The nature of sales and negotiation spawned a unique phrase to our collective lexicon: “The Car Buying Experience.” Furniture, major appliances, home theater systems, vacation packages – none of these major purchases are described as “buying experiences;” none of them involve one-on-one negotiation.
Daunted by the thought of locking horns with a pro? Take a deep breath. You are a consumer, and in today’s “car buying experience,” you have all the power.
Hold that thought, hang on to it throughout the entire shopping process, and you will have avoided one of the Five Most Common Mistakes consumers make when buying a car. These pitfalls are listed below, and since some are more egregious than others, they are listed in ascending order:
MISTAKE 5: Focus on auto loan interest rate.
Interest rate is an effective distraction for a car salesman because it’s next to meaningless for you. The difference in monthly payment between a good interest rate – say, 6% – and a horrid interest rate – call it 12% – is about 30 dollars a month on a standard 5-year note for every $10,000 you borrow.
Don’t believe it? Check the math yourself with this car note rate calculator from Carmax.
Don’t roll over on interest rate, but don’t let it distract you from the bottom line: The gap between what the dealership will give you for your trade and the purchase price of the new vehicle. This is the amount you’ll be financing, and it means far more to your bottom line than interest rate.
MISTAKE 4: Oversold at the dealership.
You’re not Moses. You’re not seeking a resting place for the original stone tablets that bore the 10 Commandments. This is not the Ark of the Covenant. It’s just a car. Know your budget before you go to the dealership, and stick to it. Consumer Reports can help you determine your budget before you start shopping.
Passion is to reason as oil is to water. A good salesman wants you to fall in love. A good salesman wants you to take mental ownership before you belly up to the deal desk. As your excitement rises, your ability to think clearly diminishes. Know your budget, stick to it and don’t get oversold.
MISTAKE 3: Hit the lots before hitting the Web.
The Internet has changed car buying forever. Once upon a time, car salesmen made lucrative livings by taking advantage of consumer ignorance. Today, you can be fully informed before you go to the lot.
For new cars, a quick stop at Edmunds can show you all the available manufacturer incentives and rebates for a wide array of makes and models.
For used cars, a few minutes at Kelly Blue Book can reveal dealership trade-in values for your current vehicle (so you’re sure to get fair trade value) and any vehicle you might consider purchasing (so you have an idea what the dealership paid for it).
And this car buying site is one of many that detail the used and new cars available in your area. Have an idea what you’re looking for, what it’s worth and what the incentives are before you leave your house.
MISTAKE 2: Buy at the wrong time.
Car dealerships employ car salesmen, and car salesmen have monthly quotas. Quota pressure will make cowards of salesmen, giving you the leverage required to get the deal you want. Odds are you’ll get the best deal if you shop the last week of the month.
Dealerships also have factory incentives for moving units. Dealerships can sell a car at a loss and still make a huge net profit if that unit pushes them past a monthly factory quota. They aren’t at all likely to do that on the 1st, but you got a chance on the 31st.
Why anyone shops for cars before the 25th is one of life’s enduring mysteries.
MISTAKE 1: Unwilling to walk.
The four hours you spent at the dealership during your last car-buying experience was no accident.
The more time a prospect invests, the less likely he is to walk. It’s a calculated risk – the sales desk invests that time as well – so be willing to call their bluff.
Next time you’re four hours deep, if you’re at all uncomfortable with the deal, stand up, crisply thank the salesman for his time and bolt. If he even suspects he’s got a deal, he won’t let you go. If you manage to make it out of the dealership, he’s got your number. You’ll be hearing from him shortly, with the promise of a better deal.
Don’t forget: There are roughly a billion cars within a 30-mile radius of you. Everyone is competing for your business – the decision to buy is yours and yours alone.