Car buyers have more tools than ever to help them get the right vehicle at the right price. But it’s easy to make mistakes. Often, car buyers are blinded by emotion or hasty timing. Edmunds’ experts reveal the biggest mistakes car buyers often make—and tips on how to avoid them.
Trading in a vehicle with negative equity
Upside down on a trade in vehicle is becoming more common. According to a recent Edmunds report, nearly one in four consumers financed a new vehicle purchase with trade-in in the second quarter of 2024 were underwater compared to their previous car loan.
“Upside down,” “underwater,” and “negative equity” are interchangeable terms for a bad situation: all three mean the car owner owes more on the loan than the vehicle is worth. Not only has the number of upside-down trade-ins grown since 2022, but so has the amount owed on those loans.
For example, if you are $5,000 below the value of your current vehicle and decide to trade it in, car and buy a new one, then you have to pay the price of the new car plus the $5,000 you owe on the current car. Your monthly payments will be much higher because you are transferring what you owe on your old car to the loan for your new one.
The best financial solution is to keep your current car longer and continue paying off the loan. Waiting can be tough — you want that new car, we get it — but if you can at least make sure that your trade-in value matches the amount of your loan, you won’t have to pay extra to purchase the new vehicle.
Buying a vehicle in a hurry
There may be legitimate reasons to rush a vehicle purchase. Maybe your vehicle was totaled in an accident, or maybe it broke down and isn’t worth paying for repairs. Either way, you need a new car right away. But many buyers don’t think to do valuable research beforehand.
There will be new and unfamiliar car features and technologies that are worth knowing about, especially if it’s been a while since you bought a new car. Taking your time will also allow you to get multiple quotes before committing to a deal and give you time for a vehicle inspection if it’s a used car.
Even if you need to replace your car quickly, it is often better to find alternative transportation while you research a new car. Renting a car for a few days may cost a few hundred dollars, but that is better than choosing the wrong vehicle or getting a bad deal.
Only go to one dealer
This mistake is often made by buyers who are in a hurry to find a new car. Make sure you give yourself time to make smart choices when you need a car fast. Most price research can be done online or on your phone without leaving your home. Avoid walking into a dealership and make a purchasing decision without looking elsewhere.
Dealers have a habit of competing with each other, so make sure they do it to your advantage. Be transparent about your purchases and share quotes with traders so they know you’re serious.
Getting confused about dealer prices
Some buyers will be overwhelmed by a salesperson who rattles off numbers like asking price, trade-in value, cash down payment, and monthly payment. While fewer dealers use confusion tactics than there used to be, it’s good to be prepared to combat them if they do occur.
To start, do your research to determine the market value of the vehicle you want to buy before you begin negotiating. This figure will serve as the backbone of your strategy and give you a point of reference. From here, it’s best to keep it simple and focus on two numbers: the car’s purchase price — that’s the sales price plus fees like taxes and registration — and your trade-in value.
Also, pay attention to possible add-ons that the dealer can use to increase his profits. These include anti-theft devices, extra guaranteespaint and textile protection, floor matswheel locks and more. You can probably negotiate the price of the add-ons, but it can distract you from your primary goal of best deal on the vehicle itself. Buying a car without add-ons is the best way to avoid the situation.
Edmunds says
Take some time to consider all the options and think carefully about the terms of a car deal can save you thousands. It’s time — and money — well spent.
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This story was provided to The Associated Press through the automotive website Edmunds.
Josh Jacquot is an Edmunds contributor.