Getting a car loan is undoubtedly a significant decision, but many first-time car buyers make the mistake of accepting anything the dealer tells them. That, right there, is what drives buyers through a cycle of bad choices.
So to prevent yourself from falling into the same trap, avoid these most common mistakes when getting a car loan:
Only Talking to One Lender
Talking to just one lender and deciding on the first loan offer may mean you are missing out on better opportunities. It’s always better to have multiple options before settling with one car loan so that you can weigh the advantages and choose the best offer. Compare the Annual Percentage Rate (APR) offered by different lenders.
Every lender has its own requirements, and so you may qualify for different APRs. Shopping around lenders prevents you from getting an expensive APR that the dealer might charge on top of the lender. Moreover, you’ll also budget more accurately, especially that you know the exact amount you can borrow.
Focusing on Monthly Payments
When getting a car loan, the two most important factors to consider are the downpayment and the monthly payments. Your main concern might be how a car loan will affect your finances, and so you want to know how much you’ll need to shell out every month. While that is reasonable, focusing on the monthly payment allows the dealer to include hidden extra products without your knowledge.
The dealer may be adding an extended warranty into your monthly payment without your realization. That means you’ll be paying the extra charge for something you didn’t want in the first place. Moreover, many dealerships offer add-ons to their prices, such as warranties and insurances. While some may be beneficial depending on your needs, you have to know what you’re paying for.
Not Comparing Prices
If you know which car you want, it might be tempting to go to the nearest dealership and just sign a contract immediately. However, you are making a big mistake if you don’t check out the car price in other parts of your region. Dealers always promote how cheaper than Manufacturer Suggested Retail Price (MSRP) the prices they offer. So that’s worth checking out.
Cars have window stickers showing their MSRP, along with a breakdown of the costs. That includes all optional equipment and their fees, along with the vehicle. So once you find a model you want, check out the window sticker to see the price variations. You may find that the same car is cheaper in a different colour.
Not Walking Away
If you’re still unsure about the car you want or the auto loan itself, learn to walk away from the deal. You shouldn’t be pressured into making a decision right away, and you should be deciding for yourself.
A salesperson might talk you into buying a car by telling you that it could be gone tomorrow if you don’t purchase it today. While that is true, manufacturers make thousands of one car models, and people trade in used cars all the time. In other words, you’ll never run out of the model you want. You can always find another dealership that goes along with your needs, which is better than being pressured into something you don’t really want.
All these mistakes point to one bad habit—trying to do things quickly. Getting a car loan can be stressful indeed, but trying to get the deal done faster will make you miss several essential things. So, take your time to get the best deal you can.
Get Approved Canada is your team of Canadian loan specialists helping clients get the best deals from coast to coast. Whether you’re getting a car loan, a personal loan or a home loan, we’re the ones to call! We can get you the lowest interest rates and the best payment options for your case. Get in touch with us and apply for your next loan!