Biggest Car Finance Mistakes That Borrowers Make
The thought of getting into that new vehicle that you just test drove is itching at you. This can lead to overzealous decision making that can affect your financial future if you are not careful. Be sure to read on below to discover the top car finance mistakes that most people make so that you can avoid them when you get to the dealership.
1.) Negotiating Payments Vs. The Purchase Price
You need to think in terms of the long-run when it comes to car finance. You should be trying to get an overall low price as opposed to getting a lower monthly price that ends up totaling up to more money in the future. When you go to the dealership, focus on negotiating the cost of the vehicle and don’t tell the salesman the monthly payment amount you can afford. Once they know what monthly payment amount you are comfortable with, they will likely try to talk you into add-ons and extending the term of the loan.
2.) Not Knowing Your Credit Score
Car Finance Stratton options are all about your credit score. Your credit score is a reflection of your financial management abilities. Those with higher scores tend to get better rates because they are at a much lower risk of default on a loan than those individuals with a poor credit score.
You should look up your credit score before ever setting foot inside of the dealership. Know where you range on the credit score index. Attempt to get some preliminary quotes from outside lenders so you can get an idea of the interest rate they will offer you. When you go to the dealership and they start throwing out car finance rates, you can check to ensure they align with your previous car finance research.
3.) Opting For Zero Introductory APR Over The Cash Rebate Offer
There’s just something about hearing zero interest that makes us all want to say yes. The problem is that this lower introductory period is not always the best decision in financial terms. The only way you are going to know whether the zero introductory APR car finance option or the cash rebate option is right for you is to run the numbers.
When a dealership throws out these options don’t be afraid to pull out your calculator and do the math. You don’t need to be rushed to sign anything. You should be calculating the amount of interest you would owe during the introductory period had that been at your regular interest rate for the car finance loan.
Total up the would-be interest payments for the introductory period and compare that number to the rebate amount. If they are more than the rebate, stick with the zero APR option. If they are less than the rebate, go with the rebate option as you will save more money over the life of the entire loan.
These are just a few of the mistakes that borrowers tend to make with purchasing a new vehicle. You should be careful to avoid all of these mistakes to ensure you always get the best rate possible.