This Is Americans’ Biggest Challenge When It Comes To Buying a Car
Some things in life are simple, others not so much. When it comes to money, especially making big purchases, it’s easy to get overwhelmed or stressed out by your options and the desire to make a smart decision — and avoid buyer’s remorse or other financial regrets later on.
Purchasing a vehicle is no different. Even though car prices have dropped a little recently, they’re still considered a big-ticket item. And this isn’t without reason. The average cost of a new car, according to Kelley Blue Book, is $47,401. Used cars go for $25,238 on average.
For some people, the price tag alone is enough to make them waver about whether or not they really need or even want a car. For others, the decision to purchase one is a bit more complicated.
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Negotiating Is the Biggest Challenge of All
GOBankingRates surveyed over 1,000 people to find out their biggest car-buying challenges. Over a third of respondents — a whopping 35% — said negotiating at the dealership was theirs.
Other common challenges include:
Initial research: Knowing which cars are worth purchasing and which should be avoided is tricky. With so many options to choose from, even those who’ve bought a vehicle before can still get overwhelmed. Nearly 17% of respondents said this was their biggest challenge.
Preapproval or rate quote: This is something you can do at the dealership or beforehand to find out what you might qualify for in terms of financing. It’s useful since it gives you a clearer picture of your credit and financial situation, too. But if you’ve never done it before, it can seem confusing. Around 15% of respondents said this was the main issue they face when buying a car.
Understanding the loan: Unless you have enough money to pay in cash, chances are you’re going to need to take out a loan. But for 14% of respondents, understanding the principal versus interest payments makes buying a vehicle challenging.
According to the survey, around 20% of Americans don’t find these aspects of buying a car all that confusing or complicated.
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Why Is Negotiating So Challenging?
Negotiating is important because it can get you the best deal possible and ensure you walk away without any regrets about your purchase decision. When it comes to many things, including buying a car, it’s also one of the hardest things to do. But what makes negotiating so tough?
“There are several reasons why negotiating at the dealership can be intimidating. For [some] people, it can be challenging because of a lack of knowledge when it comes to car pricing, financing options and dealer tactics,” said Erika Kullberg, founder of Erika.com, an attorney and personal finance expert.
“Consumers feel apprehensive during car negotiations because of a lack of education about the car business, [being] unfamiliar with different terms and the fear of walking into a perceived predatory environment,” added Gretchen Seidel, and automotive expert at Seidel & Co. “Lack of consumer education about the car business makes people uneasy about negotiation. It’s more than just the price; terms like APR, TTL or CPO can be intimidating if a consumer isn’t familiar with what they mean.”
The environment can also put people off from negotiating, even if they originally intended to do it.
“The dealership environment in itself can be very daunting,” said Kullberg. “With the pressure to buy a car, plus the fear of overpaying and making a bad decision, it can increase anxiety and stop people from aiming to negotiate.”
Unfortunately, this can all lead the prospective buyer to making a decision they regret or, in some cases, feeling like they’ve been swindled or came away with a worse deal than they could have — or shoulder have — gotten.
How Can You Overcome This Challenge?
The good news is that you can overcome any challenge with the right tools and knowledge. Here are some ways to do just that.
Get Informed
“Buying a car is often the second-largest purchase after buying a house, [so] being informed and prepared before entering into car negotiations…can help reduce stress levels,” said Seidel.
“Before setting foot in a showroom, research the make and model of the car you’re after, including the market value, typical selling price and available rebates or incentives,” added Kullberg.
Along with this, it helps to learn about some basic laws and regulations so that you know what to expect and how much room you have to negotiate.
“Specific laws protect buyers from predatory practices,” said Seidel. “Being informed about these laws and regulations can give consumers confidence in the negotiation process.”
Practice Ahead of Time
Sometimes, all you need is a little bit of practice and the willingness to say no if the offer isn’t right.
“Come prepared,” said Kullberg. “Open at a price lower than the sticker price and, if the dealer won’t agree, be prepared to walk away.”
Have a Clear Budget
Knowing what you can afford and refusing to go above that amount can help you negotiate, too.
“Set a budget,” said Kullberg. “How much can I afford? Where can I get a loan, or how much must I save? Set a budget so that you won’t be tempted when the salesperson asks: ‘But how much do you really want this car?'”
Consider Alternatives
You don’t have to buy a car from the dealership. You don’t even have to buy a new car. Knowing your options and being prepared to go with an alternative approach could be just what you need to negotiate the best deal possible.
And if you don’t feel comfortable negotiating at a dealership, consider buying from a private seller or online service where the pressure to buy is less.
Be Prepared To Negotiate in Other Areas of Life, Too
Negotiating is important in many aspects of life, not just buying a car. But you can expect similar challenges, which is why learning how to do it effectively is so important.
“Someone could be negotiating the price of a house, a salary or even something simple like a phone bill,” said Seidel. “People face the same challenges. Lack of knowledge about the negotiation process, coupled with the fear of being taken advantage of, exists across many areas of financial negotiations.”
Developing solid negotiation skills is key to navigating many of these life situations and getting the outcome you desire.
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This article originally appeared on GOBankingRates.com: This Is Americans’ Biggest Challenge When It Comes To Buying a Car
