How to Avoid Making These Car Loan Mistakes

  • Posted 26 Nov
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How to Avoid Making These Car Loan Mistakes

You’re pretty excited about the prospect of getting a new car. You’ve shopped around and know exactly what it is you’re looking for. Now you’re ready to buy, only you can’t seem to find the right car loan to meet your needs…

To ensure you don’t make any unintentional mistakes getting your car loan, follow our tips below to avoid making a mistake that could cost you thousands if you’re not dotting the ‘I’s’ and crossing the ‘T’s’.

 

Mistake #1: Not doing research

This one’s pretty obvious, but it is one that we see happen all the time. A person walks into a car dealership, finds the car they want and goes with the finance offered there… this can be a big mistake, because more often than not, the interest rates being offered here are much higher than other car loan options.

It pays to shop around and understand what will get you the best rate. Which is why it’s important that you know the following:

  • What’s your credit score? A good credit score allows you to shop around until you find the car loan that meets your needs. A low credit score means you’ll likely pay higher interest rates.
  • What are the car loan repayments likely to be? Can you afford these?
  • Are there any penalties for paying the car loan off earlier?

Once you’ve got this information, then you’re better equipped in finding the right car loan to meet your needs.

 

Mistake #2: Only focusing on monthly payments

While monthly repayment amounts are important for you to know, they shouldn’t be the only thing you focus on when getting a car loan.

You should really be focusing on the car’s overall purchase price. Never let the car dealer know how much you can repay monthly; they have the ability to lower the monthly repayments, but this generally results in a longer term loan and an increase in the interest you pay.

You want to negotiate for the best purchase price instead.

 

Mistake #3: Not making a deposit

While it’s not required, putting in an initial down payment of between 15-20% may prevent your car loan from being worth more than the actual car.

If you can afford to put some money down initially, you’ll reduce your monthly payments and offset the overall interest you pay.

 

Mistake #4: Adding add-ons from the dealer to your loan

No matter what the dealer promises you, don’t get any add-ons like extended warranties, fabric protection or other upgrades incorporated into your loan.

If you want any of these upgrades, simply get them after you’ve had the car for a few months and away from the dealership. You’ll pay more if you do it at the time of purchasing the car.

By following these pieces of advice, you’ll ensure that you get the best deal on your next car loan. If you want to take things one step further and get pre-approved, then chat to our team today at Australian Credit and Finance. We can assist you in finding the right car loan and also in buying your next car.

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