Sometimes, certain decisions made while paying for a car can have major implications for your finances. Hence, it is important to make informed decisions, as you could end up spending a lot more than required. In fact, there are some mistakes you may unknowingly make even before walking into the car dealership.
A large number of people feel relieved and get careless due to the belief that negotiating the price of the car is the only hard part of the entire process. However, the truth is that it is hardly half of the entire process. While many believe that the best way to learn from mistakes is to make them, doing so, while taking a car loan or any other financial decisions, is not ideal.
Here are some mistakes to avoid when buying a car:
- Forgetting to compare interest rates while shopping
One of the most famous phrases in finance is that you should never put all your eggs in one basket. This can indeed be applied as one of the best auto financing tips. You should always compare different financing options to make sure you have the best deal possible. For example, as trivial as it may seem, even a single point of interest on a USD 20,000 car loan can cost you heavily.Every lender operates on his set of guidelines for underwriting. While one lender might not approve your loan application, another may provide you a better rate. Comparing these options gives you a wide range of options to choose from. - Starting to talk of monthly payments
The worst possible thing you could do is walk into a car dealership and say that you wish to buy a car on a budget of USD 400 per month. Any smart salesman would use this as a golden ticket to either show you a low-quality used car or offer you a loan at lower interest but a longer term. Never talk about how much you can afford per month. Instead, ask the staff to show you what they have within a certain budget.
- Telling the dealer about your pre-approval
This is one of the biggest mistakes made. Remember that telling the salesman that you already have pre-approval on a car loan will hamper your position for negotiations with the dealer. Even if they have another offer, they will not mention it as they may earn more from your current pre-approval.One of the major auto financing tips that experts give out is: always withhold any information about loan approvals. This allows you to look at other financing options from the dealer that maybe even better than the one you have right now. - Purchasing accessories
Most auto dealers will try to get you to pay for unnecessary accessories. Remember that you may get things like rustproofing done for cheaper outside. Do not pay several hundred dollars for such things. Simply uncheck them from your purchase order.
