Car Buying Pitfalls to Avoid

• Preparation Is Your Best Protection
• Understand These Car Buying Terms
• These Car Buying Tips Will Save You Money
• Car Buying Dos and Don'ts
• The Best Time To Buy A Car
• The Nitty Gritty!
• Share Your Thoughts

You should prepare for a car purchase long before you walk into the dealer's showroom. To do otherwise is the equivalent of entering a lion's den unarmed and without a plan. You'll be eaten alive!

If you hope to drive away with a reasonably good deal and have some money left in your pocket, there are a few things you ought to know and do ahead of time.

1. Know The Make And Model Car You Want
2. Check The Condition Of Your Credit
3. Establish A Budget For Your Car Purchase

Know The Make and Model Car You Want — As a matter of fact, you should have at least three (3) different cars in your sights. It's always in your best interest to have options and the flexibility to choose an alternative if a deal should fall through on a particular vehicle.

Check The Condition Of Your Credit — It's a smart idea to get a copy of your credit report and credit score from the Big Three credit reporting agencies - Equifax, Experian and TransUnion. You want to correct any errors you find. With this information in hand you will be protecting yourself from the dishonest dealer who runs a credit check and lies about your score just so he can sock you with a higher interest rate.

Establish a Budget For Your Car Purchase — Setting limits on how much you are willing to spend will keep you from getting in over you head. The actual purchase of the car will occur only once, but you will be commiting to monthly payments for several years to come. So, in addition to the loan payments you should factor in insurance costs, routine maintenance costs and miscellaneous costs as well. When you are aware of what you are getting into, you reduce the risk of being exploited by crafty sales agents.

Doing this kind of advance research and preparation gives you a solid position to defend when it comes time to make an offer. Knowing your benchmarks gives you confidence and boundaries to stay within. There are many more car buying tips you should be familiar with that make the buying process less daunting. Careful preparation is half the battle won!

You should become familiar with the terms and expressions used in the auto industry. It lets the salesperson know that you are an informed consumer and are prepared to do business. This way you reduce the chance of misunderstandings and it's easier to negotiate intelligently. These terms are an important part of the car industry vocabulary.

• MSRP stands for Manufacturer Suggested Retail Price and means just that. (Skeptics say it also stands for Mostly Suckers Really Pay.) It's also known as the Sticker Price and does not include taxes, registration and other miscellaneous fees.



• Invoice Price is what the dealer pays the automaker for new vehicles. It represents the base cost of the vehicle with the various option packages, air-conditioning, cruise contol, tilt steering column, floor mats and factory incentives.



• Dealer Holdback Price is the amount the dealer receives from the manufacturer for every new vehicle sold. It is a percentage of the MSRP and is paid quarterly or annually.



• Dealer Incentives are hidden cash rebates that manufacturers offer dealerships to promote certain makes and models of new cars. These rebates are intended for the car buyer and can represent several thousand dollars in savings. But beware! Some dealers like to keep them for themselves. So it's up to you and your research to find out when they apply.



• Dealer Cost is not to be confused with the factory Invoice Price. It is usually much less because of the hidden factory incentives that effectively lower their cost. Here's a simple formula you can use to calculate Dealer Cost:
  
  

  Dealer Cost = Invoice Price - Dealer Incentives - Dealer Holdback

• Destination Charge is the amount the manufacturer charges the dealership to deliver a new vehicle from the factory. This is a fixed cost and is usually not negotiable.



• Rebates are cash or special low interest rate incentives that the manufacturer offers to the consumer to stimulate new vehicle sales.



• Option Packages are features manufacturers will bundle together and offer as a package at a reduced price. If these options were to be ordered separately they would cost significantly more.



• Wholesale Value or "Auctal Cash Value" refers to the price a used car can bring at a used car auction.



• VIN stands for Vehicle Identification Number. It is a vehicle's unique ID number and is usually located on the dashboard or the driver side door post.



• Lemon is a description for a defective car, one that needs numerous repairs for the same problem or different problems right after you buy it. The defect must be major. There are lemon laws that provide for getting a replacement vehicle or a full refund.



• Bait and Switch is an illegal sales tactic that "baits" a prospect with an advertised bargain-price or a one-of-a-kind item. The objective is to get the prospect into the place of business. The "switch" occurs when the prospect is told that the item is no longer available and they are steered to a more expensive item.



• Buyers Remorse is the sinking feeling in the stomach that some car buyers get when the excitement wears off and they realize they have made a terrible mistake.

The current uncertainty in the auto industry has created tremendous opportunities for the smart car buyer to negotiate a fantastic deal. Dealerships are going out of business, prices are falling as inventories are piling up.

Automakers are competing for customers by offering attractive rebates and cash-back incentives. Models that were formerly hot can now be snatched up for a song. You can use all this to your advantage.

Here are some useful pointers:

Know Your Price Negotiating Zone — That's the price range between the sticker price and the Dealer's Cost. The Sticker Price or MSRP is the top-end price the dealer wants you to pay and the Dealer's Cost is the low-end you want to start out close to.

Vehicle Trade Ins — If you are planning to use your old car as a trade in, keep that information to yourself until you have agreed to a price for the new car. If you play the trade in card too early, you risk being out-maneuvered and could end up paying more on some other part of the transaction.

Beware of Bogus Fees — There are certain legitimate fees and taxes that are included in your contract. Title and registration fees, sales taxes and trade-in taxes are all required by law. But you should know that some dealers will try to sneak other official sounding fees into the contract to pad your bill. "Dealer Prep", "Shipping" or "S&H" are some of the common ones you might get socked with. You should establish early in your negotiations exactly what fees you will be charged so you'll know what to expect.

Use a Credit Card for Your Deposit — This way, if the deal falls through, you can dispute the charge. If you pay cash you could have a difficult time getting your money back.

Here are some useful guidelines for buying a car that will help you when you sit down with the car salesman to make the deal. The more comfortable and confident you are at the negotiating table, the more objective you'll be. You'll be less likely to make an emotional decision and incur unnecessary cost.

• DO prepare for your car purchase by checking your credit, getting several quotes on different model cars and doing your due diligence.



• DO make as large a down payment as you can afford (at least twenty percent - 20%). This will substantially lower your interest rate and monthly payments. It will also protect you from getting "upside down" on your loan — owing more on the car loan than the car is worth.



• DO prepare to spend several hours at the car dealer. The process can be long and drawn out for no other reason than to wear you down. Bring something to eat, read and occupy your time.



• DON'T sign any documents without reading them, asking questions and getting satisfactory answers to anything you don't understand. And whatever you do, never sign any blank papers.



• DON'T spend money for rustproofing or fabric protection. Most auto makers routinely rustproof their cars at the factory anyway, and you can pick up a can of Scotch Guard at the neighborhood store and protect the fabric yourself.



• DO test drive the car to see how it performs. Take it on city streets as well as the highway if possible. If it is a used vehicle turn off the radio, roll down the windows and listen for rattles, squeaks, knocking and other strange noises.



• DON'T buy any car after a test drive especially if it is a used car. It's possible to miss a mechanical problem even after test driving. Go home, do some more research and return another day.



• DO have a used car inspected by a mechanic of your choice before agreeing to purchase. The seller may withold information on the car's mechanical condition, or may be unaware of underlying problems. Get your mechanic to put the car on a lift and inspect it. That could save you thousands of dollars on the price and future repairs.



• DO get a vehicle history report on a used car. With the VIN and less than $30 you can order a complete report which contains information about previous damage, repairs, odometer problems and other issues. The small expense can save you a lot of grief and unnecessary repairs.



• DON'T be a monthly payment buyer because you can be easily steered into getting a more expensive car or over-spending on add-ons. Any loan can be made to fit your monthly budget by simply adding a few more years onto the term. You'll end up paying much more in interest. Instead, you should focus on the amount financed rather than just the monthly payment.
  
  
• DON'T be afraid to turn down a dealer's offer if you've done your homework and you know you could get a better deal. Explain that you know how much they are making on that offer and you're prepared to do business if they make you a better deal.
  
  
• DON'T be an impulse car buyer and go into a dealership clueless about what you want or how much you can afford. You might as well hang a sign around your neck that announces: "I'm a sucker. Take my money!" You leave yourself exposed to the unscrupulous sales agent who preys upon your ignorance like a vulture devours carrion. A car is not an impulse item.

Did you know there are certain days when it's easier to get a great deal on a car? That's right. If you catch the dealer at the right time of the week or month you will significantly improve your chance of getting a great deal.

Weekdays are generally the best time to shop for a car, especially Wednesdays. It's the middle day of the week and often the dealer's slowest business day. Dealers are starving for sales during the week anyway because not much is going on. This puts you in a superior position when you get down to working out the numbers. You can often secure a great deal on these slow days.

In contrast, the weekend is the absolute worst time to buy a car because that's when most people are shopping for cars and dealers are busy. They don't have enough time to work with you and give you the proper attention. And it wouldn't bother them much if you decided to leave because they've got lots of other prospects waiting to take your place.

Another excellent time to go car shopping is at the end of the month. This is the time when sales agents are scrambling to make their sales quotas and will be completely at your mercy. They'll be willing to do almost anything to get your business and boost their sales records.