Shopping for your first car elicits a mix of emotions. You feel excited about the new possibilities that having a car brings, but there are also hints of anxiety and concern about how to actually buy one. You are right to be at least a little worried about approaching the car-buying process since there are a number of traps that you can find yourself stepping into. Here are four common concerns to watch out for.
1. Dealer’s Price
Going to your local auto dealership without knowing the dealer’s price for a vehicle you are interested in purchasing is a common pitfall that costs buyers thousands of dollars. The jumping-off point for negotiations should be what the dealer’s cost is for the vehicle. This number has no relation whatsoever to the sticker price that you see on the windshield. You can find out the dealer’s price for a certain vehicle through Kelley Blue Book (KBB) and through Consumer Reports’ new Car Price feature.
2. Lease Contract
A lease may work well for certain drivers, specifically those who don’t drive a lot and who can calculate the ownership and the operational costs over time. If you are planning to drive a car until its maximum lifespan or to drive over 12,000 miles annually, a lease contract may cost you more in the long run. Leasing typically requires you to purchase comprehensive auto insurance coverage as well, which can tack up to $1,000 onto your yearly car expenses.
3. Financing and Car Price Bundle
Unless you plan to pay in full with cash, you probably will be financing your vehicle. This is done either through your auto dealer or a bank that the dealer works with for financing plans. Shopping for auto loan rates can be as simple and as straightforward as searching online, but few people bother to make that five-second search. As a result, they are typically offered and, subsequently, accept a high financing rate. For instance, they may give you a better price for your car but concurrently add a few percentage points on the financing rate, which just eats up any of the savings you got from the lower car price.
4. Showroom Shopping
Despite the Internet becoming a prevalent tool today, car buyers often skip online searches and go straight for the old-school showroom experiences. Visiting your local dealership should be the last step of the research phase of buying a car. You’ll want to pursue unbiased and updated resources online, including quarterly and annual reports, such as Consumer Reports and JD Power’s customer satisfaction ratings. These resources give you a better sense of a car make and model’s track records, repair and maintenance costs over time, and safety and reliability.
Buying a car is one of the largest purchases that you can make in your lifetime. Therefore, it should never be done impulsively. Do your research beforehand and keep these common pitfalls in mind. They can literally save you thousands of dollars over time.