Not Doing Enough Research
It is an unfortunate fact that many people head to car dealerships without spending any amount of time researching the makes and models that they are interested in. Well before you even think about applying for a loan or signing a pink slip, you should first research the pros and cons of each type of car you are considering.
You could find that a vehicle that you are interested in is riddled with expensive mechanical issues that you want to avoid at all costs. Dealerships aren’t likely to tell you these sorts of negative facts when they’re trying to make a sell so you need to do your research first.
Getting a Loan from the Dealership
While it might be tempting to get a loan directly through the dealership, those companies don’t always have the best rates. The dealer is going to do everything in their power to get you to sign paperwork on the first day, and they could offer you a seemingly good loan that will end up being very expensive in the long run.
That is why you should shop around for auto loans before you head to the dealership. Know how much you can get approved for and what the interest rates will look like, and compare the offers from multiple lenders before you accept any loan.
Not Accounting for Ongoing Costs
Your monthly payments will only be one of the many expenses that you are going to run into as a car owner. In addition to the loan payment, you will also need to consider maintenance costs, potential repairs, and the fuel efficiency of the vehicle.
Products like tires must be regularly purchased as well, and the replacement parts might be prohibitively expensive.
Trying to Lower the Monthly Payments
Getting your monthly payments as low as possible probably seems like a great idea, but you need to consider how much the loan is going to cost you over time. With low monthly payments, the life of the loan is going to be much longer, and that means the interest will build up.
Your lender should be able to tell you exactly how much the car is going to cost once you are done paying off the loan.
The final step in this process is taking the vehicle out for a test drive. Even if the car or truck is brand new, you should still spend a little bit of time behind the wheel to make sure that you love driving it. Once you’ve found the right car, the right loan, and the right price, you ready to sign.
