Seven ways to screw up a car purchase

Buying a car is a big-bucks decision. Not knowing the rules means you’ll likely pay more than you should.



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I went shopping with a girlfriend recently. She wanted to buy a new car. She was pretty sure of what she wanted and she could justify up the whazoo all the decisions she’d made before she walked into the dealership. She made some big mistakes.

Here are seven things to avoid the next time you’re looking for a new car:

She fixated on the brand
She was determined to buy a Toyota. People do this all the time: they decide on the brand of the car regardless of how it’s going to affect their budget. Considering the fact that she was living on a recently reduced income, she still couldn’t let go of the prestige of a Japanese car. The other thing about getting stuck on a particular car is that you may be missing out on what may come standard on another car that you’ll have to pay extra for on your chosen model.

She put form before function
Considering what she and her family do with a car—they are avid naturalists and drive their car to the weirdest places, filling it with all kinds of stinky stuff—you’d think function would have come first. Nope. She wanted something cute and zippy. Think about how you’ll use your car. Don’t let the image of what you’d like in the driveway take you down the wrong road. Haul a lot of passengers? Drive a long way to get to work? Haul a boat? Make sure your car does the job so it’s a workhorse, not a decoration.

She hadn’t thought about all the costs
While the sticker price might be front and centre as you’re trying to decide what to buy, there are more costs you need to think about—namely gas, insurance and maintenance. And if you plan to sell the car within 3-5 years, resale value needs to be part of your equation.

While Debs had done her homework on the insurance front, she had not looked into maintenance costs. Very often, high-end cars come with hugely inflated maintenance costs. Another girlfriend of mine had to replace the key to her luxury vehicle and just about choked when she found out it’d be the equivalent of a week’s groceries.

She didn’t arrange for her financing in advance
Oops. She ended up paying more interest than she needed to because she wouldn’t take (my) good advice and walk away from the dealership financing. If you have a good credit history, talk about a vehicle loan from your regular lender. After agreeing to a price with a dealer, let the dealer try to beat your lender’s financing offer. If you don’t do it that way, you might find yourself giving back any money you saved by crafty negotiating on price to financing costs.

She shopped around, but she didn’t negotiate
Shop online. Shop outside your normal buying area by phone. Get some quotes and arm yourself for the negotiation. Look at slightly used cars to see if they’ll give you what you need for considerably less money. Even if you plan to buy new, knowing what’s available in the slightly-used arena (think demos) will give you a better sense of what you might be able to save. Show the dealer you’ve done your homework and always counter with a lower offer.

She tipped her hand on her trade-in right off the top
You shouldn’t identify that you have a trade-in until you’ve secured a firm selling price on the new vehicle. When asked if there’s a trade-in, simply respond, “I’m not sure at this point, since I have someone else who may be interested in the car.” You’re trying to avoid the sales price being inflated to cover the trade-in value.

Once upon a time dealers held the upper hand and you had to endure marathon haggling sessions to get a good deal. Not anymore. If you’re a smart shopper you’ll research vehicles carefully, discover a good target price for your chosen car and get competing dealer bids before ever visiting a dealership. Do this, and you’ll stack the deck in your favour.

6 comments on “Seven ways to screw up a car purchase

  1. Re: being fixated on a brand.

    Gail, when I bought my last car, I was determined to buy only a honda or a toyota subcompact car. Everybody that I had talked to swore by their hondas or toyotas. Those who owned domestics for the most part were telling me the proverbial 'if it were a horse, I would have to shoot it.' I rely heavily on my car and therefore I am going to buy an economy car that I know I can rely on.


  2. "prestige of a Japanese car." – you are referring to a toyota right?


  3. I made the same mistake – didn’t arrange for financing in advance when me and my wife bought our first car. It is out of ignorance and perhaps sheer excitement as well that we readily agreed with dealership financing. We didn't bother doing any comparison with regular lenders. It's a costly mistake knowing that even though I was able to haggle and get a good price, I still lost in the end. Lesson learned.


  4. With all due respect if you do research on credible sites including Consumer
    Reports website you will find that you pay more money for brands like Toyota and Honda upfront for a reason…superior resell value, lower depreciation, less maintenance costs, better over all ratings for safety etc. Ive done hours of research and we still ended going from a good used Honda to a good used Toyota and will never buy domestic again. Many of our friends have also come to the same conclusion. Even a friend who has owned a family run mechanical garage for over 60 yrs says your better off investing in a good used Honda, Toyota, Subaru etc. than a new North American. And many if not most 'imports' are now made in N. America.


  5. Personally, I consider the following when I buy my car…

    the depreciation cost and residual value if I have to buy my car today and sell my car 4 yrs….

    the fuel economy…learn to read the labels…educate yourself by going to the natural resources canada website, go to the section personal, transportation, compare vehicles

    the leasing rate the auto dealer is applying to the loan

    the affordabiltiy of my monthly cost, including my gas at the pump, my maintenance cost, my insurance, and my monthly car payment

    and wait for the deals if you have the time


  6. I agree with Marie, I used to own a Honda that I had for four years and then sold it for the same amount I bought it for! I now have a Toyota Avensis which I love, it is such a great car that never lets me down. Conclusion, you don´t have to do the research; just buy a Toyota 😀


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