3 Common Car Buying Mistakes That Can Cost You Thousands!

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Last month I wrote a post where I gave 3 reasons why looking at monthly payments when buying a car is a huge mistake. I definitely think that this is the worst way to approach buying a new car; however, there are a few other car buying mistakes that can cost us dearly over the long run.

I think that many of these mistakes are made when we rush into the car buying process without properly accessing our needs and matching that up with our finances. Here are some of the most common that I see:

A Few More Common Car Buying Mistakes

Car Buying Mistakes

Failing To Consider Secondary Costs

I remember when a family member purchased an SUV that had an 8-cylinder engine, back when having an SUV was a status symbol. I cautioned her about the amount of gas that her truck would consume, but she still wanted it.

It wasn’t long before those large gas bills caught up with her, and she was looking to either sell or trade in the truck! The worst part is that she only had one child, and rarely used the space – and never used the additional power of the engine!

Something else that comes up a lot when I talk to people about their budget/expenses is the problem of buying a car that is very costly to repair. Many luxury vehicles (and some “standard” ones) require special training and/or certifications by the mechanic working on them. Also, many times parts are a lot more expensive, causing basic maintenance to become a huge burden.

You also need to consider things such as the rate in which that make/model is stolen, the cost of insurance coverage, and maybe even the average resell value.

Be sure to do your homework when shopping for a car. That way, you can be sure to factor all of these “hidden” car costs into your decision!

Not Making A Down-payment

It is a pretty well-known fact that once you take possession of a car, it depreciates (loses value) fairly quickly. That means that the second you drive it off of the lot, it’s worth less than when you bought it!

If, on top of the purchase price, you buy an additional service, spend extra for features that aren’t worth much to the average buyer, pay the tax and fees, all with borrowed money (whether you use a cosigner or not), that means that you are “underwater” (meaning you owe more on your loan, than the car is worth) as soon as you sign the contract!

Failing to come up with a substantial down-payment is one of the biggest car buying mistakes that you can make, because you place yourself into a trap, from which it might takes years to recover! Your ability to sell or trade in your car will be almost non-existent, since you will owe more than it’s worth. Be sure not to get into an accident either, because your insurance company will only reimburse you up to the book value of the car!

Buying Unnecessary Upgrades & Add-Ons

So many dealers try to push things on you after you have already agreed to purchase the vehicle. Things such as fancy floor mats, stain guard, rust-proofing, and even alarm systems can add thousands of dollars to the purchase price of your car, while not adding nearly that much in market value.

Many times, 1 or 2 items/features that you want will be bundled with 7 or 8 more that you don’t really care for. This may cause you to pay an additional $2,000 for only $400 of value to you.

Another thing to consider is that in most cases, you can get these additional services/features for much less than what your dealer is charging. I remember when my wife and I purchased our current vehicle the dealer insisted (over and over) that we purchase an alarm system through them. They wanted $600 for it, and we were blown away with such a high price; so we shopped around and ended up paying about $250 (with more features)! What I remember most about that experience is that we were told that the dealership simply outsourced their alarm installations to them. So they wanted to charge us $600 for a service which only costs them $250, and was right down the road!

Make sure you research the individual options that you want, so you can be better informed when deciding what to get directly from the dealership. Most of the time you are paying a huge premium for the convenience.

Reader Questions:

  1. What are some of the biggest car buying mistakes that you have seen (or perhaps, made yourself)?
  2. How much time do you spend researching before purchasing a new car?
  3. What are some of your best car buying tips?

4 Ways To Lower Your Car Costs

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[The following is a guest post on behalf of Jake Ashaye, giving tips on how to produce lower car costs]

Car costs can often work out to be a significant portion of your income, especially if you are someone who drives quite a lot. At a time when many of us are looking for ways to tighten our belts and save money wherever possible, it’s definitely worth taking any steps you can to reduce your costs. Read to find out about four ways you could create lower car costs.

4 Ways To Lower Car Costs

 

Drive less

This might not be possible for everyone, but most of us probably could drive less than we do. The majority of journeys currently involve a car – including short journeys that would be easy enough to walk.

One option for reducing your car costs is to walk or cycle wherever you can. This way, you’ll use less gas, which is naturally one of the biggest costs associated with cars. You might also be able to save on your car insurance costs, as the fewer miles you drive, the less you are likely to have to pay for your insurance.

 

Lower Car Costs By Driving More Efficiently

If you have to drive, it’s a good idea to drive as efficiently as you can. Ideally, this means driving in a way that conserves fuel as much as possible so you can minimise the amount you have to spend on gas.

It’s thought that driving at speeds of between 58-65mph offer the best efficiency when it comes to fuel consumption, so if you’re driving somewhere the speed restrictions allow it, keeping your car between these zones could help you to save cash.

Other tricks, such as slowing down for the lights in good time so you don’t have to slam the brakes on at the last moment can also help you to save small amounts of fuel that will add up over the longer term and help to lower car costs.

 

Compare Car Insurance

Another major cost related with your car is the car insurance. Getting good value, cheap car insurance depends on a range of factors, including the security of your car, how big your engine is, where you live, your driving record and more.

[Khaleef here: I wrote about how we were able to save a ton of money on car insurance, just by changing our address.]

The fact that so many things are taken into consideration when generating car insurance quotes means that different insurers might well offer you significantly different prices. Doing a regular comparison online can help you to find out where the best deals are while still making sure you have cover for everything you need it for.

 

Get Regular Services

Finally, you can also reduce your long term caring costs by getting your car serviced regularly. Of course, it’s going to cost you money to get the car checked once a year, but it’s definitely worth it as it can save you money in the long run.

After all, paying for a small repair now will cost much less than paying for major work to be done to your car in the future if you do nothing while you have the chance.

Getting a regular check-up can also make your car safer to drive, which is something else that can have an impact when it comes to reducing your car insurance costs so it’s definitely something worth doing at least once a year.

photo by krossbow