).
If you’re not sure where to start, do a Google search for: “[your city] cars for sale.” Send an email to ask for more info. Make sure to mention you’re comparing prices. That might encourage a car salesman to be more generous.
5. Making an impulsive decision.
Buying a new car is a major commitment. Even if you’re 99.9% sure you MUST have this car, sleep on it.
Make a pro/con list the next morning. Be objective. Leave emotion out of it. This is not the time to trust your gut. Instead, listen to your inner-accountant.
6. Assuming new is better than used
New cars are terrible investments. They lose almost 20% of their value within the first year of ownership. If you have a low budget, it would be crazy to buy a new car when you could find used cars for a fraction of the cost.
7. Obsessing with a low monthly payment
The minimum payment of your loan doesn’t matter. The most important thing is your interest rate. That’s what determines the total cost of financing your loan. The sooner you pay down that balance, the less interest you will pay. If you can save enough to pay cash, even better!
Please share these car shopping mistakes with your friends so they can be mindful like you. Thanks! 🙂