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The 5 Worst Car-Buying Regrets

Buying a car can sometimes be an unpleasant and painful experience, especially if you go into the process wet behind the ears and completely unprepared. I'm more than a decade out of college now, and I've amassed a considerably keener sense of consumerism. In other words, I can spot a quality deal now and understand the ins and outs of the car-buying experience a lot better having just three months ago purchased the car of my dreams.

Source: Brian Teutsch, Flickr.

However, this knowledge didn't come without some painful first-hand lessons learned by yours truly. Back in college, I made practically every car-buying mistake that was possible in a single transaction. I had done very little online research while looking for a car, and instead of focusing on the car's final price I told the dealer what I wanted my monthly payment to be. Also, rather than look elsewhere for financing, I allowed the dealer to arrange my financing (double d'oh!). And of course, you know I bought just about every add-on that was available. In short, it wasn't my best moment as a consumer, and I'm blaming it on my naivety.

The interesting thing is that I'm not alone. There are countless Americans who regret their car-buying purchases each and every year – at least that would be the implication of a study conducted by Ipsos Public Affairs on behalf of used car retailer CarMax in 2009.

Ipsos' study polled 1,000 people online, 886 of whom had purchased a vehicle, and asked them what their greatest car-buying regret was. The results, needless to say, were a bit shocking to me. Let's have a look at each regret individually and point out a way or two you as the consumer can turn the tables on the dealer and become a super consumer.

No. 5: Didn't get the extended service plan (11%)
Just like any "insurance" product, extended warranties are an extra profit center for car dealerships because the vast majority of plans will cost more than actually servicing the car for the dealership. This doesn't mean that all extended warranties are bad news, because they do serve a purpose, but you have to understand your repair history, budget, and the pricing of this plan before you make your decision on whether or not purchasing an extended warranty makes sense.

Source: Bill McChesney, Flickr.

In certain instances, extended warranties can be a smart buy. If you absolutely loathe surprise car repairs, don't have an emergency fund set aside to handle the high cost of select repairs (like a pricy brake job or a faulty transmission), or simply want the peace of mind of having a warranty, then an extended service plan may make sense.

Then again, you have to ask yourself how long you plan on owning the vehicle you're purchasing. If it's not long past the manufacturer's warranty period, then purchasing an extended warranty might not be worthwhile. Similarly, you have to consider that a number of car brands these days extend powertrain warranties out for 10 years or 100,000 miles, and cars are manufactured to operate for a longer period of time on the road without major complications relatively to even two decades ago. Is an extended warranty really cost effective?

If you do decide to buy an extended warranty, consider shopping around for the best price. Little known fact: You don't have to buy the extended warranty from the dealership! Bargain the price down or shop around for the best price.

No. 4: Bought from an untrustworthy source (16%)
Here's one I really anticipated would be higher, because building trust between the dealer and the customer is the basis for return business and referrals, which is the cheapest, but most lucrative, form of advertising for any dealership.

Not to take away anything from the consumer, but being a car salesmen is difficult to begin with. Simply saying the phrase "car salesman" will send shivers down the backs of most people because it's associated with the perception of someone who's not always upfront with the consumer. The good news is there are a good number of honest car salespersons, but as we can see from this poll, there are also a considerable number of not-so-forthcoming salespeople as well.

The best way you as a consumer can avoid dealing with a questionable dealership is by asking friends and family about their car-buying experiences and reading reviews of various local dealerships online to see what other consumers had to say. Keep in mind that you're most likely going to read more negative reviews than positive reviews online, but it'll still give you a good jumping off point on which dealership might be your best bet to establish trust with.

No. 3: Bought the wrong car (16%)
Edging out buying from an untrustworthy source by a minuscule two votes were consumers who literally bought the wrong car for their needs. I know it sounds almost comical on the surface, but there are consumers whose eyes light up at the sight of a car without truly thinking through their actual needs.

I will fully admit that it's sometimes difficult to overcome the impulse buy urge, but the smartest thing you can do is think about what features are important to you and make your purchase based on those criteria. For instance, purchasing a long-bed truck while living in a major metropolitan area might be a poor choice given a crowded parking situation and poor gas mileage. The same can be true in reverse for people who need to haul a number of items or live in areas where winter driving may be difficult.

The point being that you need to understand what features are important to you and stick to only those features when purchasing your vehicle.

No. 2: Didn't do the research (22%)
This is another one that I was surprised only garnered 22% of the vote!

Perhaps one of the biggest no-no's of the car-buying experiencing is not spending enough time understanding the features of the car you're buying, or foregoing your right to shop around for the best possible lending terms when financing your car purchase.

Source: OSX, Wikimedia Commons.

As I noted last week, although dealerships will use your credit score to determine the lending rate on your loan, you're almost always going to find more attractive rates by shopping around with your bank or local credit unions.

Next to a house your car is among one of the largest purchases you'll ever make, and you certainly wouldn't buy a house sight unseen, so why would you consider doing that with your car purchase? Instead of rushing your car-buying experience, take your time to plan out what features you want, exactly how much you want to spend, and arrange for financing well in advance of your car-shopping experience.

No. 1: Paid too much for a new car that depreciated quickly (26%)
Here we are, at the worst car-buying regret: paying too much for a car that's going to depreciate quickly once it's off the lot.

We've nearly all been there and understand that purchasing a car isn't an investment in the traditional sense of the word. Instead, buying a car is an investment in getting comfortably from points A to B for the next however many years. Long story short, cars depreciate, so consumers need to use that knowledge to their advantage to negotiate the best deal possible with a car dealership, or to consider whether or not buying a used car would be in their best interests.

The easiest way to overcome this obstacle – not to sound like a broken record – is to do your homework and find out what the estimated value will be of your car a couple of years from now if you're planning on selling it. Hashing out the time frame you plan to keep your car will do wonders for helping determine what the smartest route will be (new versus used) for your car buying experience.

Don't regret your next car purchase -- save $1000's by following a few basic steps
You don't know it yet, but you probably spent $1000's more than you should have on your vehicle. In fact, the auto industry can be such a dangerous place for consumers that our top auto experts are determined to even the playing field. That's why they created a a brand-new free report: "The Car Buying Secrets You Must Know." The advice inside could save you thousands of dollars on your next car, so be sure to read this report while it lasts. Your conscience, and your wallet, will thank you. Click here now for instant access.

Read/Post Comments (13) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 08, 2014, at 5:01 PM, 1appledude wrote:

    The only extended warranty worth anything in my opinion is one backed by the car manufacturer itself - i.e. Ford, Chrysler, GM, etc - I have been burned by aftermarket extended warranties twice - the last time, I had one from Warranty Gold, one of the biggest outfits. Their underwriter took the money and ran, and left Warranty Gold policyholders without any coverage. This was a company with an A rating, who seemed to do their homework and had the reserves required by law -

  • Report this Comment On February 08, 2014, at 10:20 PM, alexjoss wrote:

    Bought 2006 Hummer H3, the 5 cylinder 4x4 model. Expensive buy drove well. I hated it but the wife insisted. We subsequently learned AFTER the warranty expired that this GM Hummer model had a known design defect that the engine will lose compression and cause a piston failure--with a $6000 cost to fix. This defest was known to GM since 2008. There are 139 complaints to the government about this piston defect issue. Our car was out of warranty but kept in immaculate condition. We asked GM to treat us they way they were treated when the government bailed them out and help us with the cost of fixing the piston. We complained to corporate GM and were rejected with no sympathy or care. Their customer service is the worst. Oh, they will get back to you fast but wil also find a reason not to help you just as fast. DO NOT BUY A 20006 HUMMER H3 EVER

  • Report this Comment On February 09, 2014, at 11:18 AM, bleep67 wrote:

    I just bought a new car, only the second one in my 65 years. But you know what?...I just got sick of driving machines that were not well-maintained or driven by morons.

  • Report this Comment On February 09, 2014, at 1:20 PM, misspiggy6555 wrote:

    never ever buy a car from Sound Ford in Renton Washington. They took advantage of me when I was sick wold not let me leave and tried to get me to sign papers with high interest rates, would not show me my credit score.. They are awful. If had I been healthy at the time I would,have called the police for unlawful imprisonment

  • Report this Comment On February 09, 2014, at 2:19 PM, BigGoose wrote:

    I only buy new. Car technology is too sophisticated now to trust buying used. You're effectively buying part used car/part used computer/part obsolete software. Add to that questionably maintained and any outstanding recalls you may not ever become aware of.

    If a problem or defect does crop up, you will not be able to repair yourself, and will likely be expensive.

    People buy used as often not too save money, but rather to own big with leather seats and a nice stereo.

  • Report this Comment On February 09, 2014, at 2:38 PM, crxvtec wrote:

    I usually buy an extended warranty on cars, tv, video game consoles etc. I must be unlucky cause I have used them quite often. The thing with them is to read the fine print. On my last car extended warranty there was a 100 dollar deductible when bringing the car in for warranty work. The car dealer guy was pretty cool and when I came in for work he told me that there were several things that needed to be repaired and told me if I brought the car in separately for each issue, it would be a 100 dollar deductible each time. If I brought the car in for several issues to get fixed at once, it would only be 100 dollars for all issues. Since there were 5 things needing to get fixed he saved me 400 bucks by telling me to get them all done at one time. Very rare to find an honest car dealer nowadays.

  • Report this Comment On February 09, 2014, at 5:18 PM, jay12345 wrote:

    If you can live with a used car, do it. The money you'll invest in a used car, ( repairs) will pay off in the end as long as their not major (...blown engine,tranny,head gasket) Think about it no car payment and you can drive it till the wheels fall off. Also cheaper taxes and insurance.

  • Report this Comment On February 09, 2014, at 5:24 PM, jay12345 wrote:

    I drive a 02 toyota with 150k on it. I do my oil religiously every 3k and check my fluids weekly.Runs like a champ.

  • Report this Comment On February 09, 2014, at 5:28 PM, jay12345 wrote:

    New car toys,gagets and gizmos don't impress me least not for the price.

  • Report this Comment On February 09, 2014, at 8:58 PM, StockgeniusII wrote:

    Better to buy an extended warranty from a big insurance carrier. Just make sure it carries a bumper to bumper warranty with no deductibles.

    As for buying an used car; buyer beware! All are crooks!

  • Report this Comment On March 15, 2014, at 3:04 PM, sidorg222 wrote:

    The best balance is to get a certified used car. It will be more expensive than a similar non-certified used car. But it'll be significantly less expensive than a new car, and you still get a good warranty on it.

    A side benefit is that you can get more car for your money, with more options, buying certified used.

  • Report this Comment On April 02, 2014, at 4:41 PM, dafusom wrote:

    anyone who considers anything to do with a car an investment, other than maybe collector's items, is delusional.

    i do love people that buy crap cars then spend a bunch of money on aftermarket stuff, and are left wondering why they can't get a dime of it back at resale. (although i always dark tint all my windows, it just looks better.)

    I would suggest:

    1) Buy a cheap used car that's easy to repair (like a Civic)

    2) Get minimum coverage insurance for cheap ($35/month from 4autoinsurancequote)

    3) Don't do anything stupid behind the wheel..

    This is the cheapest way to drive. Treat it as a way of getting from one place to another - and not an investment!

  • Report this Comment On May 20, 2014, at 1:04 PM, FountainCar wrote:

    Most of these can be avoided by going through an auto broker. Whether or not to get the extended service plan is a personal decision (though I am surprised "Got the extended service plan" didn't also make the list given how it can sometimes be useless or over-costed). We have trustworthy dealers that we work with for all types of cars to avoid any surprises on that front and we do research for people based on their needs and can advise on which cars depreciate quicker than others. As for impulse buying the wrong car? Not much we can do there I'm afraid.

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Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and in investment planning topics. You'll usually find him writing about Obamacare, marijuana, developing drugs, diagnostics, and medical devices, Social Security, taxes, or any number of other macroeconomic issues.

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