3.2 Common Mistakes and Traps to Avoid
3.0 Purchasing a New Vehicle
Once you are confident that you have done all of your research before heading to the dealership, we will now take a look at common mistakes and traps to avoid.
Remember this much: a dealership and their sales associates sell vehicles for a living. Besides the article covering Asymmetric Information, this gives them a huge advantage over their customers.
How often have you purchased a vehicle? Once every few years? You might be understandably out of practice.
Here are some of the more common mistakes and traps to avoid, when heading to the dealership.
Not Taking Your Time or "Falling in Love"
Regardless of your income, purchasing a new vehicle is a big decision. A decision that you will have to live with for the length of the load and perhaps even beyond. So take your time.
When you start test driving vehicles or even head over the dealership, its normal that you might start getting attached to one particular vehicle. Or the sales associate might start with the pressure tactics.
But the manufacturer didn’t just produce one and it happens to everyone. And the sales associate telling you that there is a pending sale on it or that it won’t stay in their inventory forever, is the main pressure tactic you’ll face.
There is always enough time to conclude a sale and there will always be another vehicle.
Not Test Driving the Vehicle
This one might seem obvious to most people, but skipping the test drive is the most prevalent of common mistakes and traps to avoid.
Getting a feel for the car and its features, checking how it feels on the road and just taking it around the block, is the best way to make sure if the car fits your needs and if anything is wrong with it. Even better, take a night sleeping on it between multiple test drives, to see if you notice any difference or can spot an feature that might annoy you down the road.
Once you have a relationship with a dealership (in certain areas), the dealership will even let you take a specific car for the week end.
Feature Creep
We all want the newest gadgets, features and fads. This desire applies from the smart phones we use, the clothes we wear and obviously the cars that we drive. Innovating the new and must-have features is one of the main ways manufacturer’s increase the sale of new vehicles.
“Feature Creep” happens when the sales associate starts showing vehicles with added features you didn’t really have in mind before and in turn, drives up the overall price by sneaking in more “must-have” features. It could be something as simple as “Remote Start”, “Navigation” or even as simple as “Color-Matched Door Handles”.
Doing your homework before you even head to the dealership is one of the best ways to fight “Feature Creep”. Take a look at the features being offered and ask yourself “how will this directly benefit me?” or “will I really use it?”.
A navigation system might set you back $4000 – $5000, but how useful is it when everyone uses their smart phones anyway?
Not Setting a Budget
Continuing with “Common Mistakes and Traps to Avoid”, make sure you set and stick to your budget.
Setting a budget and feature creep go hand in hand. Must like adding a few “must-have” features can be costly, going over your budget will cost you.
Its very important that the budget you set for yourself is realistic and doesn’t take up your entire pay check. Most research states that your car payments should not exceed 20% of your income, so that you don’t over commit.
You might be tempted to add that $40 more a month to upgrade to a large engine or more features, but that $40 more a month could be the straw that breaks the camel’s back.
Make a budget in the quiet of your own home, calculate what is realistic between rent and expenses, and stick to that budget when you’re at the dealership!