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3 Mistakes New Car Buyers Make

September 27, 2012 - by Jason Lancaster

This week, I'd like to introduce you to Jason Lancaster. He spent nearly 10 years working at dealerships as a salesperson, finance manager, and sales manager. He agreed to share tips with my readers, and the following is his first article. Hope you enjoy it. - Gregg

During nearly 10 years of dealership sales experience, I've seen new car buyers make a lot of mistakes. While I could write for days about all the mistakes I've seen them make, here are three common ones that many people (even the smartest car buyers) make.

Mistake #1 - Failing to test drive a car you intend to buy before beginning negotiations.

In my opinion, there's simply no excuse for buying a car without a test drive (special orders excepted). First, you could waste a lot of time if you negotiate a deal on a car you don't like. Second, a good, thorough test drive and walk around can tell you:

Finally, if for no other reason, a test drive and thorough walk-around are important steps in the negotiation. Many dealership salespeople and managers have been trained to believe that a test drive is an essential step in the buying process, so essential that they won't seriously negotiate with you until you drive the car.

Mistake #2 - Getting so set on a specific feature or preference that you miss a good opportunity.

Many new car buyers use online tools to "spec out" the exact car they want, and then they use the Internet to hunt down that specific vehicle. If/when that specific vehicle is not available – or when the deal on that particular vehicle doesn't come together – these buyers are inclined to either a) search online for another car with the correct options or b) start all over again and spec out a different vehicle.

While I absolutely encourage all new car buyers to get the car they want and not to settle, I also encourage anyone buying a car to be a little flexible on things like color and options.

Many dealers have new cars that are "old", meaning that these new cars have been sitting on the lot for months. These "old stockers" (that's what people in the car business call them) are considered distressed merchandise, and sales managers will work harder to sell an old stocker than something fresh.

In terms of process, my suggestion is to tell the new car manager about the features and specs you want as well as the rough price range you want to be in. Then, mention that you would consider an "old stocker" with some differences if the price is right. A good sales manager will give you options, telling you about a couple of vehicles that will meet your requirements and/or give you a very good deal.

Mistake #3 - Negotiating for a specific set of figures rather than focusing on the big picture

The fact that vehicle pricing information is readily available online has fundamentally changed the car business – consumers are no longer in the dark about the true cost of a new car or the value of their trade-in.

However, this new level of transparency has led to tunnel vision for many new car buyers: Rather than focusing on the overall deal, many consumers are inclined to focus on achieving a specific set of numbers. For example:

A new car buyer (let's call her "Sue") has used the Internet to figure out what her trade-in is worth as well as the best price for a specific new car. After setting a target price for the new car and a goal for trade-in value, Sue starts visiting dealerships.

If Sue is focused on the big picture, i.e. the total cost of her purchase, it's likely that Sue will buy from dealer #3, as they've offered her a good overall deal.

On the other hand, if Sue is focused on getting a specific discount on the new car or a specific value for the trade, she might miss the fact that dealer #3 is giving her a very good value and end up "passing a deal looking for one," something we used to say all too often in the car business.

Incidentally, this also applies when dealers can offer you different incentives like special financing or free maintenance. If the Toyota dealer has given you a better trade value while the Honda dealer has a better interest rate, bust out your calculator and figure out which one has the lowest overall cost. A new car deal has a lot of moving parts – don't focus so much on the specifics that you lose track of the big picture.

Author Jason Lancaster has nearly 10 years of dealership sales experience as a salesperson, finance manager, and sales manager. Jason has retired from the car business and now serves as the editor of among other things.

My Recommendation for Car Shoppers

TrueCar No-Haggle and Edmunds Price Promise are the quickest way to see the lowest car prices in your area. These sites show you no-haggle prices from dealers closest to you - and the deals are usually really good. This should be the first step you take when negotiating your car price. Follow this up with my checklist to make sure you squeeze out every last bit of savings.

California Residents - Important:

There is a new online car buying service called Roadster, available only to California residents, which I highly recommend you try - especially if you hate the stress of haggling with a car salesman. They provide an expert concierge who negotiates the price of the car and delivers it to your home with zero hassle - you never have to interact with a dealership. Here is my in-depth review of Roadster and why I recommend it.

- Gregg Fidan

Gregg Fidan

About: Gregg Fidan

Gregg Fidan + is the founder of RealCarTips. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate the best car deals. He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals.

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