Ten Car Buying Myths and Misconceptions
Car buying myths range from the mundane (visit the dealership on the last day of the month) to the absurd (you'll get a better deal if it's raining outside). Most of these are relatively harmless, but some can wind up costing you both time and money.
At Cartelligent, we negotiate thousands of car deals every year—in this article, we use our expertise to clarify a number of the common misconceptions people have around car buying.
1. The internet is the best place to get a good deal on a new car.
Companies like TrueCar and Costco sell your information to dealerships that are willing to honor a pre-set price for a given vehicle. Assuming the dealership(s) that buys your lead even has the vehicle you want in stock, the only part of the deal that has been agreed to is the price of the vehicle. The lease or finance interest rate, trade-in price, and other products such as an extended warranty still need to be negotiated. (See Why hasn't the internet made car buying faster?)
Cartelligent recommends: Use the internet to educate yourself about what you should pay, but don't assume that an online "deal" is fully negotiated or will save you time and money on your new car.
2. Paying cash will get you a better price.
“Cash is king” may be true in many cases, not when buying a new car. (The exception to this is when manufacturers offer cash only incentives) The dealership is usually incentivized to finance the vehicle and may even pad the interest rate you pay in order to increase the amount they make on the transaction. This means that the dealership can make more money when you lease or finance, and is therefore less motivated to further discount the price on a cash deal.
Cartelligent recommends: Choose the financing option that makes the most sense for your budget, not the one you think will get you the best price on the vehicle.
3. It’s always better to bring in your own financing.
Bringing your own financing means that the deal is the same as paying cash to the dealership and, as above, they may be less likely to discount the price. Manufacturers often run highly discounted interest rates in order to help sell cars—these can be significantly lower than what a bank or credit union will offer.
Cartelligent recommends: Do your homework and know what the manufacturer is offering as well as what you can get on your own, then make the decision that works best.
4. A lower price or payment means you got a better deal.
Many car buyers will focus on a specific number—the price of the car, the monthly payment, interest rate, etc. This can make it easy to manipulate the surrounding numbers. You could wind up paying $3,000 below MSRP, but paying an extra $4,000 in inflated interest or making a payment that’s $50 lower, but has a term of 72 months instead of 60.
Cartelligent recommends: Do the math to look at the deal as a whole rather than focusing single-mindedly on a single component of it.
5. You need to buy now or the deal will go away.
Unless the car you’ve found is in limited supply or you’re able to take advantage of a true loss leader, the odds are good that you’ll be able to get a similar deal next week or even next month. It may take the form of a lower interest rate instead of a rebate, but the overall amount you’ll pay for the vehicle will be roughly the same.
Cartelligent recommends: Make sure you’re getting the car you want at an overall good deal. If you’re not, walk away and keep looking for what you really want.
6. You should wait till the end of the month to buy your new car.
If a particular dealership is a few cars away from a manufacturer's sales target and you buy something they have in stock (you may need to compromise on colors or options), they may be more likely to accept a lower offer than normal. However, if they have already hit their target or there is no target they are chasing that month, the deal you could get on the 31st will be no different they the one you would get on the 1st (and you still may need to compromise on colors or options).
Cartelligent recommends: Buy the vehicle when it makes sense for you, and get it configured the way you want it.
7. You should wait until the last minute to mention your trade-in.
Dealerships are so used to this trick, it has a special name, "parachuting the trade." It can add hours to the amount of time you spend at the dealership because the entire trade-in evalution won't start until after the rest of the deal is negotiated—without really changing the amount you'll receive for your trade-in. (See Should you sell or trade in your current vehicle?)
Cartelligent recommends: Do your research on both the value of the trade-in and the new car so you can make sure you're getting a fair price for both.
8. Special ordering your vehicle will cost you more money.
Special ordering can actually save you a considerable amount of money on many vehicles, especially European vehicles that can be configured in many different ways. (See Why special ordering a new car can be your best choice.)
Cartelligent recommends: If you don't mind waiting a few weeks for your new car to arrive, special ordering can be a great choice to get exactly what you want.
9. You have to get your car serviced at the dealership you bought it from.
A large percentage of cars that come in for service were not purchased at that dealership. Dealerships make a lot of money servicing cars and would like to service as many as possible. There's no reason why you shouldn't take your new car to the closest dealership regardless of where you purchased it.
Cartelligent recommends: Buy your new car where it makes sense to do so and get the car serviced at whatever dealership you wish.
10. You can out-negotiate or trick the dealership into giving you a better deal.
Car dealerships negotiate hundreds of transactions each month; you probably only buy a new car once every few years. Even if you consider yourself a good negotiator, the dealership will always have more information and be better able to control the transaction than you.
Cartelligent recommends: (This one is a little self-promotional, but hey, we believe in the value of our service.) We negotiate thousands of new car deals every year, we know the market, the available incentives and can use our buying volume to get you a below market price on any new car. (See How it works.)