CARS.COM — Shopping for a car can be exciting and stressful, and there's a lot to remember. So what are the common pitfalls you should avoid at your dealership?
Related: More Stories for #FirstTimeBuyers
Leaving too much time between test drives. We know; you're busy, but if you spend a month test-driving on the weekends, it'll be hard to make accurate comparisons. Instead, find an auto mall and test your top cars back-to-back on one day. Use a notebook or your smartphone to create a scoring grid and evaluate the same aspects of every car you drive.
Try these 10 factors to score: visibility, driver's-seat comfort, backseat space, cargo room, interior quality, multimedia functionality, acceleration, handling, ride comfort and noise. Remember to consider EPA mpg ratings and (of course) price.
Shopping only by monthly payment. Too many shoppers set their budget by the monthly payment, a number that's easily manipulated by changing loan terms. Let's say you had $3,000 for a down payment and wanted to spend $500 a month on your new car. That should get you a 4 percent 48-month loan on a $25,000 midsize sedan. But that same $500 monthly payment and $3,000 down could get you a $35,000 SUV with leather seats and a moonroof. What's the catch? You'll be paying for much longer (72 months) and at a higher interest rate (4.5 percent). Bottom line: You'll spend an additional $12,000 over the length of the loan.
"The key thing then is that at the end of four years, you've got a car that's paid off, and suddenly you don't have a car payment," said Mike Sante, managing editor at Interest.com. "If you've taken care of it — you've changed the oil, you've done all the stuff that you've got to do — you've got a car that can last for at least another two or three years."
One benefit: You won't be upside down on your car for as long. Let's say that a year into ownership, circumstances force you to sell the car. With the sedan scenario, you'd still owe $16,825 in loan principle. If the sedan had depreciated (seen its value decline) by 25 percent, you'd be able to sell it for close to $19,000 and pocket about $2,000. But in the SUV scenario, you'd still owe $27,247 after a year, and if it had also depreciated by 25 percent, you'd owe $1,000 more than the SUV was worth.
Adding options by monthly payment. Some automakers pitch extra options and accessories, or even service contracts like extended warranties, by monthly payment. Make sure you do the math. An extra $13 per month for those fancy wheels might not seem like a lot, but over a 72-month loan, they'll cost you $936.
Not knowing the deals. From factory rebates and dealer cash to low-interest financing, all but the most sought-after new cars have some sort of incentive. It can be considerable: Overall industry incentives amounted to $2,842 per car in May 2015, according to Autodata.
Knowing which factory and dealer incentives are available on a car gives you the best starting point for negotiations. You may not qualify for that loyalty rebate or have good enough credit for the low-interest loan, but general factory rebates have fewer eligibility restrictions.
Forgetting to negotiate an "out the door" price. If you think you've negotiated the MSRP down to a great price, the actual total you pay might still give you sticker shock. An internet sale price might seem like a big discount, but it's seldom what you actually pay in the end. The number often excludes the vehicle's destination price, which can run from $700 to $1,000. It also usually omits the dealer documentation fee, which can add hundreds of dollars depending on which state you're buying in. Then you'll have to add sales tax and vehicle title, registration and license fees. Some cars even have dealer prep fees or extras like vehicle identification number etching.
The good news? You can avoid such surprises by mentioning up front that you want the out-the-door price. Tell the dealer that you want a number that includes sales tax and all fees. We've shopped anonymously for many cars, and many salespeople are open to requests such as this. Once they know that's what you want, they'll get you an out-the-door figure, and you should negotiate on that number alone.
Not securing backup financing. A high-interest loan can undo a lot of negotiating on the final price. Before you head to the dealer, it's smart to secure loan approval from a bank or credit union.
"Line up financing before you go to the dealership," said Greg McBride, a senior financial analyst at Bankrate.com. "That way you have an offer in your back pocket."
Automakers want your financing business, so if you have preapproved loan terms, dealers will often beat (or at least match) those terms. At worst, you have a fallback option if the dealer can't provide a decent loan.
There's another benefit to securing prior financing: You'll learn your credit scores and anything in your credit history that could keep you from getting a loan.
"Understanding what's on your credit is a big step in that direction toward being informed," McBride said. "You can scenario play and see what that translates to — what a sticker price translates to in terms of monthly payment."
Not knowing your current car's trade-in value. If you plan to trade in your car, you should know how much it's worth. Like a high-interest loan, a lowball offer on your trade can undo a lot of apparent savings elsewhere in the deal. You can click here to estimate your car's trade-in value, and if you want the most money, go here to sell it yourself. You may also want to get a few trade-in offers from other dealers as a backup plan. Remember, just because you're buying a new car from a given dealership doesn't mean you have to trade your old car in with that dealership.
Buying a used car without an inspection. If you buy a used car that's out of warranty, we strongly recommend an inspection by a trusted mechanic. Any reasonable seller should let you take the car to a mechanic or make the sale contingent on a third-party inspection. There's only so much the average shopper can tell from vehicle history reports and a test drive. Mechanics can test engine compression, inspect the underbody and detect drivetrain issues that aren't readily apparent. A good inspection can save you from buying a lemon — or at least give you some more negotiating leverage. These inspections typically cost around $100.
In the market for a “cheap” car? Find cars priced at $6,000 or less near you.