After buying a home, a car will likely be the second biggest purchase you’ll ever make. Avoid making these 10 common mistakes when buying a new car, to avoid pangs of regret as your drive off in your new set of wheels.
1. Forgo research
Before you set foot on the car lot, do some research. The showroom floor isn’t the place to be seeing what’s available for the first time. Learn what’s out there and decide if it's a car you want to buy, truck or SUV. Then, compare costs, decide what features are must-haves, and set—and stick to—a budget; otherwise you run the risk of buying solely on emotion.
2. Overlook the cost of auto insurance
Once you’ve done some preliminary online research and narrowed down your choices, evaluate how much you’ll spend per year on auto insurance. Compare rates at InsuranceHotline.com from 30+ insurance providers so you have an idea of how much it would cost to insure each vehicle that you like. It takes only a few minutes and could save you hundreds of dollars a year for each year that you own the vehicle.
- Related Read: Which Cars Are the Most and Least Reliable?
3. Fail to factor in the other costs of ownership
Once you’ve compared auto insurance rates, look up the vehicle’s fuel consumption rates too. Fuel use is a regular expense and should be considered when buying a new vehicle. Natural Resources Canada’s Fuel Consumption Guide will provide you with model-specific fuel consumption information so that you’ll know how much on average you can expect to spend a year on gasoline.
Also, chat with a trusted mechanic. Some vehicles’ parts simply cost more than others, resulting in a heftier maintenance tab.
4. Buy a car on the initial visit
Use the first visit to a dealership solely as a trip to look at and test-drive the car(s). Let the dealer know that you are not buying today and that you’re simply in the research stage. Gather the information you need from your visit and leave so you can collect your thoughts on your own without someone hovering over you. Then move on to the next dealer on your list, and repeat.
5. Buy under pressure or in a rush
There are plenty of fish in the sea, and cars are no different. Cars shouldn’t be purchased in a rush or under pressure. Take your time, visit several dealerships, and be ready to walk away, otherwise you may end up with a car that: 1) you don’t really like; 2) you paid too much for; or 3) doesn’t fit your lifestyle and needs.
6. Skip out on the test drive
A couple of years ago, a study out of the U.S. estimated that about 16 percent of Americans bought a vehicle without taking it out for a test drive; hopefully this is not true of Canadians as well. The test drive is one of the most important parts of the car-buying process, and it’s during this time when you’ll be able to ascertain whether or not the vehicle measures up to your expectations and needs. You’re spending a lot of money here and you don’t want any surprises after you've bought it. Take the time for a test drive—at least 30 to 60 minutes for each—to get a feel for how the vehicle handles.
7. Neglect research on your trade-in
If you’re planning on trading in your old car, know the true market value of it. Do a quick search online to calculate the average value for your model and year. Don’t forget to look at vehicles with similar mileage too. This way, if the dealership lowballs you on the trade-in offer, you’ll know if it might be worth your time to sell your car privately.
8. Focus on the payment, not the price
Long term car loans are increasingly popular. According to the Financial Consumer Agency of Canada, in 2015, the average car loan had a term that was longer than 72 months; up from about 65 months in 2009. While a long-term car loan means you’ll have lower regular car payments, the agency warns that these types of loans may also:
- Lead you to spend more than you can actually afford
- Require you to pay more interest over the life of the loan
- Result in your car being worth less than the amount you still owe on it, depending on when you want to sell the car
Instead, when financing a car, focus on the entire purchase price of the vehicle and not just the smaller, more attractive, loan payments. Set a realistic budget, anticipate how many years you’ll likely keep the car, compare costs, negotiate, and shop around for the best financing deal.
9. Wing the negotiations
Negotiating a fair price requires research and keeping an eye on your budget. Make sure you’re ready, in advance, to sit down and talk money with the dealer.
Here are a few tips to keep in mind:
- Make sure the manufacturer incentives are already knocked off the price before negotiating.
- Negotiate on the price of the vehicle not the loan payment if financing or leasing.
- Look at additional fees that come along with the purchase. While many are required (freight and handling, for example) there are others that you can play around with too—namely the dealership’s administration fee which can be several hundred dollars.
- Watch the extras that have a way of creeping into the sale (like floor mats). Be prepared to say no, and try to keep the negotiations focused on the price of the car itself.
Finally, if the manufacturer’s incentive increases in the days (or week) following your purchase, call your dealer. They may honour the new incentive offered.
10. Let your guard down after you’ve negotiated your price
So, you’ve agreed to a price with the salesperson and you’re happy. Chances are, you’ll now be handed over to another individual whose role is to explain all the benefits of an extended warranty, rust protection, and chip protection. Be prepared to say no if it’s an add-on that you’re not interested in buying.
A lot goes into buying a new car, but by avoiding these common car buying mistakes, you’ll drive off the lot happy without an ounce of buyer’s remorse.