Driver's hands on steering wheel of a car

You should visit at least three dealerships before leaving with new keys in your hand.  (iStockPhoto)

Buying a car may be one of the biggest financial investments you will ever make, and the shopping process can take several months. If you really want to get the best price on your vehicle purchase and drive away with a reliable set of wheels, take some time to separate your emotions from the buying decision and set a realistic budget. Determining exactly what you want and setting your own price for your vehicle can help you narrow down the search and avoid some common car-buying mistakes.

Here are five new car-buying mistakes to steer away from:

1. Shopping at the wrong time of year. Dealerships often receive new inventory at the beginning of the year and start at ground zero with their sales goals at this time. This means the car dealer may be less likely to negotiate a better price or provide you with any type of purchasing incentives. If you are in the market for a new car, AutoTrader recommends shopping in the late summer or early fall. You may be able to get a great price on last year’s model as next year’s models start to roll in. It’s also a good idea to time your visit closer to the end of the day when the sales teams are trying to close deals before they head out for the night.

2. Only visiting one dealership. While many dealerships might lure you in with grand opening specials and test-drive incentives, it pays to shop around. Take the time to visit at least three dealerships before committing to a purchase. Shopping around will give you a chance to ask lots of questions, take pictures and compare several vehicles. Car and Driver recommends getting quotes from multiple dealers and letting the dealer know that you are shopping around, since he or she might be more likely to extend a better deal and negotiate.

3. Focusing only on the monthly payment. Auto dealers work hard to make your dream car seem very affordable and may break down the financials to a monthly payment. However, being able to afford a monthly payment doesn’t necessarily mean you should sign papers for those wheels. Car salespeople may readily suggest a five- or six-year loan term to make that monthly payment fit within your budget, but the value of your vehicle investment may drop dramatically over that time. And you could end up paying a significant amount in interest. Think about whether you may be in a position to trade in the vehicle in a few years and what is the depreciation value of your vehicle of choice before you agree to a loan.

4. Believing the deal is only good for the day of your visit. Another sales tactic to encourage you to make a decision on the spot is to entice you with an “unbeatable” offer that is only good for the day of your visit. Even if you have successfully negotiated a great price for that new car, insist on shopping around so you can take the time to make your final decision or make your own offer. High-pressure sales tactics can push you to make a purchasing decision you are not ready to make – and prevent you from exploring other options. The experts at Car and Driver recommend taking control by making an offer and suggesting that it is only good for that day. If the dealer is interested in making the sale, the salesperson will agree to your offer. If not, you are not under pressure to accept theirs. Make a note of the sales managers contact information if you want to return another day.

5. Neglecting to research your trade-in. If you plan on trading in your vehicle, don’t let the dealer do the work in pricing your vehicle. Take the time to learn as much as possible about the value of your vehicle from Kelley Blue Book, and print out the details for your visit. Even though many dealers will claim to do this for you, they may also play with pricing and financing terms based on their own valuation process. You will have more negotiating power when you know the true market value of your vehicle and are prepared to do business with a dealer that will honor the highest price for your trade.

Tags: personal finance, cars, driving, consumers, shopping, money

Sabah Karimi is a columnist for the blog Wise Bread. Her personal finance articles have appeared on Time Magazine, MSN Money, Business Insider, AOL Finance, Yahoo Finance and USA Today. Sabah is the author of Financial Fitness for Freelancers, which helps freelancers learn how to thrive on a irregular income.

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