Fatal Car-Buying Mistakes

Here are some of the costliest mistakes car buyers make when purchasing a new vehicle. Avoid these common missteps to make your car-buying experience a positive one

1. Financing at the dealership. Almost always, the dealership will not be able to offer you low interest rate car loans. The interest rate the dealer offers you is inflated to pad his pockets, so you’re better off dealing directly with a lender and low interest rate car loans.
2. Buying too much car based on low monthly payments. Don’t ever buy a car you can’t afford because the dealer has dangled low monthly payments in front of you. These monthly payments do not show the hidden charges, fees, and total interest expense over time. Low interest rate car loans with too-good-to-be-true monthly payments are usually amortized over a term that is ridiculously long, such as 60 or 72 months.
3. Falling for the 0% financing scam. By and large, 0% financing offers are not legitimately low interest rate car loans. What the dealer doesn’t tell you about these offers is that only a very small percentage of buyers will even qualify for this offer. If you are one of the lucky few, the dealer will either inflate the cost of your car or keep your loan’s term absurdly short to compensate for the lost profits on interest.
4. Not accepting a cash rebate. Don’t turn down a cash rebate in favor of low-APR dealer financing. The cash rebate can be applied to independent low interest rate car loans and is the better deal in the long-run. You are better off using the rebate to make a larger down payment on a third-party loan.
5. Rushing the process. Dealers love to ask, “What will it take for you to buy this car today?” Don’t fall for it. The reason dealers are so desperate for you to buy immediately is because they know the power of emotion. You might be eager to buy your new car and will probably pay more for it if you make a spur-of-the-moment decision. Take your time and don’t let the dealer push you.