Car Buying 2001
But with the spring buying frenzy comes costly mistakes. In their rush to obtain new wheels, many consumers find their judgment clouded, their analytic faculties stunted and their brains on holiday. With the gleam of the new car finish reflecting on their foreheads, even the savviest shoppers are apt to slip into bonehead move. And car dealers, while certainly not the free booting pirates that some say they are, find themselves entirely un-required to correct consumers' mistakes. After all, if the dealer makes a mistake in his negotiations with a customer, is the customer required to correct him?
If you're thinking about buying a new car, minivan, sport utility vehicle or truck this spring, remember that the market is in your favor. The car industry consists of way too much production capacity chasing far too few qualified buyers. That means if you have enough cash in your checking account to contemplate buying a new vehicle, you are like gold bullion to the 20-some thousand new-car dealers out there. You deserve to be treated with respect, but if you are willing to play the fool, there are those out there who will be more than happy to separate you from your money.
That being said, here are three of the most common mistakes consumers make when buying a car, commentary on why they are mistakes, and the alternative choices that are not nearly as ill-advised.
Mistake #1: Looking only at the monthly payment Most people live with a monthly budget. They know what their household takes in, and they have some idea of what they can send back out in the form of a car payment while still having a few bucks left over. But if you determine the affordability of a vehicle only by the monthly payment, you run the risk of tying yourself into a bad, bad deal. Why? Because car salespeople can quickly lower the monthly payment by simply extending the length of the loan. If you take a five-year loan instead of a four-year loan to pay off your next car, the monthly payment will be lower, all other things being equal, but you could well pay thousands more for that very same vehicle.
Mistake #2: Failing to shop for price With the exception of your home, your string of polo ponies and your luxury yacht, your car is the biggest purchase you will ever make, yet many people approach vehicle purchase with the same careful consideration they devote to picking up a pack of gum. Research indicates the average car buyer visits just three dealerships before she or he buys and a sizable percentage visit just one. Now is that any way to comparison shop? Friends, the realities of the automobile market are in your favor. Industry experts suggest there are too many car companies, too many car models, and too many car dealers. This should be heaven for car buyers, and it is, but only if you make the dealers compete against one another for your business.
Mistake #3: Failing to determine what your current vehicle is worth In my spare time I study murder, so I am never amazed by the stupid things people do. One certifiably stupid thing is to bargain mercilessly over the purchase price of the vehicle you hope to buy, yet have no idea of the value of the vehicle you are "trading in." After all, "trade-in" is a misnomer in the first place. You're not trading baseball cards here; you're selling a car. By all means, get a handle on what your current car is worth in your local market before entering into negotiations on your new-vehicle purchase.
Certainly the new-car woods is filled with many more potholes, but if you can avoid these three common mistakes, you will go a long way toward making your spring car purchase smell like a rose instead of being covered with thorns.
Jack R. Nerad is the author of The Complete Idiot's Guide to Buying or Leasing a Car, which is available in local bookstores and from online booksellers.