Buying
A Car: 12 Mistakes To Avoid
A car is an
important aspect of life, and most people want a vehicle that is reliable,
comfortable, and maybe even a bit stylish. The vehicle choices are almost
endless, so finding the right combination of wants and needs with an affordable
price tag can be challenging.
Below are 12 mistakes to avoid when buying a car:
Mistake 1: Not doing your homework
The Internet has democratised the car-buying process. Now, anyone can get
access to facts and figures about vehicles, features, pricing and financing.
There’s no reason to step foot in a dealership without having first researched
vehicles and their competitors. (Forbes.com)
Mistake 2: Choosing the wrong car for your needs
With all of the choices available on the dealer’s lot, you have to have a very
good idea of how you need to use your car so that you can find a car that suits
your needs. How often will you really carry seven passengers in that big SUV?
Don’t saddle yourself with a car that only suits occasional needs — you’ll do
better matching your general needs, and renting a vehicle for the special
occasions, like family road trips. (Forbes.com)
Mistake 3: Skimping on the test-drive
Many car buyers fail to spend enough time behind the wheel to really get
familiar with a vehicle’s performance and features. A thorough test drive
should include a wide range of conditions, including bumpy back streets and
smooth highways. The time to discover that your car is noisy and harsh at 65
miles per hour is not after you’ve already taken delivery. (Forbes.com)
Mistake 4: Buying new when used would do
A vehicle is not an investment. Local car dealers say that vehicles depreciate
in value quickly, so when you buy a new vehicle, you can expect it to
continuously decrease in value. Every potential new car buyer should consider
used vehicles before buying. Certified Pre-Owned programs by many of the
manufacturers have raised the bar for used cars. Most include a detailed
vehicle inspection and refreshing, along with an extension of the new car
powertrain warranty that might run up to seven years/100,000miles. Used car
financing is cheaper than ever before – in many cases competitive with new car
financing.
Mistake 5: Succumbing to feature creep
“Feature Creep” is when added optional features suddenly become necessities the
longer the car-buying process goes on. A buyer who enters the process convinced
that the stock radio is sufficient finds that only the latest surround
sound/factory navigation system will do, and that leather seats are a
necessity. Make a list of the features that you absolutely must have, and don’t
allow new features to creep onto your list unless they are within your budget.
(Forbes.com)
Mistake 6: Rushing to buy
Cars are commodities, and there will always be another one coming down the
road. This much is certain. So don’t rush into the purchasing decision.
Take your time, even if it means that you have to rent a car for a few weeks in
order to bridge the gap between your old car and your new one. Car dealers love
buyers who are in a hurry — it shifts the negotiating leverage toward the
dealer because the buyer is much less likely to walk away without making a
deal. (Forbes.com)
Mistake 7: Blowing the budget
You’ve done your research. You’ve arranged for financing. You’ve assessed your
needs. Then, you go to the dealership and get talked into a car that
costs way more than you’ve budgeted for. Stick to your budget, make sure that
you can afford the car that you’re buying, and avoid buyer’s remorse.
(Forbes.com)
Mistake 8: Failure to pre-shop for financing
Once the dealer’s F&I (Finance and Insurance) guy gets his hands on you,
the opportunity for mistakes escalates. If you haven’t taken the time to
pre-shop for financing at your personal bank or credit union before you step
into the dealership, you are ripe to be pushed into financing that profits the
dealer more than it helps you pay off your debt. Know how
much you qualify for, and what interest rates you can get on your own. Better
yet, arrive at the dealership with a loan pre-approval in hand. Then,
you will be in a position tow assess the offer that the F&I guy slides
across the desk. (Forbes.com)
Mistake 9: Trading in your old car
This is a big mistake that will always cost you money. Even if you owe money on
your old car, you’ll do better selling it on your own, or even selling it to a
dealer, if you don’t get involved in the trade-in process. Trading in your old
car gives the dealer one more opportunity to profit on your convenience, and a
chance to muddy the waters on the details of your new car purchase.
(Forbes.com)
Mistake 10: Focusing on the payment
The most important part of the financial transaction is the purchase price.
When you focus on the payment, you’re leaving yourself open to getting
locked in to loan terms that are not as good as you might qualify for. You may
get that N50,000 per month payment, but you may wind up paying
an inflated percentage rate for a longer term than you hoped. (Forbes.com)
Mistake 11: Leasing instead of buying
Leasing makes sense for a lot of buyers, however, it advisable that you only
lease after consulting your accountant to make sure that you are a candidate
for tax benefits — very few of us are. (Forbes.com)
Mistake 12: Not taking into consideration other costs
The actual cost of the vehicle is important, but what is often overlooked are
all of the hidden long-term maintenance and insurance costs that go along with
a vehicle. Keep in mind that car insurance premiums typically increase with the
value of a vehicle, so buying a more expensive vehicle will increase your
annual insurance costs. This can amount to thousands, if not millions of naira
per year. (About.com)
