Apart from Mother’s Day, the month of May also marks many college graduations. It is a time that college graduates trade in their dorm rooms for apartments or mortgages, and ditch their skateboards and vespas to upgrade to a real ride. But for many, buying their first car can be daunting and if you’re unfamiliar with how the process works, you may end up paying the price – literally.
To help you navigate the ins and outs of car buying, our Mvelopes automotive and financial experts, have put together some of the deadliest sins of car buying.
Don’t: Focus on monthly payment.
By focusing on the final monthly payment of your auto loan, you’re ignoring the full cost of your future vehicle. Lenders will be happy to offer you 7 to 9-year loans to make sure you get the payment you want because they know you’ll be paying more in interest over time. Instead, focus your negotiation on the actual price of the vehicle and try to only take a 60-month loan at most.
Don’t: Take a trade-in value for less than your loan payoff.
This is one of the most common car buying sins due to longer loan terms and new-car depreciation. People find themselves underwater in a car they can’t afford, so they come back to the dealership to trade it in for a cheaper car. The problem? The dealership is going to offer them way less than what their loan payoff is, but will roll the difference into a loan on another car. Now, if they needed to quickly get out of this new loan for some reason, they’d be in even more trouble.
Don’t: Tell the dealer you are paying cash for a used car.
People always make the mistake of bragging that they can pay cash and they want a discount for doing so. The days of getting
a discount for paying cash are long gone! That happened years ago when dealers had to wait to get their money from the banks. Today, deals are financed without delay. After you reveal you are paying cash the dealer now knows they will not make money on the financing so they will keep the price high.
Don’t: Tell the dealer that your old car was totaled.
By revealing that your old car was totaled lets the dealer know that you are without a car and will need to obtain a vehicle quickly. Salespeople are less likely to barter if they know your need is high.
Don’t: Go car buying when the dealership is busy.
By waiting for non-peak times (like weekdays or when the weather is bad) you ensure that salespeople are dedicated to you and you alone. When there is a lot of foot traffic in the dealership, it is easy for a salesperson to pass on your deal with the hopes of closing someone else’s. Everyone wants to shop on a Saturday, but possibly saving $1,000 by shopping on a Tuesday may be worth it.
The last few days of October are the absolute best times to buy a car from a dealership? Most dealers are cutting prices near the end of the year to make room on their lot for all of the new year’s models. Also, many salespeople have sales quotas. If they haven’t reached their quota by the end of the month, they are more more likely to give you a great deal!