Car buyers have more resources than ever to find the right vehicle at the right price. However, mistakes can easily happen. Often, buyers get caught up in emotions or rush the process. Edmunds’ experts highlight the five biggest mistakes car shoppers make and offer tips to avoid them.
Trading in a Vehicle with Negative Equity
Trading in a vehicle with negative equity is increasingly common. According to a recent Edmunds report, almost one in four consumers who financed a new vehicle purchase with a trade-in during the second quarter of 2024 owed more on their previous car loan than the vehicle was worth.
“Upside down,” “underwater,” and “negative equity” all refer to the same situation: owing more on the loan than the vehicle’s worth. Not only has the number of upside-down trade-ins increased since 2022, but the amount owed on those loans has also risen.
For example, if you owe $5,000 more on your current vehicle than it’s worth and trade it in for a new one, you’ll have to pay the price of the new car plus the $5,000 you still owe. This significantly increases your monthly payments because you’re rolling over the debt from your old car into the loan for your new car.
The best financial solution is to keep your current car longer and continue paying off the loan. While waiting may be difficult – we understand you want that new car – if you can ensure your trade-in value equals your loan amount, you won’t have to pay extra for the new vehicle.
Rushing Into a Vehicle Purchase
There are legitimate reasons to expedite a vehicle purchase. Perhaps your vehicle was totaled in an accident or broke down and isn’t worth fixing. In either case, you need a new car immediately. However, many shoppers skip valuable research beforehand.
There are new and unfamiliar automotive features and technologies worth knowing about, especially if it’s been a while since you purchased a new car. Taking your time allows you to get several quotes before committing to a deal and gives you time for a vehicle inspection if it’s a used car.
Even if you need to replace your car quickly, it’s often better to find alternative transportation while you research a new vehicle purchase. Renting a car for a few days might cost a few hundred dollars, but it’s better than choosing the wrong vehicle or getting stuck in a bad deal.
Going to Only One Dealership
This mistake is often made by shoppers rushing to find a new vehicle. Ensure you give yourself time to make wise choices, even when you need a car quickly. Most price research can be done online or on your phone without leaving home. Avoid walking into a dealership and making a purchase decision without looking elsewhere.
Dealers are accustomed to competing with one another, so make sure they’re doing so to your advantage. Be transparent about your shopping process and share quotes with dealers to demonstrate your seriousness.
Getting Confused Over Dealership Pricing
Some shoppers feel overwhelmed when a salesperson throws around numerous numbers, including the asking price, trade-in value for your car, cash down, and monthly payment. While fewer dealers use confusing tactics than in the past, it’s still good to be prepared to counter them if they arise.
First, research the market value of the vehicle you want to buy before starting negotiations. This figure will serve as the foundation of your strategy and provide a reference point. From here, keep it simple and focus on two numbers: the out-the-door price of the car – the sales price plus fees like tax and license – and your trade-in value.
Also, be wary of potential add-ons the dealership might use to increase its profit. These include anti-theft devices, additional warranties, paint and fabric protection, floor mats, wheel locks, and more. While you can likely negotiate the price of add-ons, it might distract you from your primary goal of getting the best deal on the vehicle itself. Purchasing a car without add-ons is the best way to avoid this situation.
Edmunds Says
Taking a little more time to consider all the options and think carefully about the terms of a car deal can save you thousands. It’s time – and money – well spent.
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This story was provided to by the automotive website .
Josh Jacquot is a contributor at Edmunds.