Car Buying Mistakes

Given our recent car buying exploits, I thought I’d point out an article outlining common car buying mistakes that I just ran across over on This information is abstracted from their new book, Smart Buyer’s Guide to Buying or Leasing a Car

Without further ado, here are the top ten car buying mistakes, complete with a bit of additional commentary from yours truly.

1. Falling in love with a specific model. I must admit that we zeroed on the car that we wanted well before getting down to brass tacks, but we still managed to get a great deal.

2. Skipping the test drive. As far as I’m concerned, anyone stupid enough to buy a car without test driving it first deserves to be unhappy.

3. Negotiating down from sticker price. In my opinion, this is perhaps the biggest mistake that you can make. Instead, you should be working to get as close to the dealer’s cost as possible. Start at or below invoice. Better yet, ask them to bid for your business and then shop the bids around. The other day I outlined a strategy for getting a great price on your new car by soliciting bids.

4. Focusing only on the monthly payment when negotiating price. Fortunately for us this wasn’t a consideration, as we’ll be paying cash. However, at least one of the quotes that we received was broken out in terms of monthly payments over varying terms, and the actual price was pretty tough to find. Not coincidentally, this was the quote with the worst price (by far).

5. Buying the “deal” instead of the vehicle. With all the 0% financing, employee pricing, and manufacturer rebates that are being touted these days, it’s easy to lose sight of the light at the end of the tunnel. Don’t forget that you’re actually looking for a good, reliable car that fits your lifestyle. Just because you get a discount doesn’t make it the right car for you.

6. Waiting until you’re in the dealership to think about financing. Check interest rates at local banks, credit unions and online before you set foot in the dealership. If you don’t you’re at the mercy of the salesman and the dealer’s finance person, and you’ll likely end up getting a bum deal. Even if they match the terms of an offer you’ve gotten elsewhere, be sure to double check their math, as its not uncommon for the dealer to use a higher rate when their doing the calculations.

7. Underestimating the value of modern safety features. Make sure that the model you’re looking at includes all the safety features that you want — if not, find out how much it costs to get them. Similarly, be careful not to get pushed to a higher model in search of safety features that might already be available on the entry level model. One dealer in particular tried this when we were in the market for our minivan. I called them on it, and we ended up purchasing elsewhere.

8. Buying unnecessary extras. In general terms, you can safely bypass the rustproofing, fabric protection, paint protectant, and VIN etching. Similarly, think twice before you buy the extended warranty. On a related note, I’ve noticed that many dealers try to push a thrid-party warranty on you instead of the manufacturer’s extended warranty. Presumably this is more profitable for them. However, this is rarely a better deal for you.

9. Not researching the value of your current car. It’s surprisingly easy to get a great deal on your new car while losing out on your trade-in. I would recommend selling it yourself rather than trading it in. It’s not only easy, but you’ll make a LOT more money while you’re at it.

10. Not having a used car checked by an independent mechanic. To me, this is a lot like buying a car without test driving it first. If you don’t get your used car checked out, you’re just asking for trouble, and you’ll get no pity from me if you end up buying a lemon. I would also recommend getting a CarFax report. While CarFax isn’t foolproof, it’s well worth the few bucks that it costs to run a report.

[Source: Consumer Reports]

17 Responses to “Car Buying Mistakes”

  1. Anonymous

    I agree with most of the items, but I think a little differently on item 1. When we purchased our new car, I did all my research on the web and pinpointed exactly what I wanted. I then emailed our local dealers for price quotes and did most of my negotiations via email. By knowing exactly what I wanted, they were able to give me more accurate quotes. As a side benefit, I got all the unwanted things that were already in the car for free. In the end, I paid $5K under sticker (25%) and $1K under invoice (7%). It didn’t hurt that I bought the car on 12/31 – the end of the quarter and year for determining sales volume and the rate of “holdback”.

  2. Anonymous

    i recently purchased an acura mdx for 1300.00 below invoice. i did all my leg work over the internet and phone. it worked out to be almost 2000.00 out the door, lower than sticker price.

  3. John: I think that CarFax has a guarantee of some sort, but I’m not sure of the details. You may have some recourse through them for missing out on the damage. Then again, if it was never reported to an governmental agency, then they may not honor their guarantee. Major bummer about getting taken for a ride (no pun intended) like that, though.

  4. Anonymous

    Getting your car inspected by an independent party is so true. When looking for a Honda, I ended up buying a used one from a new Honda dealership (Crown Honda, formally Independence Honda in Charlotte, NC). They said it was a trade in. I asked if it had been in a wreck or been painted and they replied “no”. I got a car fax that came up clean.

    Three weeks later I found signs of body and paint work and this was verified by other mechanics. Honda said I couldn’t prove I didn’t do the damage myself.

    Get any used car checked out!

  5. Anonymous

    Any suggestions on #3 when dealing with luxury brands such as BMW, Lexus, Audi, etc.? According to Edmunds True Market Value, it seems these rarely sell for less than a few hundred off sticker. What price should you start at when dealing with one of these dealerships?

  6. Russ, not all makes take that sort of hit when you drive them off the lot. Yes, they all depreciate, but for some makes (Honda, Toyota) a late model used car is darn near the same price as a brand new one. In fact, we bought our 2004 Odyssey brand new for *less* than a used one (same model year) with ~10k miles on it was going for at CarMax. Granted, CarMax isn’t the most economical way to buy a used car. And yes, this was a weird hiccup in the market, and it’s definitely not the norm… But it does show how well these things hold their value.

  7. Anonymous

    It doesn’t matter how well you bargain with a new car dealer, the car will still lose 20% as soon as you driveoff the lot, and a total of around 40% within 2 years. Buying new is NEVER a bargain. Buy a good, used car, get it checked out by a reputable mechanic, and let the first owner take the bath on depreciation.

  8. Yeah, as I pointed out in my “Buying a Car” post, I’m not comfortable making an offer at all. I much prefer to get a feel for the marketplace and to find the bottom of the market by playing them off of each other. Admittedly, this probably stems (at least in part) from my fear that they might be thrilled at whatever amount I might offer. As you say, that’s a sure sign that you’ve offered too much.

  9. Anonymous

    I’ll add:

    “Making your initial offer too high.”

    I had a friend who made an offer to a dealership and they said “It’s a deal!” Sure sign that he offered them too much.

  10. Anonymous

    My local paper had an article recently warning people about buying cars that have been flooded. That’s definitely something to look out for, especially if you live close to the coast!

  11. The bottom line with warranties is that they wouldn’t sell them (or they’d charge more) if they weren’t, on average, making a profit. We used to have a Dodge Grand Caravan and opted to buy the extended warranty shortly before the standard warranty expired because we had experienced a lot of problems. In that case, it paid for itself and more. One thing to note here is that you can (or at least used to be able to) buy the extended warranty up until the expiration of the standard warranty. And the price is highly negotiable. They claimed that there were extra fees for buying after the initial purchase, etc., etc. The initial price quoted to us was ~$2,000. After calling around to a variety of dealerships and asking the to beat each others prices, we had it down to about $1,200.

  12. Anonymous

    Very good stuff! I had heard most of them. The part about extended warranties was interesting (pulling the switch from the manufacturer’s to a third party warranty). Next time I buy a car I will seriously consider getting an extended warranty, as my left front wheel bearing went out right after the warranty and then 8 months later the right front went! All totaled up that was about $1400 of work that could have been under warranty and a deductible paid!

    Yet, it’s pretty hard to build a model to evaluate whether to buy one or not. I think it’s more a matter of personal opinion. My dad brought me up to never buy a warranty, my best friend’s dad always bought warranties. After my story, my dad purchased an extended warranty on my mom’s new car (for some reason she has had bad luck with the last 3), which she’s already used to the value of the purchase price and she still has over half of the warranty period left.

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