car Buying Mistakes

10 Common Car-Buying Mistakes

There are several car-buying mistakes commonly known in the auto industry. To identify them, we asked for advice from experts at Edmunds.com, AutoPacific, J.D. Power and Associates and AAA. They gave us their best advice for consumers navigating through what can be a confusing path. They also told us that most dealers are honest, reliable and hardworking local businessmen and women--but there are some precautions consumers should take before they purchase a car.

Talking too much

Three things to never say on the lot: "I need this car now" (desperation breeds price inflation); "I love this car" (don't let emotions control the buying process--it only makes you vulnerable); and "This is how much I can afford to pay per month" (once dealers know how much you want to pay per month, they'll find other ways--fees, warranties, financing--to make up the difference between that and how much they must make on a sale. Talk about the absolute price of a car, not the monthly payment.)

Not doing your research

Walking into a dealership open to any ideas the salesperson has is a bad idea--it makes you vulnerable to impulsively buying something you don't need, can't afford or ultimately won't want. Determining the market value of your car will help you know where to begin negotiations on the starting price of the vehicle. Do some research to find the true market value and the expected residual value of the car you want.

Not being realistic about what you need

Before you hit the showroom floor, take a hard look at the kind of driving you do. Don't assume you need a brand-new car, and consider keeping a driving journal for a week, or even a month, to chart exactly when, where and how far you drive each day. Then buy a vehicle according to those needs--not aspirational needs, like thinking "maybe someday we'll need to tow a boat, so I need a truck with three-ton towing capacity."

Leasing a car because you can't afford the down payment

Lease payments, especially for luxury cars, don't require a down payment and are often cheaper per month than what it costs to buy the car outright. But they don't always pay off. You've got to determine if having a new car every two or three years and with no down payment--but no ownership and no stake in the residual value--is more important than long-term cost savings and ownership of a vehicle you will eventually pay off.

Assuming you'll use the dealer's financing

Dealers often set monthly payment amounts assuming they'll make up the difference with the financing agreement. Instead, arrange for your own financing at your own bank or credit union, and choose the shortest-term car loan you can: Long-term loans coax people into buying cars they can't really afford by stretching the payments out over such a long period of time that the car is almost fully depreciated by the time it's paid for.

Buying at the beginning of the month

Dealers won't offer their best deals or incentives until the end of the month, when they realize how close (or far) they are from hitting monthly sales goals, so if you can, wait it out.

Buying at the beginning of the year

Dealers have less incentive to give you a great deal at the start of the year, when their stock is brand-new and they have 12 months to hit annual sales targets. But in December, they'll have to clear out old stock in time for the new model-year cars to hit the showroom. That's when you should buy

Discussing the trade-in deal during the new-car negotiation

Be honest up front that you may want to trade in your old vehicle--but keep the new-car purchase discussion and the trade-in value discussion separate. If the purchase and the trade become one big transaction, it's easier for the dealer to fudge on how much you actually pay for the new car.

Assuming a hybrid is "greener" than gasoline or diesel

Hybrids use less fuel than gasoline-powered cars of the same model, but they don't offer huge gains: The $28,180 Mercury Milan Hybrid (41 city/36 hwy) gets just two more mpg on the highway than the 23-city, 34-hwy $21,860 Milan I-4 (granted, it gets 18 more mpg in the city). Smaller engines, like those found in Ford's $28,950 "eco-boosted" Flex, offer 20% better fuel economy and 15% fewer CO2 emissions versus larger engines.

Visiting only one dealer

Don't hesitate to walk off the lot if a dealer can't meet your terms or expectations. The more you know about what options the dealer down the road has, the more you can negotiate for a good deal with someone else. If you live in a small town with just one showroom, call a dealer in the nearest metropolitan area to get a quote (it'll most likely be lower than in your rural area) and then see if your local guy can meet it.