The Top 5 Auto Financing Mistakes to Avoid

Not checking your credit score: Always check your credit score before applying for loans. Check your credit report because you should verify that it doesn’t have any mistakes or errors that hurt your score. By correcting your report and increasing your score, you will be offered better terms on the loan. Being aware of all your information will also help you catch any lies the dealer tells about your credit history in an attempt to rip you off.

Not keeping a budget: You must always figure out what you can afford before applying for a loan. Never stretch your budget for a car. Also, never tell the car salesman how much you can afford for a monthly payment. If you do, they’ll manipulate numbers to sell you a more expensive car with a longer-term loan.

Not checking for early payoff penalties: If you pay off your loan early, lenders can lose revenue. So they penalize you with penalties. Ensure that your loan doesn’t have these.

Not checking financing options: Always line up financing before you even step into a dealership. You can try and get preapproved. This will let you know the maximum amount you can borrow and if you can afford the monthly payments for that amount. You will also know which cars you can afford. Then, once you do go to a dealer with a preapproved loan offer, you can make them try and give you an even better offer. Also, you can negotiate on the total price of the car instead of the monthly payment.

Not checking the term: it’s very important to check the term or the length of the loan. Remember that the longer the loan term is, the more you pay in interest. The lender or dealer may offer you lower monthly payments for your car loan but increase the loan term while pretending that they’re doing you a favor. But, they’ll make more money if you agree to this. Never let your loan term exceed 60 months.