Spending years in retail auto sales has allowed me to witness and take part in many car buying transactions. These experiences have provided me with a collection of stories and encounters that would make the first time car buyer cringe at the thought of going to a car dealership and buying an automobile. I am using this exposure to convey some of the costly car buying mistakes that people make so you can avoid these very expensive blunders.
Automobile Pricing: Most car buyers believe they are getting a great deal when they have received a substantial discount from the sticker price of a vehicle. The problem is that everyone’s idea of a reasonable discount is different. Buying a new car without knowing the dealer invoice price can be a costly car buying mistake. I have seen people drive away in their new car thinking they got a good deal when they really paid a thousand or more profit to the dealer than they needed to pay because they were unaware of the invoice price. Knowledge is negotiating power when it comes to making an automobile purchase.
Car Dealer Financing: There is no question that the price you pay for a car is important, but there is much more money to be made for the car dealership in the financing. Having the dealer’s finance department arrange your auto loan can cost you many thousands over the life of the loan if you are not aware of your credit score and the other financing options that are available. It’s not unusual for the dealership to charge you several percentage points of interest more than you could qualify for through other lenders. Now that is a car buying mistake that really adds up.
Extended Auto Warranty: Another common car buying mistake is to buy an extended auto warranty for the first price that the finance manager proposes. This is an area of the car buying process that can be very profitable for the dealer. Extended vehicle warranties are negotiable just like the price of the automobile. The same goes here as it does with the other mistakes, buying a service or product without knowing the true cost or at least getting a competitive quote can be very expensive. I have seen the dealer make a thousand dollars of profit or more on your extended car warranty.
Car Buying Paperwork: The last step of buying an automobile consists of completing all the paperwork along with listening to the Finance Manager pitch their wares. The biggest single mistake when buying an automobile that I have seen is signing the paperwork without reading and going over the numbers line by line. I have witnessed people that signed their paperwork for a higher purchase price than they agreed to with their salesman and for options that they refused. When the vehicle buyer catches the error they apologize and say they made a mistake. However there are many times where the buyer signs without realizing what they bought and what they are paying. And by the way there are no returns after you take delivery and drive your new car home.
There are many other car buying mistakes, but these are the most common ones and the ones that can make the dealership a huge amount of profit that could be avoided with a little knowledge and preparation before visiting the showroom. Everyday people spend thousands of dollars more than they need to spend on their car purchase by making seemingly simple oversights. I don’t know about you, but I never like spending more than I have to when I make a purchase.