10 Auto Loan Mistakes To Avoid
While tracking down a great deal on a new car is important, arranging affordable and reasonable financing for it is, too. All too often, car buyers focus strictly on the price they car for a vehicle - and don't take enough time shopping for auto loan deals. Below, ten of the most common auto loan mistakes are listed; learn them and steer clear of them.
- Ignoring Your Credit Rating - Before shopping for auto financing in earnest, order copies of your credit report from all three of the major credit reporting bureaus. That way, you'll know what the decision will be based on - and can take care of any discrepancies, if necessary.
- Choosing A Car First - The smartest thing to do is to arrange financing prior to selecting a vehicle. Choosing the car first can make you more susceptible to less-than-stellar financing deals.
- Focusing On The Monthly Payment - Just because your monthly payment will be manageable, doesn't mean you're getting a good deal on your auto loan. Be sure to look at the big picture before making a decision.
- Following Your Emotions - "Going with your gut" is sometimes a smart move; however, doing so when shopping for a car loan is definitely an exception. Keep your emotions out of it to get the best financing possible.
- Not Calculating What You Can Afford - Prior to shopping for a car loan, sit down and figure out how much you can really afford to spend. You want a loan that will mesh with your existing budget - not one that will compromise it.
- Going By Interest Rate Alone - A low interest rate does not automatically signify a great auto loan deal. Take things like the down payment you'll need to make into consideration.
- Being Unable To Walk Away When Necessary - Remember that up until you sign on the dotted line, you can walk away at any time. If things aren't going the way you want them to - or if the financing you're being offered just doesn't seem reasonable - walk away.
- Not Selecting The Shortest Term Possible - While spreading out your loan over a longer period of time will result in lower monthly payments, you'll spend more in the end. Choose a loan with the shortest term you can manage to save as much as possible.
- Jumping At Dealer Financing - Sure, going with dealer financing is convenient - but it's not always the best deal. Keep your options open and don't get suckered into agreeing to dealer financing unless you're sure that it's right for you.
- Not Shopping Around - Finally, savvy auto loan shoppers always check high and low for financing. Stop in at your local credit union, bank and other financial institutes to see what they have to offer. Rates - and loans - can vary considerably from one place to another, so don't sell yourself short.