Many people buy a new car and then regret their purchase a short time later. If you don’t take a lot of precautions, you’ll be a car buying victim instead of a smart shopper. So, here are the top ten mistakes buyers make when buying a new car. These errors are not listed in order of importance…but don’t miss the message on each error.

1. Impulse purchase

An impulse is an emotion. The worst reason to buy a car is emotion. Car dealers are taught that they must do their best to sell you a car on your first visit. Statistically, they know that if they don’t, they won’t get a second chance. If you stop at a dealer’s lot to just “kick some tires,” but haven’t sworn to yourself that you won’t buy on that visit, you’re doomed. Don’t say things like “I love this car” or “I have to have this car.” Do not involve your emotions in this purchase decision. If you’re talking too much, the car salesman will read it as buying signals. And sellers are much better at hitting you with their own buy signals than you are at resisting them.

Tons of people make impulse car purchases. You can’t do your research and smart shopping if you make an impulse purchase.

2. Lack of research

It goes hand in hand with an impulse purchase. You need to go online and research about cars, including:

has. safety
b. remember
against resale value
d. maintenance and repairs
me. range of car prices for the make and model you want

Research will give you the information you need to make an informed decision.

3. Unrealistic about your car’s needs

Many car buyers grossly overestimate their needs. Instead of buying a car that reflects their actual driving experience, they buy a vehicle that feeds into their future plans or perceived future needs. For example, a buyer who plans to have a boat and trailer may purchase an SUV or heavy duty truck. But he doesn’t own the ship yet. In general, it’s best to buy a vehicle for your present needs, not your future wants.

4. Not calculating the real cost of a hybrid

Hybrid vehicles, like the Prius, are priced much higher than regular gasoline or diesel. When you subtract the cost of the regular vehicle from the hybrid price, you’ll see the premium you pay for the hybrid. Now, will the fuel savings pay for itself over the number of months I have the vehicle? Hardly ever! Most of the time you will pay more overall for a hybrid vehicle. Gas and diesel vehicles are becoming more efficient. Remember, over 50% of vehicles across Europe have diesel engines, and have been for 50 years. Must be a reason, huh?

5. Not buying car insurance before you buy it

Here is a big no-no. How many times have you called your insurance agent and gotten a quote on the car you WANT to buy? If you’re upgrading from an average car to a different type of car…like upgrading from a Toyota Altima to a Corvette…increasing insurance premiums could make a new car purchase unaffordable. Unfortunately, most people find this out AFTER they buy that shiny new car. But simply moving from an old car to a new one could dramatically increase your insurance costs. What if your old car didn’t have collision coverage, but your new car did? That could mean hundreds of dollars in additional premiums.

6. Talking trade-in during negotiations for a new car

Do not include your old car trade-in in the new car offer. It’s all too easy for the car dealer to structure your deal to make it look like you’re getting a lot more for your trade-in. Make your car offer separate from any trade-in considerations. Then get the trade offer and deduct it from the total. Also seriously consider selling your old car yourself. You will get much more money for your old car.

7. Dealer Financing

This is a minefield, and the smugglers have put the mines in your path. The most dangerous place in a dealership is the Finance and Insurance (F&I) office. The F&I office represents a large percentage of a dealer’s total profit. You have to be careful with all the offers here…financing, collateral, insurance like life insurance that pays off your loan balance. I recommend that you turn down anything an F&I office offers you except a low interest rate on a loan of no more than 36 months.

8. Do not buy at the end of the month and at the end of the year.

At the end of the month… any month… the salespeople and the dealer are trying to maximize their bonuses and income. You’ll get your best deals if you shop on the last two days of the month. The same goes for end-of-year purchases. Dealers are desperately trying to get rid of last year’s models and finish the year strong. So when is the best time to buy a car? The last couple of days in December of any year. You can hardly lose if you are a smart buyer.

9. Car rental

Do you know why you see so many car ads on TV featuring low lease payments? Because car companies and dealers make TONS of money on a lease… much more than when they just sell a car. The lease you sign is written entirely in favor of the leasing company. He never owns the car, he just rents it out for several months. You are responsible for maintaining and insuring the car. Also, your lease limits you to a certain maximum number of miles driven. If you exceed the limits, the mileage penalties are staggering. I’ve looked at leases every time I’ve bought a car since the early ’80s, and never found a scenario where I could get away with a lease.

10. New vs. Used.

Most people don’t need a new car. When you buy a new car, you get hit with depreciation in the first year. Sometimes your car’s value drops as much as 20% by the time you drive off the dealership with your new vehicle. Car lots are packed with great used cars. You can save a ton of money buying a used car. But you won’t know for sure unless you do some research. Compare the TOTAL cost of a new car versus a used car, including finance costs, maintenance and insurance. Most of the time, the used car will win… even when dealers offer zero percent auto loans.

Buying cars is one of the biggest and most expensive purchases you will ever make. You may only buy one house in your life, but you’ll probably buy a lot of cars. Be a smart shopper and you’ll keep tens of thousands of dollars in your pocket.

© Copyright 2010, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.