Consumer Reports: 10 Car Shopping Mistakes And How To Avoid Them
Consumer Reports has compiled a list of common car shopping mistakes from their Smart Buyer's Guide to Buying or Leasing a Car, which, of course, you can find in bookstores.
Here's a quick summary of the list:
- Falling in love with a model.
- Skipping the test drive.
- Negotiating down from the sticker price.
- Focusing only on the monthly payment when negotiating.
- Buying the "deal" instead of the vehicle.
- Waiting until you're in the dealership to think about financing.
- Underestimating the value of modern safety features.
- Buying unnecessary extras.
- Not researching the value of your current car.
- Not having a used car checked by an independent mechanic.
Becoming infatuated with a single model can blind you to alternative vehicles that may be better for your needs or make you skimp on thoroughly researching a vehicle's ratings, reviews, reliability, or safety and pricing information.
A lot of vehicles look good on paper--especially in glossy brochure photos--but the test drive is your best chance to see how a vehicle measures up to expectations and how well it "fits" you and your family.
"A salesperson may offer you a deal that's, say, $500 below the sticker price, and many consumers will conclude, often mistakenly, that they're getting a good deal. Unless the vehicle is in big demand and short supply, you can often get an even lower price by negotiating up from what the dealer paid for the vehicle."
"Salespeople like to focus on a monthly-payment figure while negotiating a deal. Indeed, "How much were you thinking of paying each month?" might be one of the first questions to greet you when you meet a salesperson. Don't take the bait. It's the first step down a slippery slope of being manipulated with numbers and overpaying for your vehicle."
"...it's important to remember that any deal is only as good as the car that's attached to it. Just because you can get a good discount doesn't mean you should buy the vehicle."
"...it's critical to comparison shop for financing terms at different financial institutions and get prequalified for an auto loan before you go to the dealership to buy the vehicle. Check interest rates at banks, credit unions, or online financial sites to see which offers you the best rate."
"Today's vehicles offer an array of advanced safety features. But many buyers don't know which are most important or what to look for when comparing vehicles. Antilock brake systems (ABS), electronic stability control (ESC), and head-protecting side air bags, for instance, are effective and well worth the money."
"Dealerships often try to sell you extras that boost their profit margin but are a waste of you money. They can include rustproofing, fabric protection, paint protectant, or VIN etching, in which the vehicle identification number is etched onto the windows to deter thieves. Don't accept those unnecessary services and fees. If you see those items on the bill of sale and you haven't agreed to them, simply cross them out and refuse to pay for them. "
"Find out what both the used-car retail and wholesale prices are, so that you'll know what you should be able to get if you trade it in or if you sell it yourself. Typically, you'll get more money by selling it, as long as you're willing to put in the additional effort."
"Before you buy a used vehicle, have it scrutinized by a repair shop that routinely does diagnostic work. A thorough diagnosis should cost around $100, but confirm the price in advance. "
10 common car-buying mistakes [Yahoo!] (Thanks, Stephen!)
(Photo: Bonita Sarita )
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Comments:
I'm seriously thinking of buying an electric scooter after this winter and just leaving the car in the garage unless the trip is over 6 miles.
Thanks for bringing this article to light.
Very informative and helpful to those looking into new cars right now.
I must say, the point about arranging financing REALLY helped us last month when we went to the dealship to purchase an SUV.
Since we were preapproved through our credit union, I was able to effectively tell the dealer we were CASH customers and it gave us a lot of leverage.
I am cutting & pasting this article to a friend of mine that is in the market currently for a new car.
I can attest to pretty much all of this since I was in an accident on the 13th that totaled my car. (R.I.P. 'Bentley')
Bought a 2008 Hyundai Santa Fe but negotiated $7,200 below the sticker price. They were desperate and I wasn't playing games. Some other things to consider:
1 - That ridiculous "document/processing" fee they tack on there? Don't pay it. Tell them, "Your lights are going to be on, the cars will be on the lot, and you'll be at work whether I pay this fee or not. I'm not paying you to do what you're supposed to do anyway - fill out paperwork to close this deal."
2 - Find out what your trade-in (if you have one) is REALLY worth by going to NADA or Kelly Blue Book. While I didn't have one to trade (*sob*), I did use both of these resources when dealing with the insurance company.
3 - Don't let them rush you. Go over EVERY piece of paperwork before you sign it and ask, "Ok - and why am I signing this?" if you don't know what's up with it. They may get annoyed but they can either calm down and do their job or they can kick rocks.
4 - Be prepared to walk away right then and there. This little 5'4" chick can play hard-ball...so can you. If it is NOT what you want to be dealing with (attitude OR numbers), walk away. Seriously. That car ain't goin nowhere.
5 - You can negotiate interest rates. I had a blemish on my credit and they wanted me to pay 17%. I told him that must be good crack he's smoking. He moved me up one tier to 4.5% because I told him this sale AND the sale of my roommate's new Sonata hinged on it.
It's YOUR money. You need to be happy with the car AND the terms under which you purchase it.
I just bought a car last night.
Couple things I would add: If you roll ANY negative equity, or you're a high mileage driver, I strongly suggest GAP coverage. I average 50k miles a year, and depreciation tends to be a butt-kicker for me. Once upon a time I wrecked a high mileage car and the insurance man paid book value, leaving me $3500 upside down on a loan.
Another thing, if you bought the upgraded wheel package and live in a state that fails to properly maintain roads, the wheel protection program is worth its weight in gold. For the past two years, I shelled out $1200 each winter to repair bent rims and blowouts because Michigan struggles to understand that cold-patch is not a longterm road repair strategy.
A major shortcoming on the article, it glassed over researching the costs of the vehicle using sites like Edmunds.com. It's good to try multiple services as well to compare what Wholesale vs. Retail costs. Also realize that Certified Pre-Owned adds costs to the retail price of the car (and many times does reflect in KBB, Edmunds, NADA, etc). A dealership needs to put some money into a car they buy for the used car lot in order to meet guidelines set by the manufacturer to achieve CPO status.
"Negotiating down from the sticker price."
Good luck with that on a model in high demand, like the Honda Civic Hybrid I picked up last night. Still a couple weeks wait to get one around here.
I used to sell Mercedes. I can say always ask for some sort of discount-- you will get it. We were sometimes bewildered when a customer would pay full price without even asking for a discount, like they didn't want to be embarassed.
New-car markups are typically 9% over cost. Subtract about 7% from the full retail price and start negotiating from there. Dealers will sometimes also get a $1000-3000 incentive from the manufacturer for older models, so factor that in.
I wouldn't say never do it, but generally buying a used car on a dealer's lot is for suckers. There's a little more convenience and security if you are a luxury car buyer, but for something under $10k there's much better deals to be had in private sales.
The absolute best time to buy a new car is the last two weeks of december. Managers are desperate to boost yearly sales totals. Look for a car about to drop into the previous model year (i.e. this December look for a 2008 or 2007 model year car). Work two or more dealers simultaneously. On December 30, offer 10% below cost (i.e. about 20% below full sticker). When the manager laughs, smile and walk out, but make sure they have your phone number. Expect a phone call accepting your offer on December 31!
They've taken VIN etching to the next step. We bought a new car about a year ago and they were offering a service which places security dots on all the major components. It's some RFID dot that can be scanned so that if the car is stolen they can get our parts back. And why wouldn't I just get comprehensive insurance?
Some of the claims about safety equipment are not true. In particular, ABS is not worth the money; the NHSTA has done significant studies which showed that ABS resulted in no significant change in mortality, and in fact increased driver mortality (but decreased deaths outside of the car).
No, I cannot explain why, but the data support this conclusion.
#12 - If the dealer won't budge any more on price, you can negotiate extras. I got my GF a roof rack and Ipod stereo input for free after we ended up deadlocked on price.
If the dealer says "do you want to lose this car over a couple hundred dollars." Turn it around on him: "Do you want to lose this sale over a couple hundred bucks?'
Usually their answer is 'uh, no.'
:)
@TheSpatulaOfLove: I'm a high mileage driver myself (live in Atlanta but from St. Louis - plus, I just like to drive) so I'm definitely with you on the GAP coverage.
Do NOT leave a deposit!
Even if leasing, work that deposit into the lease. This is something that I wish I knew about before.
Oh, and if you test drive and they copy your ID/License, you take that copy back with you when you leave (the stealership). They have no right to keep that information.
Funny I used to live in Atlanta - and that's where the wreck was! ;)
I miss it down there bigtime. :-/
@TheSpatulaOfLove: Another note is to understand when you LEASE an AWD car/SUV, understand that after 30K miles of wear, if you get a blowout or damage to a tire (not a flat that can be plugged) that needs replacement, you have to replace ALL the tires as the new AWD wheel sensors will cause premature failure on the transaxles/drivetrain. You'll see this on some where it knows the tire pressure is low.
A mechanic told me that he's seen failures related to the tread wear being out of balance (more tread on the new tire, versus less on the older three, causing imbalance to the traction control system).
This is why they try to sell you a $900 tire insurance policy...since most tires are now $120-$200 each in the SUV and performance range...might need to consider putting aside some (not buying the insurance though).
I'm a car salesmen. I'd like to confirm a few of these.
"Falling in love with a model."
This is bad for me and the buyer. 9 times out of 10, the dream car is not affordable. If you close off on one car and refuse to look at anything else, you will be very disaapointed when you find out you can't affords the insurance, monthly payments or over all cost of the vehicle. Allow me to show you alternatives or possibly decontent a vehicle to suit your needs.
"Skipping the test drive."
Never ever do this. I allow and sometimes suggest that you take the vehicle overnight. This will answer many questions you may have on its own. Does it fit in the garage? Will it get the kids to school with all their stuff? If the salesmen does not want you to take it overnight, find another dealer. don't buy into his "insurance policy" excuse. Please don't sully the vehicle. It's not yours until you sign for it.
"Negotiating down from the sticker price."
I can't help you here. I work for Saturn and all you get are rebates or employee discounts. Please keep in mind that a GM discount cannot be discounted any further unless you are eligible for certain rebates. These are the rules of the program and not the dealers rules.
"Focusing only on the monthly payment when negotiating."
Excellent point. If I sell you an Aura with a maintenance interval based on your driving habits and a payment of $339 per month yet, you can get a comparably equipped Camry for $330 a month with a maintenance interval of 3,000 miles, you need to look at the overall cost of ownership. That Aura may cost you $6,000 a year while the Camry may cost $6,500 a year. Always check insurance, maintenance cost, fuel costs etc.
"Waiting until you're in the dealership to think about financing."
I disagree with this one. Get a rate, but don't apply for that loan just yet. If your credit union has a 4.99% rate, I may be able to get you 4.79% and you lost out on saving those few extra dollars by already having a loan in hand. Not to mention, you don't have to go to the bank, sign extra documents and wait for the check when you can come into the dealership and get it all done in one fell swoop. Again, check your rates first, the dealer has other options for you.
"Underestimating the value of modern safety features"
I'm lost on this one, safety is paramount here. We don't sell them as options, they are standard.
"Buying unnecessary extras."
Your vehicle may have Onstar, skip the theft protection. Fabric protection/interior protection may be good for you. Do you have kids and are leasing? The banks is going to charge you up the wazoo if they have to clean stains out to sell the car after the lease. Our protection guarantees stain removal, if we can't get it out, we replace the seat upholstery. Skip if you have leather. Read all the fine print, but don't pay for what you didn't ask for.
"Not researching the value of your current car."
I agree completely.
"Not having a used car checked by an independent mechanic."
A great idea, especially if the car has no warranty. However, don't think you can use a small problem to lower the vehicles cost. Be sure to look for stickers that say "AS IS" because someone will buy it at that price regardless.
@shorty63136: The doc fee is very real. What you have to look out for is the stuff they shouldn't be including in it. At the dealer I work at, the doc fees are basically the cost of registration, the cost of plates, other DMV based fees, and a full tank of gas.
Of course, if you're not registering the car, and want it empty when you pick it up, you do not have to pay any of that.
@AMetamorphosis: Considering financing through the dealer makes them more money, and paying cash does not, I'm not sure what leverage you think you got in this situation?
@robb9: The first two points go hand in hand, no? I always assumed that dealers pushed overnight test drives so you WOULD fall in love with the vehicle, see how nicely it looks in the driveway, etc.
Plus I think there's a much more glaring drawback to focusing on monthly payments: the overall interest. What sounds better: a $79/payment or a $600/month payment? Those that focus on monthly payments overlook the fact that the $79/mo payment is drawn out over, say, 15 years, thus adding thousands in interest. A higher monthly payment generally results in lower overall cost from an interest standpoint.
@shorty63136: Your #4 point is absolutely true. Walk-aways are a pox to salespeople. My grandfather told a story once about how he put his foot down while at a Chevy dealership. For a 70 year old man, he knows how to use the internet and how to shop around. He was helping someone shop for a car. He knew the price to pay, and wasn't going to budge. When the salesman refused the offer, my grandpa took the person's hand, said "let's go," and started to walk out. Panicky salesperson quickly closes the deal, at the price my grandpa asked. (By the way, my grandpa's asking price was well within the dealer markup still.)
Fast-forward a few months later, he walks in to the same dealership and meets the same salesperson. "I remember you... You gave me a hard time last time you were here!" was all the salesperson could say. Priceless.
@pockygt: What dealership is this, so I know not to ever shop there. Putting the full tank of gas cost in the doc fee? That's ridiculous.
@SigmundTheSeaMonster: Do you have a right to test drive their car and then disappear without leaving any trace of your taking their vehicle out for a joyride? How else do they follow up with you or send you a thank you note?
@gavni: Um... What data? Name your source, please. A quick Google search of "nhsta abs unsafe" provided NO links to an NHTSA study proving ABS causes more driver deaths than cars without it. I can certainly guarantee that ABS systems on semi trucks have lead to much fewer causalities; there are few things on the road more destructive than an out of control, jackknifing truck. In fact, the only data I can gleam from that search leads to undereducated drivers.
The procedure most drivers are taught is to pump the brakes if you're not stopping. With ABS systems, you have to just mash the brake pedal, the ABS system does the rest.
I can vouch for number 10. My friend didn't follow this and a Malibu that only had about 13k miles on it and was only 2 years old ended up being a lemon. Before 30k miles, it had over $5000 worth of problems with it.
She brought it back to the same dealer and all they offered her was a decent trade-in value for a Cobalt. Ew.
@Veeber:
Some insurers actually give you a discount for VIN etching and such. My parents had it done on one of their cars because the insurance savings ended up making it pay for itself. Then again, you can probably do it yourself cheaper than the dealer.
@pockygt:
Doc fees are real, but they don't matter. I only care about total price. As far as I care, charge me a $25k doc fee and $99 for the car. It's the total # that matters.
I'm confused about the reason anyone would buy a new car from a dealership.
I guess I view cars as simply a means of transportation and not as my identity, but some people do I guess. But still, buying a new car from a dealership just wastes thousands of dollars.
Personally I think I will always buy used. You can still have a very nice car and not have to deal with the hassle of dealerships, leases, loans, warranties, fees, salesmen, etc.
My wife and I paid cash for both our cars, have no loans, and she has a nice turbo GLX model Beetle which looks a lot more expensive than what we paid for it.
Falling in love with a model.
I don't know about you other folks but a car is not just to get from A to B for me. I like to drive and I like having a fun car so falling in love with a model is what its about. I bought my R/T Magnum that way and I am buying a Challenger because of it. I love those cars. Sure a Nissan Versa would be fine but what kind of fun would it be? I only get to live once so I am going to enjoy the hell out of it.
I did focus on the payment. They tried to play four square with me but if you do your payment right then they are forced to price the car for you. At the time the KBB on my Magnum was 23k and I left for 17k. It was when gas was peaking and no one wanted a V8 muscle car except my crazy arse. Now that gas it back to under 3 bucks I am stoked.
@shorty63136: I once asked the salesperson for a phone book so I could call another dealer. I called the dealer down the road and said, "Hi, I am at XYZ Jeep and they won't meet me at this price. Can you?" I also made sure to call from the dealerships phone. I got what I was looking for as far as price goes.
Another time I borrowed the neighbors kids(4 ages 4-9) to go car shopping with me. I went before lunch, they were hungry and made a real scene. This worked better than I could have hoped. The sales manager ordered us pizza and offered to watch the kids while I test drove.
@bbagdan: Wow, that was very informative! We won't be buying another car (knock on wood) for quite awhile, but I'm going to commit those tips to memory for the day I do need it. Thanks for posting all that.
You need to add to this
"Do not Finance from the Car Dealership!"
I just bought a car on Friday, my Credit Union Gave me 4.6% Interest. All banks would only go as low as 6%, plus you can get the "Cash Deal", they didn't care cause I came back with a Cashiers Check.
In and out with a Car financed in 2 hours. Insurance only went up $24 a month with Full Coverage for 2 Cars.
I push them to avoid the dreaded buyback. The seat is comfortable on the lot, but not after you have sat in it for 2 hours straight running errands. I want you to love the vehicle only after you have made a decision to buy it. I can't tell you how many times I have done a buyback because the car doesn't hold the family, or doesn't fit in the garage. An overnight test drive is just to verify the car suits your needs.
I agree that payment focus is a bad thing for several reasons... however, cost of ownership is uslaly on my customers minds first. Interest doesn't play to big a role in my market.
@negitoro:
It is, but a viable finish protection plan does not only guarantee against the car fabric being stained, but will also guarantee a replacement should the fabric stain and not wash out.
@The_Red_Monkey: I have to agree with you about "falling in love with a model". The last several cars I've had, I researched and found the model I wanted, then went out and found the best deal on that model. I wanted a Maxima, not a "Maxima or something similar". If one dealer can't make a decent deal there are always other dealers.
In fact, I would change this to "falling in love with a dealer" or "falling in love with a salesman".
Car dealerships can sometimes be better on financing. When I bought a certified used vehicle a couple months ago, the best my bank could give me was 6.75%, but Ford gave me 5.5% for the same term. If nothing else, it does pay to check.
Also recommend buying at the end of the month, when the dealership is anxious to make its monthly quota. That helped me negotiate a lower price.
Finally, if you do want to buy any extra warranties or GAP coverage, etc., initially say no. They'll come back with a lower price.
People are buying cars these days?
@Jevia:
I have to highly advise against waiting until the end of the month. 2 reasons...
1. You are not going to get the car you want. That blue car you wanted won't be in inventory and you have to settle for red because you waited.
What about a dealer trade?
Sure... Sign all this paper for a car I don't have on my lot. I hope you are praying the car you have already purchased makes it to the dealer without a scratch.
2. Some bonus cash ends at the middle of the month. I cannot carry that deal over for you. You might miss out on thousands of dollars.
@gavni:
I think you're interpreting the NHTSA data incorrectly. Or perhaps you're posting from bizarro land.
Another one to add..
Beware of the 4-square sheet. It's just a lame way to trick you into buying a car based on monthly payments.
When I bought my last car, the sales manager pulled out the 4-square sheet and started scribbling numbers. I kindly took that piece of paper, turned it over to the blank side, and wrote..
- out the door price
- my cash down payment
- the remainder to finance
- the finance term length, and the APR
I brought my own financing, but wanted to see if the dealer could do better. They actually did offer slightly better financing so I decided to go with them.
@akacrash: I totally agree. I worked 3 dealers against each other on a car that had a waiting list (Honda Pilot back in 2004). As for all the other crap (document fees, etc), I just said, "This is what I want, the options I want, and an on-the-road price. I don't care about delivery fees, documentation fees, whatever, I have a check here for $NN,NNN and if you want it, this is it." Done.
@th1nwhiteduke: If by "thank you note" you mean junk mail for the next seven years, then that sounds accurate.
@pockygt: Well, I can tell you from having worked at a dealership before that it was pretty much customary to throw in the registration, gas, full detail of the vehicle and standard accessories like floor mats in order to close the deal. The dealership's philosophy was "it's better to spend a little and make a lot than to try and save a little and lose a lot". Bottom line, if you won't do it for me, another dealer will. USE THIS TO YOUR ADVANTAGE...
I just purchased a used 2000 Nissan Altima GXE. Granted, I had to go to one of those buy here pay here places due to some credit issues that have yet to be resolved (Thank you, capital one), but needed a car to be able to pick up the step kids from Wichita. Blue Book value for the car was around 7 grand. Buy Here Pay Here places typically mark the price up (sometimes as much as double the Blue Book value!), but I was able to negotiate the price down from what they were asking at 9 Grand to 7500. Still high, but not bad, and it's in excellent condition. Not had a single problem with it, and it had about 80k miles. Not bad considering it's a 2000. I thought I did a rather decent job of looking into the car, doing some homework, and negotiating the price of the vehicle, as well as my monthly payments.
@AngrySicilian: That only works if you live far enough south. In Iowa, that wouldn't work now, in October, let alone in February.
Still, 7 months out of the year it would be a great deal.
I bought a Mazda back in 2001 under the S-Plan (dealer pricing) acquired through a club membership. Buying a car was actually a wonderful experience-- I knew exactly what price I'd be paying, and it was a heck of a lot lower than sticker.
My only negotiation was over the loan, and everyone involved was happier for it.
Alas, that kind of model only works when you have a quality product and there are no competing incentives. "No haggle pricing" on an overpriced Saturn econobox isn't my idea of a bargain.
Consumer Reports probably needs to add one:
11) Don't be tempted by a "lifetime warranty" from a manufacturer that is by it's own admission ,bankrupt.
That would be the soon to be "absorbed" Chrysler Corp.