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Top 3 Auto Buying Mistakes (and How to Avoid Them)

Making a big purchase can be feel daunting, and buying a car is no exception. If you are thinking about purchasing a new (or used) vehicle, check out our list of the top 3 auto buying mistakes people make when buying a car and how you can avoid them!

 

Mistake #1: Not Doing Your Research

Maybe the biggest (and most common) mistake you can make is walking into a car dealership without putting much thought into it. It’s natural to think about what car you want to drive first, but if you can figure out what your ideal monthly payment and down payment would be, you can narrow your search down to vehicles that fit your budget. This Auto Loan Affordability Calculator that we offer through Banzai can help you determine what that budget is.

Once you know your budget, research the cars available in your price range to find one that suits your personal needs. If you have a large family, for example, you may need an SUV or minivan to drive everyone around. If you only need to commute to work or school by yourself, a smaller, more fuel-efficient vehicle may make more sense. Knowing the types of cars you’re interested in before you go helps the dealership know what you are looking for in a vehicle, and helps you stay focused instead of trying to narrow down their entire inventory.

If you plan on trading in your current vehicle for a new one, it is important to know the value before you make the trade. Knowing the value ahead of time gives you negotiating power when you start talking prices.

Remember, this is your purchase. You can always walk away from a deal if it isn’t right for you. There are a ton of great dealerships in our area that can help you find what you’re looking for. Check out our Auto Dealership Partners for a list of local dealerships that we trust.

 

Mistake #2: Obsessing Over Interest Rates

We know what you’re thinking: “Interest rates seem pretty important. Shouldn’t I worry about them?” Yes, you should, but there is something even more important that often goes overlooked: the term, or the length, of the loan. Extending the term will make the monthly payments lower, but it will increase the total amount you spend on the loan over time.

Making smaller payments over a longer period of time allows for more interest to accrue. This could lead to paying hundreds or even thousands more in interest. If you would like to see how this works for yourself, the Auto Loan Affordability Calculator we mentioned earlier can help. Move the “preferred loan term” slider back and forth to see how this affects the total interest amount and the total loan cost.

 

Mistake #3: Buying from a Private, Out-of-State Seller

This one doesn’t happen very frequently. It does, however, create additional challenges that many people may not realize. Whenever you buy a vehicle from a private seller, you want to make sure that there is not a lien on the vehicle.

A lien is a legal claim to an asset that allows the holder to acquire it if the debts are not paid. This means that if someone has not been making their auto payments for a while, the lender may have legal ownership of the vehicle they are trying to sell.

If you buy a car from a private party that is titled in Wisconsin, FCCU can look it up by the vehicle identification number (VIN) and see if there is a lien or a special notice (flood damage, salvage, etc.) on it.

If the car purchased has an out-of-state title, though, we cannot look anything up since we do not have access to other states’ DMV sites. Even if you know the seller extremely well, we recommend that you proceed with caution, or reconsider the deal altogether.

 

In Summary

There’s a lot to think about when you are looking to buy a new car. By doing your research ahead of time and knowing a bit about the auto loan process, you’ll be in good shape to find a vehicle that is right for you and your wallet. If you want to know more, our Auto Buying 101 video is a crash course on the whole auto buying process.


At any point in your auto buying journey, feel free to contact us to speak with one of our auto loan officers. Our auto loan team is extremely knowledgeable and happy to help you find the right vehicle.

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