If you’re thinking about taking out a car loan, there are a few things you should avoid doing in order to get the best deal possible. Here are 10 mistakes to avoid:
1. Not shopping around for the best interest rate
When it comes to auto loans, interest rates can vary greatly from lender to lender. So, it’s important to shop around and compare rates before you commit to a loan.
2. Not knowing your credit score
Your credit score is one of the most important factors in determining the interest rate you’ll receive on a loan. So, it’s important to check your score before you apply for a loan.
3. Applying for multiple loans
Every time you apply for a loan, your credit score takes a small hit. So, if you’re considering applying for multiple loans at once, it can negatively impact your credit score and make it harder to get the best rate.
4. Not factoring in hidden costs
When you take out a car loan, there are often additional fees and taxes that must be paid. Make sure to factor these in when budgeting for your loan so you don’t end up overspending.
5. Skipping the down payment
A down payment on a car loan can lower your monthly payments and help you build equity in your car faster. So, if you can afford it, make sure to include a down payment in your car loan.
6. Not considering a used car
A new car can be appealing, but it will also cost more in the long run. Consider buying a used or pre-owned car instead to keep your costs low and avoid being locked into a lengthy auto loan.
7. Overlooking private party sales
When buying a car, you usually have the option of going through a private party sale or working with a dealership. While it can be tempting to work with a dealership, buying directly from a private seller will often save you money and help you get the best deal on your loan.
8. Not comparing insurance options
When you take out an auto loan, your lender will require that you purchase auto insurance. Make sure to shop around and compare rates so that you can get the best deal possible.
9. Not making extra payments
If you choose to make extra payments on your car loan, it will help reduce the amount of interest you pay over time. So, consider setting up a payment schedule that allows you to pay a little extra each month.
10. Neglecting your credit score after paying off the loan
Once you’ve paid off your auto loan, it’s important to keep up with your credit history and keep your credit score as high as possible. This will help you get the best rates on future loans, so make sure to stay on top of your credit report.