Don’t Get Ripped Off In This Auto Market: 5 Mistakes To Avoid If You Buy A Car Now
This item is reprinted with permission from Nerdwallet.
If you shop for a new or used car in today’s overheated market, you will find that the game has changed. Various conditions apparently gave the sellers the upper hand.
“Tight inventory and sky-high prices have caused many buyers to postpone their purchases,” said Michelle Krebs, executive analyst for Cox Automotive, a leading automotive communications, media and services company.
Deferring your purchase until the market stabilizes is the best option. But if you need to buy a car now, be sure to avoid these five common mistakes:
1. Not being prepared
This is a new car buying environment and you may need to reset expectations. Here are the important adjustments to consider before you can hook a car:
Price. Most buyers pay the price of the sticker or more, and “there’s no end in sight for price increases,” says Ivan Drury, senior director of ideas for Edmunds.com, an online resource for auto inventory and dealer reviews. For used vehicles, “the cap keeps rising as new deal prices hit all-time highs,” he says.
Krebs says the average transaction price for a new vehicle climbed to over $ 45,000 in September. And while that number may seem exaggerated, it is not. According to Kelley Blue Book, while Americans bought 7.3% fewer cars in September than in August, the average price for a new car was $ 45,031.
Related: This new Cadillac model sold out in about 10 minutes
Inventory. Since the inventory of new vehicles is around 2.5 million units lower than it was then in 2019, according to Krebs, you’ll have to search more to find the car you want. It helps to be flexible when choosing a make, color and options, as well as when purchasing a new or used vehicle.
Hourly. With inventory so low, make sure you’re ready to buy when you find a competitively priced available car. “You sleep, you lose,” Drury said. “The days in the field are reaching the lowest levels we have ever seen.” With today’s high demand and low supply, cars don’t stay on the lot and often sell out before they arrive.
Read: Here is a buying opportunity for smart used car buyers
If you can’t find the car you want in the field, ask what cars are being shipped to the dealership and reserve one. Be prepared to pay a deposit to keep your car as soon as you select one.
2. Losing money on your trade
The value of used cars has skyrocketed and dealers are scrambling to increase used car lots. This puts you in a stronger position when you trade in your old car – if you follow a few simple steps:
Using a pricing guide, such as Kelley Blue Book or Edmunds, research the value of your car, adjusting it for condition, options, and mileage. Also check car classifieds, such as Autotrader, to gauge the asking price in your area.
Get offers from used car buying sources such as Carvana or CarMax. Keep in mind that these prices may change after your car has been inspected.
Once you’ve come to an agreement on the price of your new car, see if the dealership can beat the wanted price or the online quotes you got for your trade-in. If that doesn’t match, sell your car to the highest bidder and use the money as a down payment on your new vehicle.
Keep in mind that depending on the state you live in, even if the dealership’s price is lower than other sources, a trade-in can reduce the amount of sales tax you will pay on your new car.
Read also : The Biggest Mistakes Buyers Make When Buying an Electric Car
3. Not getting pre-approved financing
Getting pre-approved for a car loan will help you identify any credit issues before you go to a dealership. Pre-approved financing also offers other benefits:
It gives you the option of setting up your own loan with the right down payment and the right loan term.
This can simplify negotiations with the dealer by allowing you to focus on the “outside price”.
This could act as a bargaining chip to get the dealer to offer a better rate.
4. Buy unnecessary extras
With low inventory and high demand from buyers, dealerships are loading their cars with profit boosters, according to Oren Weintraub, president of Auto Authority, a car-buying concierge service in the Los Angeles area. These upsells include additional warranties, anti-theft devices and add-ons such as mudguards and locks.
You can eliminate these hidden charges earlier by asking for the exit price, which then lets you tell the dealership what you want and what you don’t need.
5. Ignore the exit price
Given the likelihood that you will see additional markups on most cars, it is essential that you focus on the big picture: the exit price. Does it matter if the paperwork includes $ 595 of anti-theft window engraving that you never asked for, as long as you hit the overall price you wanted?
The exterior price is a single, simple number that reveals the specific cost of everything: the car, registration fees, taxes, dealer added extras. It’s a number that you can write a check for and go to the finance office to get a loan.
See: New car loans are easier to get now than cars
A similar and dangerous distraction is when the dealer only focuses on monthly payments. But, if you’ve pre-arranged a loan or used an auto loan calculator, you should have an idea of what you can borrow and what the payments will look like.
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Philip Reed writes for NerdWallet. Email: [email protected] Twitter: @AutoReed.