6 Car Loan Mistakes That Can Cost You More Money

Getting a car loan in Canada

Bought a great car but didn’t read the fine print before signing? MyAutoLenders examines the biggest car loan mistakes consumers make and end up paying more money. 

The Biggest Car Loan Mistakes

As a consumer, chances are you have made bad financial decisions in the past. We have all made purchases that cost us more money due to hidden fees, deceitful marketing, and poor negotiation skills. If your next big expense is a car purchase, you’ll need to do more than striking what you think is a great deal by negotiating with a salesman on the price tag to save money. 

Just a single mistake on your car loan could cost you money and take away any savings you thought you had secured while negotiating. 

Here are 6 car loan mistakes that can cost you more money:

1. NOT Doing Your Research

We cannot overstate the importance of doing your homework before buying a car. Consider everything you need to know from how much you’re going to use it, how many people will accompany you, and how much you’re going to drive it daily. Learn about fuel economy, features, and reliability to compare with other makes and models. 

You can find tons of information and videos on review sites and other credible sources such as YouTube or Facebook. 

2. NOT Considering the Overall Purchase Price

If you have decided to take a car loan to assist in the purchase, don’t just look at how much you’re paying monthly. You might not account for the longer loan term, which increases your overall price with interest. We understand that you’re probably trying to keep your monthly payments affordable, but this doesn’t mean you should negotiate the purchase price or additional fees. 

3. Letting Your Dealer Define Your Creditworthiness

Your credit score (300 to 850) defines your creditworthiness. It is a rating based on your credit report with reporting agencies. The higher your score, the better interest rate you’ll get on your car loan. Letting your dealer define your creditworthiness is one of the biggest car loan mistakes you can make. 

By cutting just one percent of the interest from a $20,000 car loan over 60 months would save hundreds of dollars in interest paid throughout your loan.

4. NOT Calculating What You Can Afford

Assess your current and projected financial situations before approaching a dealership. Calculate your existing debt, and learn how it will affect your car purchase. When calculating your monthly payments, don’t forget to add registration, duty, and all other costs to purchase and maintain it. 

5. NOT Putting Down a Down Payment

If your financial position allows it, consider making the highest down payment possible. A down payment reduces your monthly payment, as well as the over interest you pay until the tenure of your car loan.

6. NOT Getting a Pre-Approved Loan

Getting a pre-approved car loan will inform you about what you can and cannot afford. By doing this, you’ll know what you can afford and prevent becoming victim to clever sales tactics that pounce on uninformed customers. 

Final Takeaway

Financing your car purchase is not a complicated process if you know what you’re doing. Most first-time buyers make these car loan mistakes, and as a consequence, pay a higher price for their vehicles. If you want to learn more about car financing and avoid making the same mistakes, please visit MyAutoLenders today.

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