Today’s car payment is higher than in the past, although the exact amount depends on your situation. Even used cars have skyrocketed, and you may not be able to help having to get a new vehicle. But no matter how you look at it, buying a car can be an expensive undertaking and can stretch your budget to the max. If you are in the market to get a new vehicle, there are several mistakes to avoid to help you make the most of your funds.
Obtaining the Wrong Car
While you may have a specific brand and even model in mind, it might not be the smartest financial move. Instead of getting something you want, consider focusing more on what you need. Think about your lifestyle. If you will be traveling on country roads a lot, you’ll want something durable that can handle the constant use. On the other hand, if you do a lot of city driving, you may want something that is efficient in this type of environment.
The overall purpose of the vehicle plays a role in the right type as well. It should be able to get you where you need to go, but you should also think about how well it will fulfill your needs. A growing family in need of transportation will have different needs than someone who needs a commuter car. Answering these questions allows you to narrow down your options, shopping with a purpose in mind.
Only Looking at One Dealership
When you have other options at your fingertips, you will have more leverage in negotiating the price. Many retailers match the prices of other retailers because they don’t want to lose business to the competition. The same is true of car dealerships. If a dealership knows you found a better price elsewhere, they may be willing to work with you to find something that fits in your budget.
Even if they won’t work with you, you know you can find a better price elsewhere. Shopping and comparing models are a great way to start researching as well. If you don’t need a vehicle right away, it can give you a good idea of how much to budget for it. It allows you to understand the market value of different models and brands.
Giving in to Pressure
Many salespeople try every tactic at their disposal to get you to agree to the deal so they can close another sale. Some of these might be obvious to you and easy to avoid, but others might be more subtle. To avoid this kind of pressure, understand your overall budget and promise yourself to stick to it. If you are feeling pressured, simply tell them no and leave. On the other hand, don’t go to the other extreme and be rude to the salespeople.
You do want the salesperson to work with you, not against you, as they likely have some control over how much you will pay for the vehicle. If they like you, they may be more willing to negotiate or give you a deal. On the other hand, if they feel you are rude or a difficult customer, they won’t want to work with you.
Getting Financing at the Dealership
While you can get financing at the car dealership, that does not mean it is the best deal. Sometimes, you can get deals or freebies by financing with the dealership. That’s because they will make up the difference in the interest you to pay to them instead of another lender. Still, it’s often better to finance with a local bank, especially if you have a relationship with one already. Shop around for financing in the same way you would shop around for anything else. Putting as large a down payment as possible on the vehicle can save you money in the interest as well. That’s because you won’t have to borrow as much to cover the price.
If you have some time, consider cutting other monthly expenses so you can save more. One option is to refinance your current student loan debt payments by taking out a new favorable loan and repay with a lower monthly payment. Other ways to chop expenses can include cutting the cable cord, cancelling the gym membership, or avoid going out to eat.
Not Looking It Over Carefully Enough
If you are getting a used car, it’s not as simple as decorating your home for fall or even choosing a new haircut. You will want to know everything about the vehicle. Was it kept up properly? Was it involved in any accidents?
Understanding these types of things can prevent you from purchasing something that’s going to die on you shortly. You should be allowed to have a mechanic inspect the car to make sure it’s running well. You should also be able to do a test drive. More places want to streamline the process, so you may already know a lot about the vehicle from your online research.
Some dealerships may have technology designed to help you learn about the vehicle without having to be physically next to it. However, you still need to physically test drive the vehicle before purchasing it. It’s even more important to test drive if you are buying used because this can help you catch any potential issues with it.
This helps you determine the car’s quality, and it allows you to determine if this is a vehicle you would enjoy driving every day. You can use the test drive to determine what life with this car would be like each day. If possible, consider driving in different conditions, such as the city and the highway. Try it on hills to make sure it doesn’t stall out.
While it might feel like the dealership has the power, you actually have a lot of power as well. Even if a particular dealership doesn’t negotiate, it doesn’t hurt to ask politely. Don’t be afraid to ask if they have ongoing incentives, lower prices, or additional add-ons.
When you ask about these things, ask confidently. The dealership needs your sale to stay in business. It might feel uncomfortable, but your finances will thank you later on.