For some people, financing a car is their only option to get their hands behind a new wheel. But in doing this, there are certain factors that a car buyer should be aware of in order to avoid mistakes that could make them end up with a car that doesn’t suit their needs and pay thousands of dollars more in the end due to higher interest rates.
Here are the huge mistakes that you must avoid when financing a car:
Biggest Mistakes When Financing a Car
Not thinking of the best car for your needs
Not just because it’s the most “in” car right now, you should get it. You should always think about how you will use the car and whether it will suit those needs.
Are you going to use that car on a daily basis? How many are there in the family? Or maybe that car is just going to be your spare car to be used on the weekends? All these are important questions that can help you identify the best type of car to consider financing.
Let’s say you’re single and you’ll be going to use the car daily to go to work. Does financing an SUV sound reasonable for that situation? Well, it could be not since you won’t need that much space, plus it might require a higher fuel budget.
Not doing enough research
Financing a car is a big financial responsibility that you have to live with for several years. With that in mind, it would be a dumb move if you don’t made adequate research before making the loan.
There are probably dozens of sources online about the car you are eyeing to finance. From the automakers’ websites to automotive-themed e-magazines, there are countless reading materials that you should check out to know whether a car will truly satisfy your needs.
You can also visit Q and A websites like Reddit and Quora to get honest perspectives of people who actually own the vehicle you are considering. This could also help you get to know issues that actual owners are encountering, which might be possible dealbreakers for you.
Not shopping around
Going to just one dealer and making a purchase immediately is a definite no-no when it comes to car hunting. Whether you are paying cash outright or financing a car, always consider visiting as many dealerships as you can. That’s why it is best if you can spend the whole day visiting different dealerships to really end up with the best car for you.
Visiting three to five dealerships can be enough, giving you a good number of options to choose from. Different dealerships, even those under the same brands, can sometimes offer the same car at different prices or include different freebies. Other dealers can even have a different color not available in another dealer you have visited.
Aside from that, also ask the salesperson for a test drive. This allows you to experience the car firsthand, and determine whether you feel comfortable getting behind the wheel. Going for a test drive also allows you to see the interior of the car closely, helping you to assess whether the space is enough for your needs.
Not thinking about the interest rate
When shopping around, sellers will try their very best to convince you to make a purchase. They can even make almost any vehicle fit your budget and make your monthly repayments lower, which you might think that just makes you have a longer loan term.
Lower monthly repayments may sound more financially manageable to you, but this causes you to pay more in the end. Depending on the additional percentage points on your loan, you can end up paying thousands of dollars more. That’s why, as much as possible, stick to a vehicle that you can afford and the shortest term possible to finance it.
You have to be smart and sensible when shopping around for a new car. Tracking the best possible deal fit for your budget is a challenging task and the assertiveness of car salesmen won’t be helpful either. That’s why before you start shopping around and looking for your next ride, make sure that you are aware of the common mistakes most car buyers commit, so you won’t end up seeing yourself in the same situation as them.