Most People Aren’t Happy With their Car Purchases
A survey by AutoTrader found that only around seventy-percent of us regret buying our car-buying decisions. When asked why most people simply said that they made a mistake. Too many buyers felt like they’d rushed into the decision and walked away with a car or payment amount that didn’t suit their needs. Some buyers focused on aesthetics over function. Others got talked into raising their budget by a smarmy salesman. As a result, their new wheels were less of a treat and more of a burden. Since a car is one of the most expensive purchases you’ll ever make, next to a house, it’s important that you do things right.
To do that, you’ll need to avoid these common car buying mistakes:
1. Buying What You Want Instead of What You Need
Humans are kind of like magpies. We’re easily distracted by shiny objects. Dealers capitalize on this fact to convince people that once optional features have somehow become necessities. Though you might enter the dealership perfectly content with the stock radio and manual windows, you can walk away convinced that you need a speaker system that can wake the dead, a supersized SUV, and an extended warranty. And, that’s exactly what the salesman was counting on. You see, car dealerships don’t actually make all that much money off the sale of a new car. In many cases, especially when cars have sat on the lot for a while, they take a loss.
To stop yourself from falling victim to feature creep, grab yourself a sheet of paper and split it down the middle. Then, take a pencil and write ‘Needs’ on one side and ‘Wants’ on the other. Once that’s done, start making a list. Having enough room to take your kids to school every day? Need. Having enough room to hold all the in-laws when they make their semiannual visit? Want. Take the list with you and don’t buy anything on the ‘Wants’ list that doesn’t fit your budget.
2. Skipping the Research Phase
With the power of Google at your fingertips, there’s no excuse for showing up at the dealership ignorant. The showroom isn’t the place to learn how much your trade-in is worth and what models are available. Start by deciding if you want a car, SUV, or truck. Then, use a site like Edmunds, CarGurus, or Carpages.ca to find a car that fits your efficiency, space, safety, and budgetary needs. Does the vehicle have good reviews? What’s its safety ratings like? Not researching a car practically guarantees you’ll be unhappy with it. So, spend a few hours on the internet and make sure you avoid this common Canadian car buying mistake.
3. Going to the Dealership Without Financing Lined Up
Sure, it’s convenient to have a dealer who doubles as a financier, but it’s rarely in your best interest to get dealer financing. Dealerships often serve as the middleman between you and a bank or credit union. Which means they need to jack up your APR to make a profit. And even a slight increase in the interest rate can leave you paying thousands of dollars more over the life of your car loan. To avoid overpaying, you should arrive at the car dealership with a preapproval letter in hand. This will force the dealership’s financing department to either meet or beat your preexisting offer. Instead of going through the hassle of contacting your local bank though, why not give Car Loans Canada a shot? Our two-minute application gives you access to more than 300 financiers across Canada.
4. Not Budgeting for Insurance
The average Ontarian pays roughly $2000 a year in car insurance. That’s is the equivalent of 1,222 medium coffees at Tim Hortons. Though Canadians in other provinces pay less, insurance is still a pretty big part of car ownership costs. Unfortunately, a lot of people fail to take it into account when shopping for a new car. Before you buy a vehicle, reach out to your insurance company, and get a quote. Sometimes, the difference in the cost of insuring a speedy new car and a slower used one can be drastic. If price is your main concern, opt for a family-friendly vehicle like the 2019 Honda Odyssey.
5. Rushing into the Purchase
If your old ride just called it quits, you might feel pressured to make a purchase right away. You’re probably worried about missing work or having to skip out on appointments. But, rushing into a car purchase is likely to leave you with buyer’s remorse. Take your time, visit a few dealerships, and think over your decision carefully. In most cases, renting a vehicle is cheaper than buying a car on a whim. As a rule of thumb, you should avoid buying a car on your first visit to a dealership. Instead, you should sleep on it and give yourself some time to think about your decision without a salesman breathing down your neck. Remember, no matter what the dealership says, that there are always plenty of cars to go around.
6. Not Considering All Costs of Ownership
Sure, we’ve already talked about people forgetting to factor insurance premiums into their car-buying budget, but that’s just one piece of a much larger pie. Does your new car get better gas mileage? Is it harder to resell? Are parts and repairs more expensive than what you're used to? You can look at Natural Resources Canada’s Fuel Consumption Guide to clear up at least one of those questions. Comparative repair costs, on the other hand, are something best discussed with a local mechanic.
7. Skipping the Test Drive
Many of the things that people hate about their cars could have been found in a test drive. But, according to data collected by DMEautomotive, 16-percent of car buyers don’t even take one. Those that do often take a short one that tells them little about how the car reacts to everyday hazards and situations. When you find a vehicle you like, make sure to run it through its paces. Check if your baby’s car seat will fit. See how the car feels when it changes lanes on the expressway. Fiddle with the buttons and gadgets to make sure everything works the way you need it to. Consumer Report says a good test drive should last at least 30 minutes. For best results, forgo the dealer-suggested routes for one of your own choosing. Salesmen often pick streets and locales that show off a car’s best features.
8. Fixating on the Monthly Payment
A lot of people set their car’s price range based on its monthly payments. And, salespeople love when they make that car buying mistake. Unlike the total price of a vehicle, which is relatively static, your payment amount can be easily manipulated. This is often done by extending the length of the loan. Since monthly payments lump your trade-in discount, vehicle price, and financing together, dealers can make the loan look good in one area while ripping you off in another. Don’t let them muddy the waters like that! Ask them to negotiate one aspect of the loan at a time -- starting with the vehicle’s total price. Only discuss financing, leasing options, and add-ons after the vehicle’s price is set in stone.
9. Rolling Over Old Debts
If you’re already underwater on a car, it’s really not time to look for an upgrade. Though you might be tempted to trade your vehicle in and be done with it, this rarely works out in your favor. By rolling your negative equity onto a new car, you’re increasing your chances of falling back into the same trap. Though it might feel like a fresh start, it’s really quite the opposite. Instead of rolling your negative equity into a new loan, you should focus on paying it down as quickly as possible. Once you get back to a spot where your vehicle’s worth equals your debt, sell it to a private party. This will likely net you more money than you’d get if you traded it in and will stop you from being crushed beneath auto debt.
10. Only Skimming the Paperwork
Congratulations! You’re just a pen stroke away from a nicer, newer car! All you need to do is sign some paperwork and grab those keys. At this point, you’re probably exhausted. You’ve spent hours walking the lot, testing cars, and listening to the salesperson’s spiels. The last thing you want to do is wade through triplicate stacks of legalese. But now’s not the time to let your guard down. Comb the invoices and agreements line by line to make sure everything is what you expected. Does your contract include a warranty you didn’t sign up for? Is your interest rate not what you agreed on? Are you getting stuck with some mysterious fee? Whether these are honest mistakes, or the dealerships last-ditch attempt to pad their bottom line, now is the time to question then. After you sign, it’s too late.
Buying a car doesn’t have to end in regret. If you spend some time outlining your needs, avoid the most common car buying mistakes, and actually take the car for a test drive, there’s a good chance you’ll walk away happy. Just make sure you don’t let the dealer talk you into anything you don’t want or need. To make that a bit easier, make sure you have financing lined up before you step foot anywhere near a dealership.
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