When it comes to getting the best deal on a new car, they say timing is important.
How often have you heard that buying a new car is best done during the month of August, near the end of the month, or on a weekday?
Certain adages about buying a car have been used so frequently that they nearly have a mystical influence over buyers. Some vehicle purchase myths are supported by factual data, while others are based on data that may or may not be true in all circumstances.
Here are ten car-buying fallacies we’ve debunked and tips on how to avoid them:
Myth #1: At the end of the month is when it’s ideal to purchase a new car.
Bonuses for reaching quotas are given to car salespeople, and they may be given at the end of the year, quarter, or month. Thus, if the automobile you want is in stock and the dealership is just a few vehicles short of reaching the manufacturer’s sales goal, you might be able to negotiate a discount.
You might have to make color and accessory compromises even if you get a good deal (though dealers are always happy to upsell you on upgrades).
However, the bargain on the last day of the month will be the same as the one offered on the first day if they have already reached their target or if there is no target that month.
Buying a car when you’re prepared, have done your homework, and have your financing in order is one method to dispel this fallacy.
Myth #2: Saving money by purchasing old products
Due to depreciation, buying a used automobile will save you the most money up front. Used automobiles are less expensive than new cars, which is a basic truth that we’ll discuss in more detail later.
A used automobile won’t save you money on finance, though. There are a lot more financing alternatives available for new cars, including cash rebates and other incentives used by dealers to entice customers to purchase them.
A lower interest rate on a new car loan may be the best inducement. Based on your credit report and other personal details, Credit Sesame recommends auto loans.
Interest rates are gradually increasing, thus a larger gap between the financing rates for new and used cars could result in higher savings on a new vehicle when utilized in conjunction with savvy haggling and other incentives.
Misconception #3: Purchasing new will result in cost savings.
With the most recent technology and the assurance that it will be more trustworthy than a used automobile, a new car will give you peace of mind, but it will cost significantly more to purchase.
Some automobiles depreciate less quickly than others and retain their worth well, although this is not always the case. The moment you drive off the lot, a new car might lose 20% of its value. The value for resale or trade-in can decrease by 30% after a year of use.
This misconception also states that new cars require less maintenance since they are less likely to experience problems. It is somewhat true, but it shouldn’t prevent you from buying a secondhand car.
Nowadays, used cars are far more reliable than they ever were. You can save thousands of dollars and obtain many of the same amenities as the most recent model by waiting only three years or fewer to purchase the same model car.
The 2016 Mazda CX-5 is mentioned by Matt Smith, editor of CarGurus.com, as being superseded by the 2017 version. According to Smith, the 2016 model “will have almost the same technology as the upcoming generation, but may be acquired for a reduced sticker price.”
The reasoning is comparable to purchasing an iPhone 6S before the iPhone 7 is out since you receive the most of the functionality of the most recent phone at a lower cost, he claims.
Misconception #4: Avoid buying a red car because they are more expensive to insure.
This auto insurance myth may have an impact on the color of the vehicle you choose to purchase. Stop letting it. The color of your car is not even a question that insurance companies ask.
“As a result, individuals often steer clear of purchasing red cars, which lowers their selling price. Hence, when I bought mine, I was able to save more money, says David Waring, co-founder of Fit Small Company, of his decision to purchase a red Toyota Camry.
Insurance companies prefer to know a car’s age, make, model, body type, and engine size above its color (in addition to your own age, gender and credit-based insurance score).
Myth #5: I lack the expertise to successfully negotiate a transaction.
You may not be able to know as much about a car as a salesperson, but you can do your homework on the model you want, investigate local prices, and be prepared to walk away from a bad deal.
Whether it’s a used automobile dealer or a private seller, you can bargain with them as well.
Richard Reina, a product training director at CARiD.com, an online retailer of aftermarket auto parts, asserts that “anyone who is confident can be a successful negotiator when it comes to buying used cars.” “Research can help you develop this confidence.”
And keep in mind, you are not forced to purchase a car when you enter the lot, advises Reina. If you believe you aren’t getting a fair bargain, there are always options you might consider.
Myth #6: I am a better negotiator than the dealer
Being confident in your abilities to negotiate might be beneficial, but don’t be overconfident. This is what auto dealers do for a living and every day. probably don’t.
You probably won’t be able to outbid a team of individuals that negotiate hundreds of deals each month if all you do is negotiate the acquisition of a new car every few years.
Bring a dependable friend or relative with you and come prepared with the information you need to make your decision.
Myth #7: Online shopping has the best bargains.
One aspect of the car-buying process is shopping online at places like Costco, AAA, TrueCar, or anyone else that sells your information to dealerships willing to honor a pre-set price for a particular vehicle.
The interest rate on your loan, trade-in value, improvements, and an extended warranty are additional expenses that may have an impact on your bottom line. All are negotiable or at the very least optional.
Myth no. 8: Money is king
A new car is not one of the items you can save money by paying in full, unless the automaker offers cash-only incentives, which is uncommon.
Cash buyers do not provide the dealer with any incentive to offer discounts because the dealer may make more money when you lease or finance. If you finance the vehicle, the dealer typically receives a commission, but an all-cash transaction doesn’t increase its revenue.
You are not required to accept their money because of this. At your bank or credit union, search for the best rate.
If the numbers still add up for you, the dealer might be able to match or even beat the financing you’ve discovered on your own. Cash payments may reduce the likelihood of price reductions.
Myth #9: You can afford it if you can buy it.
Dealership finance specialists are always able to find a way to fit a car into your budget. How much of a monthly payment can you afford? is frequently one of their first inquiries.
They claim that you can afford the car if they can reduce the monthly payment to a level that works with your spending plan.
It doesn’t necessarily mean you can afford something just because you can buy it on paper. The monthly payments are reduced when a loan is extended from 48 to 60 or 70 months, but the total cost is significantly increased.
Take a look at the total cost. Don’t purchase it if the price is not one you are comfortable with. It’s not fun to have to make auto payments for an additional year or two, especially if the car will eventually be worth less than the loan.
Myth #10: You should purchase it if you can afford it.
Go back and carefully examine this major purchase even if the auto payment is within your means. No need to haste. The current deal will still be available in a day or two, if not longer.
You should be able to find a comparable deal the following week or the following month, barring the automobile being a loss leader or being in short supply.
While a salesperson will make every effort to dissuade you from leaving the lot without purchasing a car, the cost of a car should remain mostly unchanged even if you wait a little.
It’s up to you how it works with your spending plan. You are the only one who can decide what you can afford and how long you can afford to make payments.
For instance, the Edmunds Real Cost to Own calculator displays additional expenses you might not have taken into account while researching your car purchase, such as depreciation, loan interest, taxes, fees, insurance, fuel, maintenance, and repairs.
These expenses, which might mount up to more than the monthly loan payment, must be included in your car budget. In one year, the cost of auto insurance alone may be far higher than the cost of financing.
There are limitations to the fresh-car fragrance.