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Mistakes You can Do on Your Car Loan Application

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Focusing on the monthly payments

While it’s smart to be aware of your monthly budget, it is not wise to base your loan decision on monthly payments alone. There are many elements that comprise a good deal, the monthly payments just being one of them. Unfortunately, the dealer can manipulate things and make it appear low, although in reality you will be paying for more that you should have.

A good start is to bargain with the vehicle’s purchase price. The purchase price is one of the determining factors of how much your monthly payments will be, and dealing with it first can have that domino effect. Make sure you get a good deal on your purchase price and then the terms will follow.

Stretching out the payments

Basically, the longer the loan term is, the lower your monthly payments will be. However, this could mean you will have to pay for more interests in the long run. It could also mean that you would have to keep up with the loan for quite some time, which can affect your budget. Extending the loan term could also risk you owing more than the car’s worth, a situation also known as upside-down loans.

Not shopping around

There are many places wherein you can find auto loan offers, and even if the dealer gives you something which you think is already competitive, it pays to continue searching for a better offer. Who knows, a better deal might just be there when you knock on the next door. Check with your bank, credit unions, and car dealerships to see what each has to offer.

Not checking your credit

Oftentimes, buyers forget to check their detailed credit report and assume what’s in their profile. However, this can leave you in a weak position, and in most cases, this can lead the dealer to dictate your credit worthiness. You should never allow the dealer at any point to take control of the situation. This can be avoided if you have known what’s inside your credit report in the first place, because the dealer will be cautious once he sensed that you did your research.

Including add-ons on your loan

Add-ons are designed to make extra profit for the dealership, and in most cases, you don’t actually need them. Even for extras that you really need, such as extended warranty and insurance, you may be able to get them for cheaper costs outside of the loan. Make sure you question any fees included in your contract that you don’t understand.

Not reading the small print

This is probably the worst you can do. In every kind of deal, especially with money involved, always make it a point to read and understand what’s inside the contract, and preferably, have someone with you during the signing. There are cases when monthly payments or interest rates suddenly increase without you knowing why, so always clarify things in your contract to avoid surprises in the end.

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