Getting a car is really exciting, but if you’re getting a loan for it, it’s important to take your time and make sure you’re doing it right. Here are six common mistakes people make when getting a car loan:
1. Not doing your research
When you’re looking for a car loan, it’s important to do your research and compare offers from multiple lenders. Not doing this could lead you to pay more in interest than you need to. The easiest way to shop around is by using an online car loan comparison website. You’ll be able to see all of your best loan options in one place, and compare interest rates and monthly repayments so you can ensure you’re getting the best deal.
2. Failing to consider the total cost of the loan
When you’re comparing car loans, it’s important to look at the total cost of the loan, not just the monthly payment. This includes things like interest rates, fees, and the length of the loan. Choosing a loan with a lower total cost will save you money in the long run. Also, keep in mind to factor in the ongoing car running costs in Australia for how much you should borrow.
3. Not being aware of your credit score
Your credit score is one of the most important factors lenders consider when approving a car loan. If your credit score is low, you may not be able to get a loan at all, or you may be offered a high-interest rate. It’s important to check your credit score before you apply for a car loan so you know what kind of offers you’re likely to receive. You can get a free copy of your credit score online.
4. Applying for too many loans at once
When you apply for a car loan, your credit score is temporarily lowered. If you apply for too many loans at once, this could lower your score even further and make it difficult to get approved for a loan. It’s important to space out your loan applications so you don’t hurt your credit score.
5. Not reading the terms and conditions
Before you sign any loan agreement, it’s important to read the terms and conditions carefully. This will help you understand the responsibilities of both the borrower and the lender. If you have any questions, be sure to ask your lender before signing anything.
6. Forgetting to shop around for the best rates
Just like when you’re shopping for a car, it’s important to shop around for the best rates when looking for a car loan. By comparing different offers from multiple lenders, you can ensure you’re getting the best deal possible.
When you’re looking for a car loan, it’s important to take your time and make sure you’re doing it right. By avoiding these six common mistakes, you’ll be on your way to getting the best car loan for your needs.