Simply put, no one wants to spend more money than necessary on an auto loan. And the best way to avoid throwing your money away on a car purchase is to avoid making one of these all-too-common errors.
Car Loan Mistakes
There's a good chance that if you're going to make a mistake when purchasing a vehicle, it won't be out on the floor with the salesperson, but in the financing office. As stated on Bankrate.com, "A mistake on your car loan could cost you money and erase the savings negotiated on the price of the car." By keeping certain details in mind when negotiating with the finance manager, you'll avoid spending too much over the life of your loan.
- Don't focus on the monthly payment. In a perfect world, no finance manager would ever try to hide costs in a loan contract. However, the reality is that this does occur, and it happens more than it should because buyers don't always consider the whole cost of the car when negotiating.
If you start hammering out the deal by looking at the final price, it is much more difficult for a dealer or an F&I (finance and insurance) manager to conceal expensive add-ons or inflated fees. If, on the other hand, you're only looking at what you will be paying from month to month, these sneaky additions can easily go undetected.
- Don't rely on the dealer to tell you about the shape of your credit. Your interest rate will largely be based on your credit score, so it's wise to know what that number is before visiting a dealership. It would not be ideal if you were to be assigned a particular interest rate, only to discover later (when it is too late) that you could have asked for better terms. Be aware of where you stand with your credit before visiting a dealership, and make sure that you're given a fair interest rate that is based on your actual credit score.
- Don't finance add-ons that you can buy separately. According to a report from the National Automobile Dealers Association (NADA), nearly 37% of the average gross profits earned in new and used car sales departments were generated through aftermarket add-ons.
Some add-ons, like fabric protection, can be skipped altogether. And if you're interested in purchasing an extended warranty or GAP insurance, don't be afraid to shop outside of the dealership for the best deals on these products.
Or, if you do purchase add-ons from your dealer, be wary of rolling these into your loan. If you end up paying interest on these items, you could end up tacking on hundreds of dollars to the total cost of the vehicle.
The Best Financing, Made Easy
If you want to take all of the guesswork out of your car buying experience, Auto Credit Express can help. Even if you have moderately to severely damaged credit, we can connect you with a dealer in your area that can get you approved for an affordable auto loan with the best terms available for your situation.
Just fill out our fast and secure online application to get started today.