The Four Biggest Mistakes People Make When Buying A New Car
Edmunds: The Four Biggest Mistakes People Make When Buying A New Car
Josh Jacquot Updated Thu, August 29, 2024
Car buyers have more tools than ever to get the right vehicle at the right price. Still, mistakes can happen quite easily. Often, car buyers get blinded by emotion or rushed timing. Edmunds’ experts reveal the four biggest mistakes car shoppers often make and offer tips to avoid them.
Trading in a Vehicle with Negative Equity
Being upside down on a trade-in vehicle is occurring with increasing frequency. According to a recent Edmunds report, nearly one in four consumers who financed a new vehicle purchase with a trade-in during the second quarter of 2024 were underwater on their prior car loan.
“Upside down,” “underwater” and “negative equity” are interchangeable terms for a bad situation: All three mean that the car owner owes more on the loan than the vehicle is worth. Not only has the number of upside-down trade-ins grown since 2022, but so has the amount owed on those loans.
If, for example, you are $5,000 upside down on your current vehicle and decide to trade in this car and buy a new one, you will have to pay the price of the new car plus the $5,000 you owe on the current car. Your monthly payments will be much higher because you’re rolling over what you owe on your old car to the loan on your new one.
The best financial solution is to keep your current car longer and continue paying off its loan. Waiting might be challenging — you want that new car, we get it — but if you can at least ensure your trade-in value equals your loan amount, you won’t have to pay extra for the new vehicle purchase.
Rushing Into a Vehicle Purchase
There can be legitimate reasons to expedite a vehicle purchase. Perhaps your vehicle was totaled in an accident, or maybe it broke down and it’s not worth paying to fix. Either way, you’ll need a new car right away. But many shoppers don’t think about doing valuable research beforehand.
There will be new and unfamiliar automotive features and technologies worth knowing about, especially if it’s been a while since you bought a new car. If you take your time, you’ll also be able to get several quotes before you commit to a deal and have time for a vehicle inspection if it’s a used car.
Even if you need to replace your car quickly, it’s often better to find alternative transportation while you research a new vehicle purchase. Renting a car for a few days might cost a few hundred dollars, but that’s better than picking the wrong vehicle or getting suckered into a bad deal.
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