4 Car Financing Mistakes People Make

If you want to get a good deal on your next vehicle, you can’t just focus on getting a good price. If you aren’t paying cash, you have to worry about financing as well. The biggest mistakes are often made in front of the loan officer. Unfortunately, a lot of people are still completely clueless when it comes to calculating the real cost of a loan. In this article, we’re going to explore some of the most common mistakes people make when financing their vehicles.

 Car Financing Mistakes

Negotiating Based on Monthly Payments

This is one of the biggest traps inexperienced buyers fall into. By disclosing how much you can afford per month, you’re giving the salesman vital information that will allow them to hide things like add-ons or a higher interest rate. So, while it’s essential to have a clear number in mind that you can afford, keep that secret at all costs and negotiate each fee separately.

Letting the Dealer Dictate their Creditworthiness

Make sure that you know your credit score before you even step foot in the dealership. If you’re trying to find a car in Canada, all three major credit bureaus are obligated to give you a free copy of your credit report and score.

Most dealerships will offer different rates based on different credit scores, but if you don’t know what your credit score is, they can make up anything they want and overcharge you on interest rates.

You can even go the extra mile and apply for pre-approved financing. What that will do is give you a general view of how much you can borrow and what interest rate you can get. This works pretty much like a real-time credit check. You’ll now have more control of the negotiations and won’t be so easily swayed.

Not Negotiating your Interest Rate

For some reason, many people think that the interest rate on their loan is etched in stone. But, did you know that some car dealers will allow some salesmen to mark up their interest rates by as much as 2.5%? Depending on your down payment and credit score, some will be open to some haggling on the interest rate. So, don’t be afraid to try to shave a few points on that interest rate, most dealerships will be open to it. Just shaving one point off that interest rate could save you hundreds over the life of the loan.

Going Long Term

This is one of the worst mistakes you can make when contracting a loan on a vehicle.  While you may be tempted by the seemingly much lower monthly price, a five-year deal would offer over a three-year one, think about the total interest you would have to pay over the course of the loan. 24 more months could add thousands to your car’s total cost on interest rate alone.

Conclusion

If you manage to steer away from these mistakes, you’ll be able to avoid the predatory practices some dealerships practice.

Buying Considerations for Your Perfect Car

This is a sponsored post.

 

Gorgeous and high-tech car models make car shopping a fun and exciting task for buyers. You can easily find new or used vehicles that you’ll like from online dealers like cars.com. However you don’t just run off and pick the first car that catches your eye. Buying a new car requires a lot of thought especially if you want your investment to pay off. Is this the best car for my family? Am I spending too much or is it a good buy? The real question is what do you look for when buying your perfect car?

 

 

There are 3 basic considerations when buying a car and these are looks, performance, and value.

Looks

Looks pertain to the vehicles aesthetic features like interior, exterior, and cargo room. Aside from the vehicle’s overall look, you should also check if the design is able to meet your needs. For instance, if you need a family car make sure that the interiors are fitted with child safety features. The size and capacity of cargo room should also be able to service the needs of the family. Comfort is another consideration when scrutinizing the interiors of a potential buy. A good looking car is a great choice only if it makes your passengers feel safe and comfortable during the ride.

Performance

A gorgeous car isn’t any good if you don’t check under the hood. The car’s performance is a primary concern since it covers power train capability, handling and braking systems, including safety features. Safety is a top priority especially if you are going to have children on board. Check the safety features of the vehicle as well as the safety records of the model and manufacturer. The National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS) have crash test information on new vehicles that you can use as reference when buying vehicles.

Value

Since cars can be considered as an investment, it also pays to weigh its value before you buy. Value can be assessed based on retail price, reliability, fuel economy, depreciation. Lower priced cars don’t necessarily come cheaper that higher priced ones when you consider other factors. Cheaper cars that are unreliable might cost you a lot on repairs and maintenance compared to a more expensive counterpart. Checking the fuel economy features and type of fuel used for the vehicle can also save you money in the long run. Cars that are reliable and easy to maintain are often your best options.