Common car buying mistakes to avoid
Ramsey Solutions financial expert Chris Hogan on the impact of the rising cost of cars on American consumers.
In the market to buy a car? Some studies suggest some of the best deals are available during the summer months.
Heading into the summer, some carmakers are reeling off of sluggish sales, too.
U.S. auto sales slumped during the second quarter for some of the country’s top brands – including Ford and General Motors. However, sales at Chrysler were up two percent last month, owing to a surge in Ram pickup truck sales. Electric automaker Tesla also had a record second quarter for both production and delivery – delivering 51 percent more cars compared with the first quarter.
Meanwhile, auto loans hit a record-high in the first quarter, according to data compiled by credit reporting agency Experian. Borrowers took out an average of $32,187 during the first three months of the year to purchase a new car, while others making a used vehicle purchase borrowed more than $20,130.
The average monthly payment for a new vehicle was $554 and $391 for a used car.
Outstanding auto loan balances in the first quarter totaled $1.18 billion, Experian said.
Regardless of when you plan to make a purchase, here are some ways you can make sure you are getting the best deal, according to tips provided to FOX Business by Joe Pendergast, vice president of consumer lending at Navy Federal Credit Union.
Don’t skip the research phase:
Knowledge is power when it comes to buying a car.
“Being prepared means you have greater purchasing power and can boost your confidence during the buying process,” Pendergast said.
Things you should know before going out shopping include your credit history, average interest rates and how much you want your monthly payment to come out to. Pendergast said a dealer is likely to be more willing to negotiate with you if you have a payment threshold set.
In order to determine that threshold, it is prudent to know what deals are on the market.
And for those on the market for a used car, Pendergast said a vehicle history report can help prevent you from buying a car with potential problems, which will save you money down the road.
Don’t visit just one dealership:
Another pair of mistakes car shoppers make are agreeing to dealership add-ons, and considering an offer from just one dealership.
Pendergast said shoppers should take a look around at their local dealerships, but noted that people can do research online as well.
“Many dealers will encourage you to act fast, but it’s always a smart move to take your time and compare different offers from the dealer and your trusted financial institution,” he said.
How many dealerships you should visit depends on what type of car you are looking to buy, your ideal price point and how quickly you are looking to get a vehicle.
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Don’t forget to talk to your bank:
Another big mistake people make, according to Pendergast, is obtaining a vehicle loan through a dealer without speaking with your bank or credit union first. Speaking with your financial institution or credit union about available options can boost your purchasing power.