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Top seven car-buying mistakes

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Buying a car is exciting, and itís easy to get swept up by your emotions. But as with any major expense, itís worth taking the time to weigh your decisions carefully so you donít end up with a bum deal. Here are the most common mistakes people make when buying new wheels:

1. Getting hung up on one model.
Sometimes people fall in love with a particular car and fail to look at comparable models that may offer better value. This is an especially big problem if the car youíre mooning over is impractical for your needs -- a four-wheel-drive Jeep is great fun, but itís probably not the best choice if youíre running errands in the suburbs. In addition, getting overly enthusiastic about one model leaves you vulnerable to salespeople who may try to take advantage of you.

2. Not doing your research.
Even if youíve narrowed your choice to a couple of different models, youíve still got work to do before you set foot on a dealerís lot. Check each vehicleís safety record. Read reviews from journalists and current owners. Research the available options and decide which ones you really need.

3. Buying too much car.
Many car buyers, lured by low monthly payments, end up purchasing a vehicle they canít comfortably afford. To avoid this situation, determine exactly how much you can you can spend before you hit the lots. Many experts suggest spending no more than 15 percent of your after-tax income on car payments. And remember that cars depreciate quickly, so while car loans can carry terms of up to five years, youíll get better value with a three-year loan.

4. Not considering all your financing options.
Dealers offer incentives that sound tempting, including the promise of zero-percent financing. But because these offers usually entail paying a higher purchase price, you can often get a better deal from an outside lender. If you have good credit, youíll be able to consider a range of options, such as personal loans or home equity loans. Itís best to go to the dealer armed with a pre-approved loan. If the dealer thinks they can beat your loan rate, make sure the term theyíre offering is the same and there are no hidden charges.

5. Not taking a test-drive.
You wouldnít buy a suit or a dress without trying it on. Yet many people buy a car after only taking a quick spin around the block - or without test-driving at all. Make a list of characteristics you want to check and questions you want to ask and then take the time to do a thorough test-drive. It should take at least half an hour.

6. Negotiating from the sticker price.
Smart car buyers ignore the manufacturerís suggested retail price (also called the sticker price) of a new car. Instead, they start their comparison-shopping by looking at the invoice price -- that is, the amount the dealer paid to the manufacturer. You should negotiate your price upward from this, not downward from the sticker price.

7. Buying unnecessary extras.
Dealers have all kinds of tricks designed to get you to pay more. You canít avoid sales tax, destination charges and licensing, but you may be able to dispute advertising fees or other administrative charges. They may also try to slip in treatments such as rust-proofing, stain-proofing the seats, or etching the vehicleís ID number into the window to deter thieves. Most are unnecessary, and if you really want them, you can often arrange to have them done cheaper on your own.

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