You’ve turned the other way when faced with too many beautiful bags so you can save up for a car. You’ve done your research – although it mostly involves what colour that works best for you and which model will be most space effective when trying to manoeuvre in parking lot.

The harsh truth is, many first time car buyers make some common mistakes when they make their purchase. Lucky for you, we’re here so you don’t make them.

  • Paying for your car entirely in cash

To the first time car buyer, the car dealership business may seem like a simple trading business where dealers buy and sell cars. The reality of it is that a car dealership is a far more sophisticated business than most would expect.

Car financing and loans make up a major component of a dealers profit, so there is little to no incentive for them to offer you a further discount if you choose to pay in cash. In fact, by paying for a car in cash, you’re cutting out a potential source of income for the dealer.

Also, if you’re buying an expensive car, like a BMW or Audi and pay it fully in cash, the size of the transaction may raise some red flags. Large cash transactions may trigger money laundering alerts. After all, making a purchase with a suitcase full of cash may leave some wondering if you’re breaking bad.

  • Not thinking twice about after-market products

After-market products are additional products or accessories that are used to enhance the performance or appearance of the car. These are sold to customers who have just bought a car. Most car dealers generate a large chunk of their commissions on these products, so there’s a lot of incentives to push these products.

Many first-time car buyers often get suckered or pressured into buying after-market products they don’t need and get a bad case of buyer’s remorse. After all, you don’t really need that spoiler or a different kind of hood.

  • Being too nice

We’re not telling you to swear at the car salesperson, but instead, we’re advising caution – don’t give the dealers the benefit of the doubt. If you see a dent, a scratch or more drastically a leak, don’t be afraid to point it out. At the end of the day, buying a car – especially a used one – boils down to your ability to negotiate against the salesperson. Pointing out defects lets the car salesperson know that you’re aware of the problems the car has and weakens his bargaining position.

Don’t be afraid or embarrassed to point out any defects you may perceive. Have doubts? Clarify it. It’s far better in the long term to have everything sorted out when you’re making your purchase, then trying to sort it out later. Remember, you’ll never get more service than when you’re making your purchase, so try to get everything sorted straight right from the get-go. Negotiate with all your observations

  • Neglecting to test drive, or failing to take a proper test drive

Whenever you buy a car, insist on taking it our for a test drive before making any purchase. A simple test drive can reveal a lot about the car you’re about to buy. Here are some factors you should keep in mind when test driving a car:

  • Handling/Steering – Does the weight of the steering wheel feel ok? Is the steering a bit too light or sensitive for you? In older cars, the steering wheel may no longer be properly aligned with the car wheels, i.e. when you straighten the steering wheel, your tires are not straight.
  • Brakes – Does the brake feel jammed or sluggish? Is there a strong screeching sound when you tap the breaks gently? This helps us determine if the brake pads are worn and need to be replaced or if there may be sand trapped in between the brake callipers. Remember, when it comes to a car’s brakes, you should be extremely cautious. From a safety perspective, there is probably no component that is more important.
  • Engine/Transmission – Does the engine make a loud whining noise at higher speeds? Do the gears make a sharp screeching sound even when you change gears appropriately? Is the acceleration abnormally sluggish?

Remember test driving a car is not just a part of a negotiation, more importantly, it also allows you to assess the roadworthiness and the safety of that vehicle. Remember, you can put a price on car but not on the value of a human life. Take your time to ensure that you feel the vehicle more than addresses the safety concerns you may have.

For more information on owning a car, explore these car articles.

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2 COMMENTS

  1. In regards to your first point I do have a slightly different opinion.

    Why reveal all your cards at the beginning of the price negotiation? There is no need to mention that you plan to pay in cash upfront. You can leave the car dealer in the perception that you would take up the maximum loan quota, negotiate the final price (keeping silent and walking away works wonders) and upon the final signature lower the loan quota to a level you feel comfortable with and he does not revoke his discount to you.

    This tactic worked quite well for me.

    Be aware that although the interest rate for car loans may appear low at a first glance, the interest for a 100 K SGD car purchase with a 60 K SGD loan can easily add upy to 5 to 6 K over the tenure of 5 years.

    • Hi Andreas, thank you for your insight. I actually consulted my friend and he agrees with you. I think it depends on the approach you take but hey, whatever gets you the best deal! 🙂

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