Mon, May 28, 2012, 2:13 PM EDT - U.S. Markets closed for Memorial Day

Discover Yahoo! With Your Friends

Explore news, videos, and much more based on what your friends are reading and watching. Publish your own activity and retain full control.

To get started, first

YOUR FRIENDS' ACTIVITY

    How Not to Buy a Car

    Fantasy Finance

    Buying your first car? Be sure to arm yourself with research before trotting off to the dealership.

    More from WSJ.com:

    How to Teach Teen Drivers

    2011 Chevrolet Cruze: Brand New and Almost Out of Date

    Trying to Unplug and Drive

    "Confusion is a car dealer's weapon," says Philip Reed, senior consumer-advice editor at Edmunds.com. "The more focused and in control of the numbers you are," the more likely you'll have a positive outcome.

    [Click here to check auto rates in your area.]

    Here are four common mistakes first-time car buyers make and how to avoid them.

    1. Going to the dealership without financing.

    One of the trickiest parts of buying a car is the financing, or loan you have to take out in order to pay for the vehicle.

    Popular Stories on Yahoo!:

    Hot Careers and What They Pay

    5 Innocent Ways to Drive Up Car Insurance

    8 Steps to Prevent ID Theft

    More from Yahoo! Finance

    "The 0% financing that's advertised is top-tier financing and might not be available for you," says Mr. Reed. "If you don't have a credit history or much of one, you might not have the credit score required for that level of car loan."

    That doesn't mean that you can't get a good rate. Just be prepared to shop around. Compare rates at websites like Bankrate.com.

    Find out what you qualify for before going to the dealership, so you have a backup in case you get turned down or can negotiate a better interest rate at the dealership.

    Say you get approval for up to $25,000 at 6% from a bank and receive a no-obligation check. You then go into the dealership and see if you can do better.

    "If they can beat your rate, you go with them," says Mr. Reed. "If they can't beat it, you know you won't be exploited."

    2. Not shopping online.

    Many dealerships have an Internet department that doesn't get paid on commission like the salespeople.

    The buyer benefits because the worker's job is to get volume out the door, which means you are "less likely to have games played with those guys," says Jeff Ostroff, founder of the website CarBuyingTips.com.

    Once you've found an acceptable quote and financing, ask if you can have the car delivered to your home. That way, you can skip going to the dealership in person, where the salesperson has the opportunity to rewrite your contract and sell you expensive extras, says Mr. Reed.

    To encourage the dealer to deliver the car, make your offer contingent on free delivery.

    3. Paying for extras.

    VIN etching, dealer prep, fabric protection—these are all unnecessary extras, each costing at least a couple hundred dollars, that a dealer might try to sell you on before you sign the contract.

    The one extra that could potentially be of some value, says Mr. Reed, is an extended warranty if you plan on owning the car for a long time. If you go the warranty route, he suggests calling ahead to negotiate the price before showing up to sign the contract. However, even the warranty isn't completely necessary. "I try to buy a very reliable car and just treat it well," says Mr. Reed.

    4. Buying a used car without research.

    You can't always tell what's wrong with a used car just by looking at it, so be sure to get a copy of the vehicle history report and to have your mechanic check it out.

    "Always double protect yourself before buying," says Mr. Ostroff. In addition to checking out the vehicle history on AutoCheck.com or Carfax.com, he suggests having your mechanic put the car up on a lift to check out everything underneath.

    Write to Anna Prior at anna.prior@wsj.com.

     

    18 comments

    • fullcompass  •  Durango, Colorado  •  7 days ago
      stay away from car leasing!!!!!!!!!!!!!!!!!!!!!!! i call it fake financng. dealer suggests there is less transaction risk, but really the trasaction risk ends up on you. anything that goes wrong with the car will be a deduction in value that will affect your "turn in" credit.

      the ultimate in "the BIG print giveth, and the small print taketh away"!!!
    • fullcompass  •  Durango, Colorado  •  7 days ago
      this may be a little extreme for some - but unless you are expecting a significant increase in cash flow..... you should only pay CASH for your car. If you don't have enough CASH, you CAN'T afford THAT car.

      You will save on a lot!!! Taxes. Insurance. Etc. Your pride may take a hit - but your wallet will be all the less stressed.
    • mel d  •  San Diego, California  •  19 days ago
      When you go to a dealership they look at you as a fish ready to be caught, scaled and fried. Salesmen are a-holes every one of them. How do you deal with this crap? you get in their face from the get go. no nuances no word games just business. You know the routine, go into a lot wearing a shirt that says something like Denver Broncos, ny Giants etc. you give the salesmen an opening line, wear a plain shirt, black is good its a power color. Ask him ok heres what im looking for and tell him nothing else will do, if he shows you something else start to walk, they always call you back "hey did i say something wrong? like he dont know? Ha. You then tell him your not listening to me and my concerns are you? your just interested in yourself not me, hey, this is all about me Get It? You make him small, you bring him down to where you want him. Ok the boss is listening [and they do] all of a sudden the mngr. walks in Hey hows it going? [like he dont know} hes been monitoring the conversation all along. Be congenial but say I like talking to one head not two, is your salesman not capable of doing this? get in their face. Listen its all about whats left in your wallet or purse when the transaction is done and you get what you want. The so called friendly salesperson you see on tv does not exist, but they are tricky at making you believe it. Good Luck and remember what i just said.
    • jim g  •  8 days ago
      the extended warrantee almost always entails that you get all services they require( and many unnecessary I might add) done at their dealership in order for the extended warrantee to be honored. you miss one service and they got you ! they dont have to honor the extended warrantee. so they can charge you anything they want for the services, and demand everything they want. DO NOT GET AN EXTENDED WARRANTEE !!! IT IS A TOTAL RIPOFF. Been there, done that !!!!!!
    • Chris  •  8 days ago
      how can I tell if a car is a lemon? what used car to buy? from whom? my car transmission broke down at 235k miles. i need a car.
    • jeff b  •  Little Rock, Arkansas  •  8 days ago
      Never talk price until you know what you want. Ask to see the invoice and then offer 8 % lower.
    • Greg  •  1 month 3 days ago
      Why not just move to a metro area and/or take public transportation?
      • fullcompass 7 days ago
        oh i want to buy a car, no i will move instead and take public transportation - you might as well change your diet to vegan, wear all used clothing, read the communist manifesto, and vote democrat or green regardless of the economic implications.
      • jimd 4 days ago
        why not quit being a fool? your life ahead of you appears very bleak. you cant fix stupid.
      • Greg 4 days ago
        Trouble with public transportation is the public is on it.
    • donald  •  2 months ago
      VIN etching???? EXTRA?
      • ESCAPE from NY 8 days ago
        Yep. Bought my car in NJ, and was told it was STATE LAW that every car HAD to have VIN etching before the car left the dealers lot. $200.00. What a crock.
    • David  •  Keene, New Hampshire  •  2 months ago
      I was an auto dealer for 30 years...now retired. NEVER buy a new car unless you have money to toss away. I buy current-2 year old cars with low miles. I just bought a 2012 Mini Cooper S, 2,400 miles, MSRP of $29,100 for $23,650. I also have a 2010 Jeep Wrangler I bought last year, loaded with leather and nav. Was $32K new....bought for $24,500. Shop, use the internet, look at private sales that are local.
      • steven c 19 days ago
        Wow David you got screwed. The car you bought is 2 years old? Only saved 5450 that off MSRP? Do you think the person paid MSRP? I have never Seen that done. Avarage price taking off MSRP around 2500.
      • David 19 days ago
        Ahh...check Mini Coopers...dealers rare discount them much. Then check KBB and NADA values. You CANNOT buy a new 2012 Mini Cooper S for $2500 off..!!! Ask a Mini Dealer my friend. And yes, people do pay MSRP every day.
    • JoAnne  •  3 months ago
      Buy a solid car that will make you happy. Once you pay it off - here's the moneymaker - keep driving it! While you are doing that, start saving for the next one so that you can either pay cash or have a hefty down payment when the time comes. I buy a car that I love once every decade. I've had my current car for six years and I still love it. Because I've cared for it only a real aficionado can tell how old it really is.
      • Greg 4 days ago
        Right on the money.
    • Bob  •  3 months ago
      1. Almost every other site, and personal experience says that the extended warranties are not worth the money. 2. Make a decision that you are not going to buy on the day you are looking. Then you can't be pressured. Of course the salesman will say that someone else is coming in later to see that car. Too bad. There are lots of cars out there. 3. If you get financing from the dealer, be aware that most of the time it is not finalized for a couple of days. So the dealer can call you back and say the loan company did not accept the loan. Then you are under pressure to sign at a higher rate.
    • Cuddles  •  3 months ago
      You are absolutely crazy to buy a new car as 30 minutes after purchase the value is under water by thousands and you end up paying off a dead horse. Better off to purchase a used car that is fairly new after the value has stablized. People are upset about homes being under water, but they have no problem with autos. People are stupid.
      • John 1 month 18 days ago
        "Crazy" might be a little strong........I ALWAYS buy new cars and take care of them. I have not bought tires, had brakes replaced (those two alone on my last car would have been $1800-2000) or any other expensive mechanical issues. The real trick is to buy cars with long established good (a relative term admittedly) resale value and then do NOT let the dealer make excessive profits on the trade in when it is sold at retail. That means knowing the retail and auction spreads on the trade in. Then negotiate the cash price - should be somewhere around -8-10% off the window, maybe more if rebates to the dealer are considered - these run 3% or so. Apply the trade in to that number and you get a decent deal.
        Sum and substance - pay me now or pay me later.
      • steven c 19 days ago
        I have been in the car business for 15 years. I have done everything from sales to finance and worked for sub-prime banks. Just keep in mind ifyou buy a used car and don't buy a warranty good luck. They are used cars they break. Don't go crying to the dealership if something breaks. You had a chance to buy a warranty you had a chance to take to your machanic.
      • Greg 4 days ago
        Just don't buy junk, which admittedly is easier said than done because there is alot of junk out there... do all of the maint in the owners guide no first owner ever does (ever change a cabin air filter or do a tune up?), flush/change every fluid after purchase (oil, tranny, coolant), replace air and fuel filter (fuel filter is under the car near the tank typically) and replace brakes/rotors/tires as necessary. Cars are actually alot of maint initially when you get them, but after that, you can replace things at your leisure. I'd budget about a grand after purchase for all of this maint plus any other surprises a competent mechanic uncovers. Once you get the car rolling, assuming you picked a solid one, you can easily go 50K-100K, just keep up on the fluid changes (auto tranny 25K-50K, coolant 3 years or 30K, oil 2-5K.) and watch for trouble with undercarriage parts such as CV joints, ball joints, lower control arms, struts, and shocks which can really mess the car and you up if they suddenly break due to disintegration or neglect. Remember a car isn't an investment, far from it... its a financial black hole but a necessity. Between it and fuel it can burn a big hole in your budget if you don't plan well. Since I know you're wondering what should I buy if I am budget conscious if I am able to afford all of this maintenance and still afford a car? I used to work in the business so I've seen all kinds of cars ranging from beat 89's to new 09's. Personally I am a value buyer, and a value car to me is a FWD GM with the 3800. Why? GM has put out their share of junk, but this drivetrain is fuel efficient (for a V6) reliable, torquey, plentiful, and cheap to own. The quality of the car around it may vary from year to year but this engine originally debuted in 1986 and was produced through the 2009 model year, in its run I believe it was in something like 14 different models from Chevy to Buick. Don't want a GM? Fords were always hit and miss used, some questionable (Probes, Contours, 80s/90's escorts) and some solid (Taurus in most years, Mustang in most years, Crown Vic from 92 on, F150). Personally I've had a Town Car (aka Crown Vic/Marquis) and a Taurus, the Townie gave me hell (it was a 90 in 2009) but the 2000 Taurus did 151K when I sold it beat and running in 06 for $1500. Chrysler should simply be avoided as they have a track record for junk since the early 90s, try back when the newer 09s and 10s are in beater territory, maybe they turned it around. The Japanese for a long time built a good car, this started to slip in the mid 00s compared to the legendary 80s models but I'm sure they are still halfway decent. Trouble with Jap scrap is they are very expensive used (figure 20%+ compared to an equivalent domestic) and are high theft targets (your mom could steal a 2000 civic its that easy). I personally think when buying sub $10K used the ones your going to find will have 80-100K, be ten years old and fairly beat. They may still be great runners but all of the above maint will need to be done because believe me people who buy these new buy them because they want an appliance like car with a fat warranty so they never have to touch it and just drop it at the dealer. I would avoid Korean used, sure everywhere I go I hear about how a $50 Kia is a great car but you have to look at the track record of the brand. How many 2000 Kias are around? How many 2000 Hyundais? How have they held up? Maybe in five or ten years they will be a great used buy but I would avoid them now. European? Sounds like you have a death wish my friend, or your just the kind of sick enthusiast like me who loves the look of a Jag, or dreams of cruising in a 740. German makes (including Volkswagen) are more of a lifestyle than a just a car, pick your poison and learn the brand's quirks. Chances are you'll have a sweet but expensive ride which may be in and out of the shop.
    • Kenneth  •  San Francisco, California  •  3 months ago
      To Ugly Kid why dont you grow up and quit giving bad advice. Yes the cars made 30 was not the best that was made. But now they are Not the same as before. We have a 08 Fusion bought new NO Problems at all. If I had a chance to do it again, I would do it again in a heart beat.
    • Big  •  Malvern, Pennsylvania  •  4 months ago
      How can you avoid the dealer prep fee? Every dealer that I've been to in NY, regardless of brand, wont skip on the dealer prep fee.
    • Susie-Q  •  4 months ago
      AND beware of the 2012 Chevy Sonic. . .they are being recalled for MISSING ~brake pads~. Seriously. You can't make this stuff up!
    • UGLY KID  •  Toms River, New Jersey  •  4 months ago
      #1...IF A UAW EMPLOYEE MADE MONEY OFF THE CAR....WALK AWAY......RUN...RUN FOR YOUR LIFE.......
    • Ender  •  4 months ago
      Join a Credit Union for a year before you buy a new car.
    • nick  •  Libertyville, Illinois  •  4 months ago
      Once you've found an acceptable quote and financing, ask if you can have the car delivered to your home. That way, you can skip going to the dealership in person, where the salesperson has the opportunity to rewrite your contract and sell you expensive extras, says Mr. Reed.

      I have worked as a car salesman for over 15 years. Please check your facts as to telling consumers to have the vehicle delivered to there house. First of all the Government has laws in place that do not allow this. If a vehicle is delivered to the house it falls under a Salesmans law enacted in the 40's to protect soldiers wives from door to door salespeople. Unfortunatly car dealers cannot deliver cars to your house because it gives a 3 day right of recision and the banks charge fees for reversal of paperwork. All these fees will be passed on to future customers as have all the fees the online search providers are charging dealers for the "right" to negotiate. Just keep bringing all these 3rd partys in to the industry and watch the factories switch to "ONE" price philosophies to curb the third parties that are driving up the costs of buying a new car. True car charges 299-399 to the dealer for each car they sell under that program..Who do you think pays this?? Well if you dont know its the end user of the car IE: the consumer.

    RATES

    Stay in touch with Yahoo! Finance

      YAHOO! FINANCE ON TWITTER

    Subscribe

    [X]

    How to subscribe

    Roll over each section to subscribe using Add to My Yahoo! or RSS Feed feeds.

    Yahoo! News offers dozens of RSS feeds you can read in My Yahoo! or using third-party RSS news reader software. Click here to find out more about RSS and how you can use it with Yahoo! News.