Top 10 Mistakes to Avoid When Buying a Car


Buying a new car is always a big decision unless you are a business tycoon or a finance guru. It takes detailed financial planning to figure out the budget and then lots of research to buy a car that suits your needs and fits your pocket. Even if a car is not a once in a lifetime buy anymore, the cost of a shiny new ride still makes the buy an infrequent one. So the car you buy is the one you have to live with for a few years at least. The following article contains the most common mistakes that car-buyers commit and how you can avoid making these mistakes.

No. 1 – Not Putting in Adequate Research

This is one of the most common mistakes that car-buyers make. Proper research means a fair amount of work. Laziness among the buyers often costs them dear.

In order to equip oneself with the basics of an automobile, consulting reputed auto journals is the best way to proceed. Magazines such as Car and Driver, Topgear provide a lot of insights as well as present road-tests and reviews. The Web is also a rich source for such information and websites such as provide adequate information.

The most important resource has to be the auto section in Consumer Report. Here you’ll find plenty of reviews, ratings and testimonials for a wide range of cars. You can go through these at
Once you narrow your research down to a few cars, it is important to know the price. The price that should concern you is the price that the dealer paid. This price can be found at or The price you are shown is the Manufacturer’s Suggested Retail Price (MSRP). Your negotiations should start at Dealer’s cost price and not MSRP.

The last, but not the least, part of the research should deal with the resale price of the car. Honda usually has the highest resale price. Usually Japanese cars go for a higher resale price than the American counterparts. However, check the resale price of the car you are interested in and its rivals.
Buying an Impractical Car

A car that doesn’t suit your lifestyle is an impractical car as far as you are concerned. So even if you’d kill to own a sports car, if you plan to have kids, you should stay away from it. Your best bet in that case will be a sedan or an SUV. You should compare the pros and cons of each type of vehicle.
An impractical car is very difficult to live with. Say, you buy a sports car but after a week or so you realize you don’t have enough boot-space to accommodate your golf kit. Or if you cherish long drives, it will be a pain to make frequent stops at gas station due to a poor mileage of your vehicle.

No. 2 – Auto-Impatience

Yes, getting a new car is something that is difficult to wait for. But while you may think that people wait too long to buy a new car when a particularly noisy car drives past, the fact is that most of the buyers buy cars a little too early as opposed to too late. So even when many payments are pending on their leased of financed vehicle, car dealers can lure them into buying a new car.

It often happens that to make a sale, dealers convince buyers to transfer the finances of the old car to the new car. This is something referred to as an “upside-down” buy. This is very bad for the buyer. What it does is that when you trade, you end up owing more on the car than its actual worth. The attractive low interest on new cars actually makes a negative on the old ones.

The owners then become liable to pay the remaining difference between the trade-in price and the payment balance. Owners, on an average, end up owing about $2000 on the trade-in when they indulge in upside-down buying. It may sound incredible, but it can be shown statistically that a person trading in a 1998 Honda Civic at $8000 could still be left with over $10,000 left in payment.

An alternative for such a situation is to buy a comparatively new used car. In this way, the car you buy has depreciated significantly (the value of a car drops very rapidly after twenty four months and includes an average depreciation of 30% after the first year) and is hence priced at a fair price.

This way, you will get a car in a fairly good condition for significantly less and will place you in a better position to make the final payments on the trade-in.

No. 3 – Buying From Closest Dealer

The dealer nearest to your residence may not be the best bet for you. Just like you browse shops for usual shopping, you should check out as many dealerships as possible to get the best bargain.

Every dealership will offer a different price. Each dealership has a different Consumer Service Index (CSI), which is a measure of how well that particular dealership treats its customers in terms of services and prices. J.D. Power and Associates maintain the CSI.

The difference in the prices offered at different dealerships is due to the way an MSRP is determined. Several factors such as the affluence of the neighborhood, geographic location etc, determine the MSRP. So, if you live in a posh area, it is possible that you may be offered a car at a higher price as compared to another part of the city. So while buying a car, you should be prepared to travel around a bit.

No. 4 – Buying Without Driving

The test drive is the acid test for a car. Unless you take a car for a spin, how can you determine whether it is a car you can live with everyday? It is akin to buying clothes without trying them on first. What a test drive establishes is the comfort level of the car. The position of the steering, the height adjustment of the seat, braking distance, accelerator calibration, noise inside the car etc are important factors for comfort. Once you take a car for a spin and see that it suits your taste, you can go ahead and buy it!

No. 5 – Not Negotiating

Always remember that you must negotiate on the price tag and the market price. The basic rule of negotiation is that you must not give up until you hear the answer ‘Yes’ from the salesman. Salesman always insists on the same rate and they never give up, you should also treat them like they do so that they can reduce the cost.

If you want to save money then you must talk to the salesman about different topics like tag price, market price, discounts and sales price. It’s better to clear each and every detail related to the car so that you can save extra money.

These things on paper look a bit misty but in real they are not so much difficult. If you actively take part in it then you are having a better chance of saving money while buying the car. The main thing is to stay active and take part in all the paper work. Lazy customers don’t save too much money on the car because of their inactive attitude.

Don’t show your emotions in front of the salesman. If you desperately fall in love with any car then you must control your emotions so that sales man cannot catch your weakness. Sales men are always looking for these kinds of weakness so that they can get a good amount for the car.

Never mention that you are selling your old car to the same dealer because this may reduce the chance of bargaining a good amount. You must bargain first on the tag price of the car and then reveal that you are selling your old car to the dealer.

This will give you the advantage of bargaining again over the price of the old car. Obviously you won’t get the exact cost for the old car but you can save a lot of money in the deal of the new car. Dealers offer a good price for the old car if you are purchasing a new high priced car.

The best deals are worth when you are buying some expensive cars. Some of the best saving will be because of best bargains and some measured steps.

No. 6 – Short-Sighted Financing Perspective

While it may be tempting to go for the financing option that is cheaper at the beginning to reduce the pain of paying more at the start, it is usually a foolish move. Look at the bigger picture and determine the option that will give you the lowest total cost of ownership of the car. This usually involves trying to pay as much as possible upfront to reduce interest costs.

For example there are two choices one is $250 and other is $450 per month and the principal amount is $15000. The interest rate is 5% then for the first option it will take 6 years to pay off the amount but the interest rate will accumulate an amount of $2393 and the other option will take exactly 3 years and the accumulated rate amount will be $1184. In the second option you can see that you are paying less amount of interest. Always go for the scheme which will make you pay more per month.

Installment scheme are the most common trap from the dealers, so always try to choose the short term plan where you can save some money.

Usually, most car dealerships also offer special rates or discounts if you take a loan from a specific bank. Do your math properly and decide if the offer is the best offer for you. The bottom-line is, look at the long-term financing picture and pick the option that gives you the best bang for your buck.

No. 7 – Ignoring hidden costs

Before purchasing a car you must enquiry about all the hidden charges which are involved in purchasing the car. You must read all the documents where small charges are discussed properly. Obviously you can’t cancel the charges but at least you can negotiate on all the other extra charges.

This will give you the benefit of saving more money. Some of the hidden charges are document processing fees, rust coating, advertising cost etc.

No. 8 – Cost of insurance

Before buying a car never forget to include the cost of insurance in the total cost of the car. Sales men often charge the cost of insurance in the total cost and you can even bargain on that for saving extra buck.
You must meet an insurance agent before buying a new car so that you can clear the insurance related deals earlier. There is a huge risk in accidents and theft so insurance is a big factor while purchasing a new car. Some of the insurance companies offer a really good premium amount. Always look for an insurance company which makes the best deal.