Buying a car can be exciting for many. Every working person dreams of owning a vehicle. For some, vehicles can be a necessity, while others may be attracted to the luxury factor. But almost everyone wishes to own a car. Most of the time people go for auto financing through car loans from banks or mortgage companies. But getting a car loan is a tedious process.
Securing a car loan may seem easy, but there are lots of things that you need to be careful about throughout the process — from researching about various car loans to finally getting the loan. A mistake in any part of the process can cost you dearly. Here are the 4 most common mistakes that can be avoided while getting a car loan.
Overpaying for the vehicle: Do not overpay for the vehicle you are going to get through a dealership. When you like a car which is $15,000, the dealership may charge you $20,000 for that, but that doesn’t mean that you have to pay that amount. Generally, when a person goes to buy a car, they like it so much that they are ready to pay that extra money. It is important to research about the average trade-in-price, and talk to the financial institution about the vehicle that you are planning to buy. They will inform you everything about it.
Ignoring interest rate: Research about the interest rate. As aforementioned, people tend to ignore the interest rate. And this mistake can cost you a lot of money in the long run. Interest rates have a huge impact on the total amount you are paying for the car. Since cars aren’t that cheap, you need to get a good interest rate. If you have got a bad interest rate right now, you need to refinance it. For this, you can take help from the financial institution and see if they can help you drop the rate. Do not get a car loan at any higher rate of more than 10%. If it is more than 10% then it is not a good interest rate.
Financing for a long term: Financing a car for 7-8 years is not a good idea. When you are selecting such a long time to pay the loan you are just wasting your money in the interest. Don’t fall for the dealership who try to make you pay for an over-sized, over-priced loan stretched over a long time (74-82 months). If you have a bad interest rate coupled with that, chances are that your money is being wasted.
Buying a car at the wrong time of the year: Most people ignore this aspect while trying to finance their car. If you think that buying a car during tax refund is a good idea then you are wrong. Buying a car when everyone is buying a car is not a smart move. The best time for financing your car is at the end of the year. Car manufacturers typically launch their new cars during fall — this means that the cars are much cheaper compared to other periods. Also, the salesmen are eager to sell off the cars at the end of the year to hit the year-end goals. Therefore, the time of the year for buying a car does make a difference!