7 Car Shopping Mistakes
Posted by Gail | Filed under Smart Shopper
I went shopping with a girlfriend who wanted to buy a new car. She was pretty sure of what she wanted and she could justify up the whazoo all the decisions she’d made before she walked into the dealership. She made some big mistakes. Here are 7 you can avoid:
She fixated on the brand. She was determined to buy a Toyota. People do this all the time: they decide the brand of the car regardless of how it’s going to affect their budget. Considering the fact that she was living on a recently reduced income, she couldn’t let go of the prestige of a Japanese car. The other thing about getting stuck on a particular car is that you may be missing out on what may come standard on another car that you’ll have to pay extra for on your chosen model.
She put form before function. Considering what she and her family do with a car – they are avid naturalists and drive their car to the weirdest places, filling it with all kinds of stinky stuff – you’d think function would have come first. Nope. She wanted something cute and zippy. Think about how you’ll use your car. Don’t let the image of what you’d like in the driveway take you down the wrong road. Haul a lot of passengers? Drive a long way to get to work? Haul a boat? Make sure your car does the job so it’s a workhorse not a decoration.
She hadn’t thought about all the costs. While the sticker price might be front and centre as you’re trying to decide what to buy, there are more costs you need to think about: gas, insurance and maintenance. And if you plan to sell the car within 3-5 years, resale value needs to be part of your equation. While Debs had done her homework on the insurance front, she had not looked into maintenance costs. Very often, high-end cars come with hugely inflated maintenance costs. Another girlfriend of mine had to replace the key to her luxury vehicle and just about choked when she found out it’d be the equivalent of a week’s groceries.
She didn’t arrange for her financing in advance. Oops. She ended up paying more interest than she needed to because she wouldn’t take (my) good advice and walk away from the dealership financing. If you have a good credit history, talk about a vehicle loan from your regular lender. After agreeing to a price with a dealer, let the dealer try to beat your lender’s financing offer. If you don’t do it that way, you might find yourself giving back any money you saved by crafty negotiating on price to financing costs.
She did shop around, but she didn’t negotiate. Shop online. Shop outside your normal buying area by phone. Get some quotes and arm yourself for the negotiation. Look at slightly used cars to see if they’ll give you what you need for considerably less money. Even if you plan to buy new, knowing what’s available in the slightly-used arena (think demos) will give you a better sense of what you might be able to save. Show the dealer you’ve done your homework and always counter with a lower offer.
She tipped her hand on her trade-in right off the top. You shouldn’t identify that you have a trade in until you’ve secured a firm selling price on the new vehicle. When asked if there’s a trade in, simply respond, “I’m not sure at this point, since I have someone else who may be interested in the car.” You’re trying to avoid the sales price being inflated to cover the trade-in value.
Once upon a time dealers held the upper hand and you had to endure marathon haggling sessions to get a good deal. Not anymore. If you’re a smart shopper you’ll research vehicles carefully, discover a good target price for your chosen car and get competing dealer bids before ever visiting a dealership. You’ll stack the deck in your favour.
September 6, 2012 at 6:29 am
Toyota offers a grad rebate on the purchase of a new vehicle, other dealerships probably do too.
September 6, 2012 at 6:57 am
I wanted, or thought I wanted, a Toyota as well. While realizing repairs may be more expensive than a North American name, I figured they’d be less often and it would balance out. Much to my surprise, I found out while I was researching cars, Toyota and Pontiac actually jointly built the Toyota Matrix/Pontiac Vibe. The Vibe was cheaper, had a better warranty package and 0% financing. Because I plan on keeping the car “forever”, it’s reduced resell value compared to the Matrix, didn’t bother me at all. That car, almost 5 years later, still has a warranty with 130 000kms on it already, and is almost paid for (no rush at 0% right?) and, touch wood, no problems. GM also too our old broken down truck for $1000. Not bad, considering it wasn’t really driveable anymore.
September 6, 2012 at 7:28 am
@Cas – I drive a VIBE too and I love it!
September 6, 2012 at 7:47 am
Good advice, for the most part, as it pays to do your homework.
I’ve always bought Volkswagens, not because of a fixation, but because that’s what I want to drive. I’ve never even considered another make as the quality of the cars and the service I have received over the years has been excellent.
My choice with financing is to have the total cost of the car saved in advance.
This eliminates the whole financing step. I believe it is a waste of money to pay interest on something that depreciates in value the minute you drive it off the lot.
September 6, 2012 at 8:09 am
I spent months and months looking at new and used vehicles when I determined I needed a more reliable vehicle that would better serve what I actually do with it. (Picture hauling 10-15 animals in a 2 door car, or camping for a week). Looked at a lot of makes/models. In the end I bought from a city that was selling some of their vehicles. It’s a 2008 Escape hybrid and had only 35,000 km on it when I bought it. There was not much room for negotiating, and I did have to finance through the bank, but with extra payments it should be paid off quickly. It was not a “steal” but it was a very fair price for the vehicle I got, and it is working out so well for me! City vehicles are very well maintained too so I didn’t have as many worries about buying used. Funny thing was that I hadn’t even looked at Escapes because they didn’t have the mileage I wanted – but the hybrid evens that out and I’m saving on gas from my old car, even with an SUV!
September 6, 2012 at 8:44 am
I also drive a Volkswagen (my first car which I’ve now had to six years). I think when I purchased it I definitely missed some of the rules Gail posted – like being fixated on brand. Now I test drove all the small cars from most manufacturer’s – honda, toyota, mazda, hyundai, ford, and when I got to the point of figuring out what total was it made the volkswagen not seem THAT out of the range, just an extra $2000 upfront. And so I went for the fancier, a little more high-end brand.
The problem came in for me with the extremely expensive services and the “VW-only” mechanics. I am lucky enough to have a brother who is a mechanic but he can’t work on it because of all the specialized tools. I currently have an oil leak because the drip-pan has a slight ding in it… $1200 to replace a $60 part. Why on earth would they set up an oil pan where you had to remove the entire transmission to get at it (okay I’m not a car person, so perhaps that is the norm but it seems overly complicated to me).
I have definitely learned from this car though – when I do purchase another car it will most definitely be a cheaper car to maintain (fingers crossed) that multiple mechanics can work on. My brother says Honda, and I don’t necessarily disagree, but that decision has a few years before it happens considering I intend to beat this car into the ground and it’s only a 6 year old VW – do you know how long those things last!?
September 6, 2012 at 8:55 am
Id love to see an article about buying new vs used vs leasing! I dont own a car (I live in downtown Toronto) but if I chose to buy one Id feel so in over my head and wouldnt even know where to begin!
September 6, 2012 at 9:12 am
Don’t let the 0% financing be your final persuading factor. When I bought my vehicle I had a choice of 0% financing or paying an interest rate. The same vehicle was almost $10 000 more if folks chose the 0%. Do the math to see how much the total interest would be at the rate they give you, and see if it is less than the jacked up 0% price. I had planned to pay mine off early with extra payments going down on the principle so I saved money by choosing the interest based price.
September 6, 2012 at 9:20 am
My spouse used to work in the car business and loves doing research. So, at the used car lot we test drove the cars he liked. On the way to firm up the deal I saw a blue car. I said I really like the blue car. We test drove it. We bought it. The car was almost 20 years old when we sold it to our mechanic who could replace some lines and then he gave my blue car to his son’s girlfriend and she drives it to university.
September 6, 2012 at 9:29 am
I am the worst once I fixate on something, I MUST HAVE IT. When car shopping last year, I did do all the pertinent homework, shopped all the brands til I found what I wanted within my budget (and ZERO financing, I will never pay interest on a car again). But here is a tip that anyone who is as impulsive as I am should do, get all the financing and negotiating out of the way before you even get in the car. I knew what they were offering me for the sale price, but I also knew what I had to get on trade to make it all work and there was no point test driving if I couldn’t make the numbers work. This worked great, I got what I needed (albeit a little less than I wanted), the payment came in where I needed it to and THEN I got behind teh wheel. Saved much disappoint and a few pennies. And I think equally as important, the salesman knew I wasn’t a “flighty female” who he could schmooze.
September 6, 2012 at 10:27 am
Another piece of advice: don’t listen to the salesman’s pitch. I wanted a Jeep, and ended up finding the Patriot, which I love. When I went to the dealership, I knew I’d be buying used, and he tried to sell me one with every option under the sun. I found another Patriot on their website and went back (after not agreeing to the loaded one). It had A/C, CD player and a jack for an mp3 player.
I bought it (after dickering the price down a further $2450).
The total price was $6700 less than the model (same year) he was trying to push me on.
Why? Options! I have to (gasp!) actually roll down my own window and use my finger (or elbow when my hands are full) to lock the door all by myself.
But my payments are under $300. All because I chose to go without some options. Worth it’s weight in gold, IMO.
So don’t get all starry-eyed when the sales guy swings in to his heated seat, fully loaded pitch. The savings is substantial.
September 6, 2012 at 10:32 am
Over the years we’ve driven a variety of brands and normally have two vehicles at a time. My DH has had a Toyota, then 3 GM pickups, a Suburban and now a Dodge Durango. Towing capacity for our camping trailer means he can only consider certain vehicles. The Durango is better on gas than the Suburban was, but it’s still nasty (and a financial consideration if you think RV camping makes for cheap vacations).
My first car was a Pontiac, but now I’m on my third Honda Civic and unless I suddenly hear bad things about the newer ones, I don’t see that changing any time soon. My first one lasted to 463,000km and the second one to about 350,000km. My current one is a 2000 and I’m just over 300,000km with no signs of it retiring anytime soon. Unless I total it, I expect to get another 3yrs out of it. Parts are cheap and best of all we have a close friend who is a former Honda mechanic. They seem to be the energizer bunnies of the car world. I always buy them as 3yr old vehicles and drive them until they go to the dump, which is normally at 10-12yrs old. This one had only 35,000 kilometers on it when I bought it and was in meticulous condition. With my first two, they were very rusty by the time I got rid of them. This time I had our friend undercoat it the week I bought it, and even now at age 12 it has only very minor rust so I expect to get 15yrs from this one. Woohoo! Since I expect to need a “new” car in 2015 I’m paying close attention to the reviews on the 2012s since they will likely be my next car.
I can’t see ever buying a new car, since resale is never part of my calculations. I just want a reliable car that is inexpensive to maintain and lasts a very long time so I don’ thave to go shopping again any time soon. I place no importance on what I drive and would be open to considering any make, but based on my experience with Honda Civics, I haven’t seen a need to change yet.
September 6, 2012 at 10:37 am
I used to be an accountant at a dealership with a sole function of processing deals. i always recommend two things. 1. buy slightly used, new cars are ridiculously expensive, u can save an average of $10000 by buying a car that is one year old with 20000 km on it. if you buy from a certified used lot it will be fully inspected, repaired, and detailed before it goes on the lot, so it still looks and runs like new. 2. don’t buy the extended warranty, its a waste of money, a one year old vehicle still has original warranty on it, and most parts in a vehicle are built to last ten years, so as long as you do regular maintanance, your baby will be fine.
September 6, 2012 at 10:55 am
Don’t do what I did, although I’m sure angels were watching over me when I bought my car. I went to the Toyota dealership (single woman alone) determined to buy a Toyota (because everyone in my family had a Toyota). I did no research whatsoever. I had a different model in mind but the dealer talked me into a used Camry with all the bells and whistles. I didn’t even test drive it, thinking it would be inconvenient for them to move it from the showroom floor! Luckily for me, the car has been great and I’ve had no problems with it.
September 6, 2012 at 11:01 am
Going to the bank for a car loan
Is not always the lost rate!
FYI And everytime you let a dealership
Photocopy your drivers license while
Your out with the sales guy test
driving they
Run your credit history!
My friends son is the finance
Manager of a huge car dealership
In Alberta… He told me that said
Show them a valid drivers and
Refuse to let them photocopy it.
And they want your business
And are willing to give you the
Same rate as your bank…if
You say you’re walking out the
Door to your bank….
September 6, 2012 at 11:08 am
My husband and I both have exactly the same cars (other than colour) – 2002 Pontiac Sunfires, which I love. The parts are quite reasonable and he can do a lot of the repairs. We figure when one of the cars is no longer drive-able we will strip all the newer parts from one car to the other – unless they both go at the same time. We didn’t really plan it that way but I think it may be a good idea.
September 6, 2012 at 11:37 am
I see it with my neighbours all the time. They buy way more car than they really need, and they buy new. I agree with the strategy of getting a one-year old car. You can save about 30%-40% off the price, depending on the model, condition and mileage of the vehicle. The vast majority of these vehicles are fleet cars that have been well-maintained. There’s nothing wrong with them.
September 6, 2012 at 1:36 pm
I’m curious as to what model Gayle’s friend bought. I bought a Toyota 11 years ago after much research and many a test drive and my maintenance costs are dirt cheap compared to other vehicles on the road. It’s the first and only car I have ever owned. I know the company had a lot of safety issues not that long ago – perhaps newer model owners are paying the price of this?
My car was bought used and just off a lease so it was in pristine condition. I am convinced that I will let someone else pay for the bells and whistles the first time around and I will enjoy their leftovers when it’s my turn to drive.
I think you also need to be prepared to walk away from a car if the dealer won’t meet your price – you can easily go way over budget very quickly. I had to do this at one dealership – I really did love the car they had but they wouldn’t do a thing to help me with the price.
September 6, 2012 at 1:44 pm
@ Milan – a lot of money can be saved by buying fleet vehicles – HOWEVER, you must know the source – many years ago I was in the Car Rental industry – worked at head office so I got a chance to see different operations – some franchisees were great and right on the ball with the maintenance of the vehicles – others (because we only kept the cars 6 months) only changed the oil once or twice and did very little aside from that – still a good idea to have a trusted mechanic check out the vehicle for you – could save money in the long run
fyi only – there is the little known Supplier Discount available when buying a new car – in 2005 after decades of buying cars from Auto Wreckers and fixing them up (great way to save thousands) I bought a new car – I had arranged the financing through my employer’s credit union – the salesman noticed and asked if I worked for the company or was just a customer of the credit union – I received an additional $800 discount because my company is one of GM’s suppliers – honest salesman – this was done after all the paperwork was signed and I went in to pick up the car
September 6, 2012 at 5:53 pm
Use your local credit union for a loan. I used mine (I’ve dumped using banks altogether). Two years ago I called the credit union and got a loan over the phone at 3.25%, the car dealer tried to match it at 7.5%. Who’s laughing now!
September 6, 2012 at 9:07 pm
GAIL……….please inform your readers about CAR COST CANADA available through ConsumerReports………provides info on: cost of All Factory Installed Options
: unpublished dealer incentives & holdbacks
: negotiating tips and traps
http://www.ConsumerReports.org/greatprice
I bought my CRV using this information and as soon as I walked in and presented my info and told them I went to Car Cost Canada the salesman completely changed and the games ended because they knew I had done my research.
September 6, 2012 at 11:58 pm
I also check out Phil Edmonston’s Lemon-Aid guides for used and new cars before I buy a newer vehicle – he rates the reliability and safety of cars based on many sources of data. He has also saved me thousands of dollars by sharing info on the secret warranties and confidential service bulletins on defects in cars that the car makers don’t share with consumers. I was able to get the car manufactor and dealer to pay for a serious defect that they initially denied was their problem with his information.
He’s been doing this for more than 30 years – his books are available in the bookstores and some libraries.
http://www.lemonaidcars.com/
September 7, 2012 at 3:23 am
So how was your friend, did she get the car? Brands cannot always give you want you need. And if you stick on the name, like you said – you’ll definitely miss on what the other brands of cars could give you. She probably never went through an extensive thinking and research before going shopping for car.
September 8, 2012 at 1:26 pm
[...] 7 Car Shopping Mistakes [...]
September 13, 2012 at 12:32 am
Its better to research for a good quality and affordable cars than just jumping into conclusions with some luxurious cars, what she’s doing is just wrong. Why didn’t you give her some friendly advice then?
September 20, 2012 at 4:01 am
Another Mistake – not checking out cars in the USA. Long story short, we looked here for a month for a mini-van. We finally settled on a pre-owned Grand Caravan. Price after haggling $30K.
Checked out eBay and found the upgrade vehicle (Town & County) with way less miles/kms, more upgrades (not that I care after widows, doors and locks. We paid (rather little amounts) to have the lien background checked, test driven (4 page written report and a least 150 photos. The info we received was WAY more thorough that we would have down. We also paid to have it shipped to us.
So five days after clicking “buy” ( and than having small heart attacks) we had our van delivered into our driveway. This was the most unstressed car purchase we have ever made. You just need to get over the “oh my gush, what have I done” feeling after clicking on “buy”
Nothing needed to be done to our vehicle to make it safe for Canadian roads. Cda Tire did offer a $99 Cdn Care Fix if we had needed it.
In the end, after paying for the various companies, brokerage contact at the boarder and shipping, and a few extra bucks as the dollar was over par, we paid a min. of $10K LESS than the “lesser” van would have cost us in Canada. If you’re looking for a car, at least chk out what’s available down south.