The Top Mistakes People Make When Buying a Car
"Regrets, I've had a few, but then again too few to mention."
From the song "My Way" made famous by Frank Sinatra.
Unlike Frank Sinatra and Elvis Presley in their hit renditions of this popular tune, car buyers often have regrets - big regrets. Their hope for a trouble-free future with a terrific vehicle they love often comes crashing down around them. But it doesn't have to be that way. Despite what some will tell you, choosing a vehicle that suits your needs and paying a proper price for it is well within the capabilities of anyone who has read thus far. What you need to do to avoid regrets is to sidestep the pitfalls that many car buyers tumble into. Of course, avoiding them is simpler when you know what they are, so read on, because our vast experience at Kelley Blue Book has told us that the following are the three biggest mistakes that car buyers make.
Choosing the wrong car
This could be mistake one through fifty-two, because it is by far the most troublesome and enduring mistake. When you choose the wrong car, just as when you choose the wrong mate, you are reminded of your folly on a constant basis. It's painful, and it's hard to escape.
What do we mean by the wrong car? Well, a car can be wrong on many counts. It can be too big, too small, too expensive, too hard to maintain. It can lose value at an alarming rate that far outpaces its peers. It can be fraught with mechanical gremlins, while models very similar in many respects operate for years trouble-free. So how do you avoid choosing the wrong car? Some of the effort requires you to take a realistic look at both your own needs and your personal budget. Spending half your monthly wages on a car payment is a certifiably bad idea.
Beyond that, we at Kelley Blue Book are here to help you with solid recommendations. These are perhaps most accessible in our awards programs (for example The Best Buys of 2015) and our lists (15 Best Family Cars of 2015, Top 10 SUVs under $25,000, etc, etc.) We spend a lot of time driving, researching and analyzing the vehicles and the data that surrounds them so you don't have to. We firmly believe these lists will point you toward choosing the right vehicle. We also suggest you examine our Buyer's Guides for individual vehicle types (Midsize Sedan, Compact SUV, Small Luxury Cars, etc), our Expert Reviews of individual models (we have a review for virtually every model available in America) and our 5-Year Cost-to-Own Awards and the cost-to-own data for individual models, which you can view in handy comparative form.
Paying too Much
Nobody wants to feel like she or he was a chump who paid too much for a new car, but, sadly, many buyers end up feeling that way. Some are justified in that assessment and, oddly, some are not but they feel they paid too much anyway. Of course, there are many ways to pay too much. Off the top, you can agree to a purchase price for the new car that is higher than the going rate, but there are other ways that are less obvious but equally damaging. For example, you can undervalue the vehicle that you are trading in or selling in preparation to buying a new car. You can also pay too much for your financing simply by not understanding what market rates are and what you qualify for.
Again, we at KBB are here to help you avoid the pitfalls. Our KBB Fair Purchase Price enables you to understand what car-buyers near you recently paid for individual vehicles very much like the one you are contemplating. If the projected purchase price spelled out by your car salesperson is substantially higher than this number, keep negotiating or seek a deal elsewhere. Similarly, only we at KBB can give you the official Blue Book value for your current vehicle (and for any used car on the market.) Like our Fair Purchase Price, these values closely reflect the market prices for very similar vehicles in your locale.
When it comes to financing, we recommend you pre-qualify for an auto loan from our financial eCommerce partner and/or from a local bank, credit union or other lender. This will help you grasp financing cost in a less frenetic environment than you'll typically find in a dealership. Once this is done, we heartily recommend that you compare the dealer's financing terms to your pre-approved loan terms. You might well find the dealer's terms are more favorable to you.
Leasing When They Should Buy; Buying When They Should Lease
Another way to describe this mistake is failure to look into the future, and in this case the future might roll around as soon as a few months though often it rears its unattractive head two or three years down the line. Here's a typical example: recently married Lisa and Jose decide to sign a three-year lease on a terrific-looking two-door sports coupe and a year or so into the lease they discover that lovely Lisa is expecting a child. Suddenly that super-cool coupe becomes a liability, because they'd much prefer a four-door sedan or crossover SUV that is more baby (and child-seat) friendly. What they find it is difficult and expensive to terminate a lease before the lease term is complete. Two things would've changed this difficult circumstance: 1. They might have foreseen a pregnancy and thus leased a four-door or 2. They might have purchased the cool sports coupe and then traded it in when their family size increased. Contrary to what you might believe, selling a car you have purchased, even if you owe a balance on the loan, is easier and typically less expensive than exiting a lease early.
The other side of the Lisa/Jose coin is Leon, a guy who likes having a new car every two or three years. He loves the new gadgets, the ever-increasing levels of tech and the current styling of a new car. All that's cool, but he has always purchased his cars so he continues to do so. In his circumstances, however, he would be well-advised to lease. That way he won't have to fool with trading in or privately selling his vehicle and for the same monthly outlay, he likely could find himself driving even fancier wheels. If he's going to have a car payment every month anyway, why not?
We warn those who lease, though, that they need to look over the horizon at another factor - how many miles they will drive before the lease is done. (No, really.) We can't tell you how many folks out there are getting clobbered with mileage overages at the end of their leases because they didn't project what their actual driving would look like a couple years down the road.
Certainly there are other mistakes car buyers make that can cause them to careen, figuratively that is, into the ditch. In a future story we'll dive into some of them, but we believe if you avoid these three big mistakes, your car-buying and car-ownership experience will be better for it. Like I said, we're here to help.