It’s time: You need a new vehicle. You know that you have to do your research and pick out a great new ride. You will probably also have to get financing, unless you’re in a position that allows you to pay cash for a new or used car. All of this can be a bit stressful, of course — especially if you make a mistake that could cash you dearly now or down the line.
But never fear: We’re here to help you avoid the biggest and most common mistakes that people make when they shop for their next car, truck, SUV, or other vehicle. Read on, and steer clear of these disastrous decisions!
Exceeding your budget
Cars are pretty expensive things. They’re the most expensive things that many people own; other than houses, they’re the most expensive things that many of us will ever buy in our entire lives. And the huge figures that we see when we shop for cars can be overwhelming — which can lead to bad decisions.
We’re already taking out a loan to cover ten thousand dollars or more, we muse. So what’s the big deal if we take out a bit more debt than we planned and add some package of perks and extra features? After all, who would want to spend so much and get anything other than the perfect car?
Beware! It’s all too easy to go over-budget when you’re car shopping. Keep your eye on the purchase price (the monthly payment can be very deceptive), say no to add-on packages, and stick to your predetermined budget no matter what. Keep your total car expenses — including not only the monthly payment but also gas, insurance, and more — to under 15% of your take-home (that means after tax) income.
Shopping only at the dealership
Dealerships had a stranglehold on car sales for years — but no more. Dealerships are under fire from all sides; new car companies are fighting them, online sales companies are competing with them, and consumers are fed up with them.
That’s why you need to make sure that you use the internet to find your next vehicle. To be clear, this doesn’t mean that you shouldn’t consider cars that are on the lot at local dealerships. But let’s consider an example: Let’s say that a local family in Easton, Pennsylvania is looking for new cars. They could head to the local Easton car dealerships, in which case they could see what’s on the lot at each one. Or they could hop online, fire up a car sales site and search engine like carshopper.com, and search for their next vehicle — in which case the results would include the cars from those same Easton car dealerships, all in one place and alongside other options.
In other words, searching online will allow you to see more options at once. It will also keep you away from pushy salespeople, allow you to do research at your leisure (just open another browser tab!), and make the whole experience a whole lot less stressful.
Defaulting to dealership financing
If you’re like most Americans, you’ll probably need financing to help you afford your new vehicle. Refinancing a car allows you to take on a new loan to pay off your previous balance. You may think does refinancing your car hurt your credit? The simple answer is yes, but not for long.
And if the dealership that you buy from has the financing you need at the best terms that you can secure, then so much the better. But you won’t know if the dealership’s financing is the best deal unless you do your research!
So shop around. Check out different financing deals, and consider getting pre-approved before you shop. Don’t assume that the dealership will have the best terms, and remember that small differences can add up to big savings over the life of a car loan.