Buying a car is a major purchase. With any large financial commitment like that, it pays to be prepared before taking action. You can ready yourself to take on the car-buying process by getting informed before heading to the dealership. This will allow you to avoid the following common car buying mistakes.
Neglecting to Research
Again, with a major purchase like a car, it can be extremely beneficial to do your homework beforehand. Plus, with all of the information available at our fingertips on the Internet these days, there's really no excuse not to.
Ideally, you should be focusing on two main goals: figuring out what you absolutely need from your car purchase, and deciding on your price range.
Online research will help you gather a wealth of information on car makes and models, pricing, what's available at local dealerships, rebates and incentives, and more. You can also consult expert and owner reviews and estimate financing costs.
Hopefully, all of your research will help give you a good idea of what you're after. That way, you'll be much more prepared to choose the right car for your needs and budget.
Only Focusing on the Monthly Payment
This car buying mistake can cost you big time in the long run, so listen up. Budgeting is important, but many buyers' idea of budgeting for a car purchase is figuring out what they'd like to pay every month. Instead, you would be better off to consider the total cost of the loan.
For example, imagine you head to the dealership and tell the salesperson you can spend $350 a month on your car. Knowing that, any dealer worth their salt would be able to get you in almost any car by tinkering with the terms of the deal. Basically, they could extend the loan term to a crazy length to get you the monthly payment you want to see.
The problem? A longer loan means paying much more in interest in the long run, making the total cost much higher than the price of the car. This also makes it more likely that you'll have negative equity, which greatly reduces your flexibility because it makes trading in your car more complicated.
Conversely, you can lower the total cost of your car purchase by taking on a shorter-term loan. While you would have to pay a higher amount every month, you would save money overall. Of course, everybody has a budget, so it's all about finding the proper balance between the right monthly payment and not paying too much to finance.
Rolling Extras into Your Loan
Watch out when it comes to financing things other than the price of the car. It's easy to lose sight of what it's actually costing you to finance vehicle options, F&I products, and/or tax, title and license fees.
Instead of financing your tax, title and license fees, you can save money in the long run by having the cash to cover them up front. The same goes for the extras you'll be offered at a dealership.
You may be allowed to roll any extras into your loan, but, again, that will make them more expensive in the long run. Plus, you can shop around for these products with other providers and you may find prices that beat the dealership.
The bottom line is that these extra things can wind up costing you a lot more than anticipated because you will pay interest on anything you finance.
The Bottom Line
Shopping for, choosing, and buying a car is a big deal, both on a personal and a financial level. You can make sure you are successful with your purchase by doing your research, taking your time, and avoiding these mistakes.
If you are looking to purchase a car but are struggling to find financing approval, you might be working with the wrong dealership. At Drivers Lane, we help people dealing with credit issues find local dealerships that can work with most credit types.
Our service is free, fast and easy, plus it puts you under no obligation to buy anything. We can help you next if you simply complete our simple and secure car loan request.