Shopping for a new car can be really stressful, time-consuming, and even confusing at times. Before going into the car buying process (at dealerships likeAuto Max), you will want to better understand how it works and what you can and cannot afford. This will help ensure that you get the best car loan for you that you know you can afford. In order to do this, you will want to also understand these four common car loan mistakes that you need to avoid:
- Negotiating on the Monthly Payments: One common mistakes that people sometimes make is trying to negotiate on the monthly payments instead of on the actual selling price of the car. Many people make this mistake because they want to know what they will end up paying monthly instead of altogether. It is important that you go into the car buying process knowing what total price is going to be the most affordable every month for you. For example, if a $15,000 car is going to cost you more than what you can afford per month even with the longest payment term, then you don't want to buy that car unless you can negotiate on the total cost, which will in turn lower the monthly payments.
- Not Knowing Your Credit: If you don't know your credit, then you probably don't know how much interest you are going to pay. This is going to make the car buying process more difficult. You may end up choosing a car that you think that you can afford, but once you attach the interest rate, the monthly cost can end up being more than you think. It is important that you know your credit so that you can determine the estimated interest rate, which will help you shop for cars that meet your budget needs.
- Including Negative Equity: Including negative equity on your car loan is a common mistake that people with a trade-in car make. If you want to trade your car in, it is important that you don't owe more on your old car than what it is worth. For example, if you still owe $5,000 on the car and the dealership only offers you $3,000 to trade it in, then the new car loan you receive is going to include that extra $2,000 that will have an interest rate attached to it.
- Financing Add-Ons: Another mistake that you should avoid is including add-ons on the car loan, such as warranties and more. Instead, you should consider purchasing these things separately since they will not include the interest rate. This can end up saving you a great deal of money per month.
By knowing some common mistakes to avoid, you can end up with the best possible car loan for you.