When I was Internet Manager for a major car dealer, I compiled a list of the most common mistakes my customers made when buying new and pre-owned vehicles. These missteps cost consumers hundreds, and often thousands of dollars more than necessary. We’ll look at these individually over the next few days.
For now, a quick tour of the top five mistakes car buyers make.
Mistake #1 – Not Starting Your Vehicle Search in Your Pajamas
If you’re in your pajamas, you’ve got to be in the privacy of your home. And that’s exactly where your vehicle search should begin. Too many consumers walk into their local car dealership browsing for a vehicle. Many are surprised to find that they drive home a few hours later in the biggest and best new vehicle available. And they don’t have a clue if they paid too much.
Here’s a tip: If you don’t know if you paid too much for your new car, you can assume that you just paid hundreds, and probably thousands more than necessary.
Mistake #2 – Not Comparative Shopping
When I was Internet Manager for a major car dealer, one of the biggest mistakes I saw my customers make was walking into a dealership and expecting to find they car they wanted, negotiate the price, and drive home in the same day. You are not only going to pay too much for your vehicle shopping this way, but your stress level will go through the roof.
Mistake #3 – Not Getting Pre-approved on Your Car Loan
Car dealers have numerous profit points where they expect to make money. This is one reason they can sell a new car for cost—or even at a loss—and still make money on the deal. Adding a few percentage points to your car loan is a lucrative profit center for the dealership, but it can cost you hundreds, even thousands of dollars over the term of your car loan.
Mistake #4 - Pre-negotiate Only the Selling Price
May consumers work very hard at getting the best selling price possible, and then they relax. That’s a big mistake. The selling price is just one area where car dealers make a profit. Do you realize that the interest rate on your car loan may be negotiable? What about the trade-in value? Or, do you want an extended warranty? A better security system? Not pre-negotiating these items can cost you a ton of money.
Mistake #5 – Not Working as Hard on the Trade Value as the Selling Price
The Internet has changed how we buy cars. It’s no longer that big of deal to buy a vehicle at the dealer’s invoice cost or below. This has resulted in a dealer’s profit margin being reduced from the glory days. One area they can make up that lost profit is by giving less for a customer’s trade-in.
Don’t go to sleep on the value of your trade. Not doing proper research in this area can literally cost you thousands of dollars more than necessary.
I’ll take an in-depth look at each of these top five mistakes over the next week with the idea of you keeping more of your hard-earned cash in your pocket. We begin with Mistake #1 – Not Starting Your Vehicle Search in Your Pajamas tomorrow.