Some car buying advice is outdated — or just plain wrong. Either way, car buying myths range from the mundane to the absurd. While most of these myths are relatively harmless, there are some that can end up costing you both time and money.
The flawed advice seems to fall into two categories. The first is the mistaken belief in a style of car buying where the buyer is somehow going to turn the tables on a car salesperson. The second category is made up of car-buying myths and misconceptions. Some of these tips might have worked at one time, but they have outlived their usefulness. Other bits of "wisdom" was never true to begin with, but live on as myths that are about as useful as believing in the Tooth Fairy.
20 Dealers Have Great Margins On Pre-Owned Cars
Making a low-ball offer on a used car is going to set you up for a world of frustration because the margins on pre-owned are tighter today than most people realize. The dealer will often not even counter-offer. New cars simply have more wiggle room: more deals, more incentives, more factory rebates, better financing terms and more options on the lot. This isn’t the case with used cars.
19 Cash Is King
If you are buying a car from a private seller and you want to haggle them down, telling them you have cash right now might motivate them to give you the price you want. However, at the dealership, the ability to flash your bills gives you no leverage on the price whatsoever. In today's competitive market, dealers aren’t making much on the cars themselves.
18 Bring A Cashier's Check For The Exact Amount You Want To Pay
Imagine doing this and telling the salesperson: "Take it or leave it." Sounds cool, right? Except, if you bring a check with a figure you made up, you won't be getting a car. And how do you know the dealership wouldn't give you a price lower than the one on your check?
17 Buy A Car On A Rainy Day
No. Just no. First of all, rain hides imperfections and scratches in the paint, as well as small dents. Second, the idea is that due to bad weather, no one will be on the car lot and the dealer will be desperate to sell. One problem: Many people have heard this advice, which means the dealership is both wet and crowded.
16 Don't Mention The Trade-In Until The End
Dealerships are so used to this trick, it has a special name, "parachuting the trade." It can add hours to the amount of time you spend at the dealership because the entire trade-in evaluation won't start until after the rest of the deal is negotiated—without really changing the amount you'll receive for your trade-in.
15 Be Prepared To Walk Out
This is good advice for people who insist on shopping in person at a car lot or from a private seller. But it's no longer good advice in the Internet age, mainly because it's not even necessary to ever walk onto a dealership lot. Instead, use the Internet department and Price Promise for a hassle-free, low-cost shopping experience.
14 Read Every Word Of The Contract
If you follow this advice, you'll be there all day. Besides, most sales contracts are just standard stuff that's regulated by the state's motor vehicle registry. It's not necessary to read all the words in the contract. However, it is absolutely essential to review all the numbers in the contract.
13 Call The Sales Manager And Demand The Lowest Price
The principle of this approach is to pit dealerships against each other. Believe us, they are already well aware of the competition. Furthermore, this confrontational style is harder to pull off than you might think. Maybe it sounds fun to put the salesperson on the spot, but it won't get you anywhere. Instead, just be polite and honest and tell them you're calling around to check prices.
12 You Get The Best Price When The Dealer Is Closing On The Last Day Of The Month
This strategy comes from an old-school car buying advice claiming dealers are more likely to offer you a bigger discount at the end of the month because they are trying to hit a sales quota. But if they’ve already met their target or there is no target that month, then the deal on the last day of the month will be the same one available on the first day.
11 Buying Used Will Save You Money
Buying a used car will save you the most money upfront, mainly because of depreciation. After all, used cars cost less than new ones. Where a used car won’t save you money, however, is in financing. There are more financing options for new cars, such as cash rebates and other incentives dealers use to get you to buy new.
10 Buying New Will Save You Money
New cars can lose 20 percent of their value the minute you drive off the lot. After a year of driving, the resell or trade-in value can drop 30 percent. In addition, used cars are much more dependable than they used to be. Waiting a few years to buy the same model car can save you thousands, and still get you many of the same features as the newest model.
9 Don't Buy A Red Car
This is a myth of car insurance, and it could affect which color car you buy. However, insurance companies don’t even ask for the color of your car. Because of this myth, people generally avoid buying red cars, which means they often sell for less. Instead of a car’s color, insurers want to know the year, make, model, body type, engine size and age of the car.
8 You Don't Have Enough Knowledge To Negotiate
You may never know as much about a car as the salesman, but you are capable of researching the car you want, knowing area prices and being willing to walk away if it isn’t a deal you want. It's always possible to negotiate with a seller of a used car, whether it’s a used car dealer or a private seller.
7 You Can Negotiate Better Than The Dealership
Erm. No, you can't. Don’t be overconfident in your ability to negotiate. Car dealers do this for a living and do it hundreds of times per month. You probably don’t. Even if you're a good negotiator, the dealership will always have more information than you. Make sure you’re buying from a trusted high-quality dealer and bring a knowledgeable friend or relative to help you weigh the decision.
6 The Best Deals Are Always Online
Shopping on the internet at someplace that sells your information to dealerships that will honor a pre-set price for a specific vehicle is just one part of the car buying equation. Other costs that can affect your bottom line include the interest rate on financing, trade-in price, upgrades, and an extended warranty. All can be negotiated or at least be optional.
5 If You Can Buy It, You Can Afford It
Just because it appears on paper that you can buy it doesn’t mean you can afford it. Extending a loan from 48 months to 60 or 70 months lowers the monthly payments, but the overall price will be much higher. An extra year or two of car payments is no fun, especially if the car is worth less than the loan at the tail end.
4 If You Can Afford It, You Should Buy It Right Away
Even if the price fits your budget, step back and carefully consider this big purchase. There’s no rush. The deal that’s offered today will not be going away in a few days, if not longer. Unless it's a highly sought-after vehicle that is. It's not the seller who will be making the payments, how it fits into your budget is your business.
3 Car Guide Prices Are The End-All-Be-All
Nope. Car Guides simply calculate prices by examining the trends in your area while adding more for optional equipment and subtracting for high mileage. Deductions for past damages or existing problems cannot be included in a car guide. Research thoroughly, inspect the car lot before making any decisions and always take the car for a test drive, then you are sure to find the used car you've always wanted.
2 Warranties Are Scams
In reality, knowing what your warranty does and does not cover can help save you a lot of money in the long run. Also, just because you purchase a used car from a dealer it doesn't mean you have a warranty. Dealerships do not automatically give warranties of any kind. Definitely ask as many questions as necessary so you know exactly what is covered.
1 Dealer Financing Is More Expensive Than Outside Financing
Bringing your own financing means that the deal is the same as paying cash to the dealership and, as above, they may be less likely to discount the price. Some car dealerships have relationships with banks and can get discounted interest rates in order to help sell cars—these can be significantly lower than what a bank or credit union will offer. Do your research.