If you’re like me, you probably made your fair share of financial mistakes during your college years! Unfortunately, I racked up a lot of credit card debt and had to start a toilet-cleaning campaign to wipe it out. I also had to take an early IRA withdrawal to pay off the debt too! Not only did I goof up with credit cards, but I also made some dumb mistakes with a new vehicle purchase. While I was in college, I worked part time around my full load of classes. The job wasn’t a well paying career by any means, but it did pay decent money at the time and allowed for me to meet necessary expenses plus have a little left over for play. It wasn’t long before I started thinking about getting a new ride. It’s not that my current car was bad, but it was approaching the 100,000 mile mark and so I justified a new purchase. I decided to buy a new car on a part time salary! Mistake #1 – Being Discontent With The Current Vehicle My first mistake was discontentment . Instead of being satisfied with my current car and seeing it as a gift, I viewed it as a disease I couldn’t wait to get rid of. I didn’t appreciate what I had, especially considering there was nothing wrong with it. My car got me from point A to B, but I just had to have a brand new one. I wanted something nicer, faster, and sportier! And I wasn’t about to let anything stop me. Discontentment can trick you into doing some foolish things! Mistake #2 – Telling the Salesperson The Desired Payment After a few test drives I settled in on a car. But not just any car. This was black with shiny rims and a sunroof! That new car smell was like a drug, and I just had to get my fix! It was perfect! As I made myself comfortable in the saleswoman’s office I smugly uttered these 6 awful words: “I can afford $250 per month.” Her eyes lit up! She hardly had to work for this one. I did the very thing you should never do with any car salesperson – Never tell them what payment you can afford . You always negotiate the price, not the payment! She responded with a smile: “Oh, no problem – we can definitely get you to $250 per month!” Mistake #3 – Getting Suckered Into Creative Financing The saleswoman quickly said, “ With your trade in, we can get you into the car you’ve been dreaming of for $254 per month !” “ Really? Wow, that’s great, how can that be?”, I asked with the excitement of a child being told he could have cookies for dinner! “ Let me tell you about the GM Smart Buy ” she responded. She went on to desribe the program. The program was essentially a lease with a giant balloon payment at the end. The difference was that I could sell it, or trade it in at any time. It was a way for me to buy a car I couldn’t afford. After four years, when the balloon payment was due, I could refinance for another four years or trade it in on another new car. In reality, it was an eight-year loan! Not only did I not effectively negotiate my trade-in, I paid too much for a car and allowed myself to be suckered into a deferment plan with a giant balloon payment at the end! The Bottom Line Be careful when you’re looking at buying a car. Check your heart to see why you’re buying the car, be prepared and know what you can afford to pay, and don’t allow the temptation of something new, better, faster, or sportier to make your decision. What about you? What mistakes have you made when purchasing a new car? Leave a comment below. Related Articles: Are You Making These 4 Credit Card Mistakes? 6 Financial Mistakes and How to Recover Quickly 4 Tips to Avoid Stress This Tax Season 6 steps to reducing your credit card interest rates Money Mistake #3 – Not paying attention to interest rates 3 Mistakes to Avoid if You’re Self-Employed 3 Things to Overcome to Reach Your Financial Goals Jason writes at Redeeming Riches where he helps others Restore Their Money and Renew Their Minds . If you want to learn how to save money be sure to subscribe to to catch more of Jason’s posts! As a thank you for subscribing to our newsletter you can download our quick eBook ” 25 Ways To Save Money in 2011 ” for FREE! The articles on this site are for entertainment purposes and should not be taken as financial advice. Please contact a financial professional for specific advice regarding your situation. Also, many of the CPF articles help us pay the bills by using affiliate relationships with Amazon, Google, eBay and others. Find out more here .
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Buying a Car: 3 Mistakes to Avoid