The Costliest Car-Buying Mistakes

The Costliest Car-Buying Mistakes

Whether it’s your first time or you’re a seasoned pro, you should never buy a car on impulse. The buying process takes time, research, careful thought and even some strategy.



Truth be told, it can be overwhelming. In addition to finding the best car for the right price, you have to navigate through confusing payment options and deal with salespeople. One mistake -- no matter how small -- can cost you hundreds, if not thousands, of dollars.



Under such pressure, it’s easy to understand why so many car shoppers get in over their heads. However, it doesn’t have to be that way. By learning from past mistakes, you can find the right car and get a good deal too. Take a look at eight of the most common car buying mistakes and how to avoid them.



1. Confusing Wants with Needs
Convertible two-seaters are really cool. But if you’re lugging a load of hockey equipment every day, chances are you’d do better with a Honda Fit than a Mazda Miata. Unfortunately, car shoppers often make the mistake of confusing their wants with their needs. After all, who wouldn’t want a car that’s faster, sexier or more luxurious? However, such choices aren’t always practical…or even affordable.



Avoid making the same mistake by putting together a list of regular activities that would require using your car. When car shopping, reference the list to make sure that the car you’re considering will serve those functions well.



2. Test-Driving the Wrong Trim
You know those weird letter-number combinations that follow your car’s badge -- LS, GLS, LX, LP560-4? In most cases, they denote significant performance, interior and even exterior differences between trims of the same model. The Dodge Challenger SRT8, for example, performs like a true American muscle car. The Challenger SE? Not so much.



Be wary of dealers who give you the highest trim level of a car to test drive and then proceed to sell you a trim that better fits your budget. Car shoppers who fall for this trick usually end up sorely disappointed with the car's performance and features. To avoid making this mistake, test drive the exact trim you plan to buy before signing any papers.



3. Sacrificing Reliability for Appeal
Don’t let a car's curb appeal or features sway you. Buying a pretty car with funky features and a poor history of reliability can prove to be a major drain on your wallet. Just ask anyone who has purchased a Volkswagen Jetta. Shoppers love the Jetta for its small size, cute design and sprightly performance. However, the vehicle has a so-so record of dependability -- receiving a J.D. Power rating of only 2.5 out of five power circles for predicted reliability.



Before you allow a car’s emotional statement to overpower your ability to think rationally, research its reliability. J.D. Power and Associates is a good source for determining whether your car is doomed to be a lemon. If you’re buying a used car, hire a mechanic to conduct a pre-purchase inspection.



4. Not Knowing What Others Paid
Saving $500 on the sticker price of a 2010 Toyota Land Cruiser is great, but not if the average buyer is saving thousands more. In the past, it was almost impossible to know whether the price you negotiated at the dealership was a good one. However, with the dawn of the internet, that information is now readily available. The Land Cruiser, for instance, has an MSRP of $65,970, but the average price paid is only $63,645.



5. Underestimating the Value of Your Trade-In
A smart way to save money on the price of a new car is to trade in your old one. But a dumb way to miss out on potential savings is by taking the dealer’s word for how much your car is worth or announcing that you intend to trade in your ride too early in the game. After all, a dealer’s primary job is to maximize his profits -- not your savings. By failing to prepare or showing your cards too early, you could be making a costly mistake.



Before stepping foot on a dealer lot, consult Kelley Blue Book or NADA Guides to determine your car’s trade-in value. At the dealership, use that knowledge to negotiate a fair price. However, don’t mention anything about wanting to trade in your car until you’ve already negotiated a suitable deal on a new one. Waiting until the very end to mention your trade-in will ensure that its value gets factored into the final price. Also, remember that you can negotiate the value of your trade-in. If you don't like what the dealer is offering for your trade, find a dealership that will give you what your car is worth.



6. Buying Options You Don’t Need
If you’re shopping for a 2010 Lexus IS, an optional navigation system is going to run you an additional $2,465. It’s a great system that features the latest in voice command and Bluetooth technology. But if you don’t need all those bells and whistles, you can buy a TomTom portable GPS for only $150 and still get where you need to go. Shoppers who make the mistake of opting for unnecessary extras will quickly inflate the price of their new cars.



Avoid wasting money on optional features that you don’t need by researching their prices first. Most manufacturers will list the price of individual and package options right on their websites. If you come across a feature that you really want, try to find an aftermarket store that sells a comparable version for less. You’ll be surprised at how much you can save.



7. Not Cross-Shopping Car Deals
One of the costliest mistakes car shoppers can make is forgetting to cross-shop car deals just as they would competing vehicles -- though doing so can help save them bundles. Take, for example, the similarly-priced Nissan Versa and Chevrolet Aveo.



Recently, the Aveo was offered with zero-percent financing for up to 72 months. Nissan, on the other hand, was only offering 1.9 percent financing for up to 60 months plus $500 cash on the Versa. At first glance, the Aveo appears to be the better deal. However, a simple crunching of the numbers reveals that the Versa’s monthly payment would actually turn out to be a bit less than the Aveo -- assuming an equal down payment of course.



Don’t let carefully-crafted sales promotions mislead you into thinking that you’re getting the best deal around. Be meticulous in comparing car deals for competing vehicles, and remember that these deals change monthly. U.S. News’ best car deals will keep you in the loop.



8. Only Thinking in Terms of Monthly Payments
For most people, it’s easier to think in terms of affordable monthly payments than a daunting end price. However, such short-sightedness has led many car shoppers to overpay. Sure, a $250 per month car payment is easier to swallow than a $350 payment, but getting that lower price often means taking out a loan over a longer period. In the end, that means paying more interest and fees.



To avoid overpaying, don’t just calculate what your monthly payment will be. Add up those payments to determine whether the total price paid still makes economic sense.