Five of the most common mistakes to avoid when searching for car finance. 

By Jill Gourlay June 26, 2024

What to avoid when searching for car finance

Are you searching for car financing? It is essential to avoid making some common mistakes that could have negative financial consequences in the future. However, you can stay away from these pitfalls by gaining the right knowledge. Let’s explore some of the most frequent mistakes people make while financing a car, so that you can avoid them. 

 Here are five of the most frequent errors people make: 

Not checking your credit score before applying

Reviewing your credit reports for accuracy and potential errors before applying for financing is essential. A low credit score may result in higher interest rates and a more expensive loan. 

By accessing your credit report beforehand, you’ll clearly understand the deals you qualify for. If there are any mistakes, you can address them prior to applying for financing, increasing your chances of securing the best offers. 

Not shopping around for the best deal

It’s crucial to be cautious when considering financing options. A common error people make is accepting the first financing offer they receive without doing any research. This approach could lead to unfavourable terms such as higher interest rates, additional fees, and a more costly loan overall. Therefore, it’s highly recommended to take the time to shop around and compare various financing options to find the one that best suits your needs and budget. 

shopping around - mistakes when searching for car finance | carmoney

Overlooking the total costs for your new car 

When you are in the market to buy a car, it is easy to get caught up in the excitement of the newest models and the allure of low monthly payments. However, it is important to take a step back and consider all the costs associated with car ownership.  

Monthly payments are just one piece of the puzzle. You must also factor in insurance, maintenance, fuel, and depreciation expenses. These costs can add up quickly and significantly impact your budget. So, it is crucial to take a comprehensive approach when buying a car and consider all the expenses to ensure it fits your budget. 

Skipping the fine print: Hidden fees and charges. 

Looking beyond the advertised interest rate is essential when comparing car finance deals. Remember that some lenders may have extra fees, like arrangement fees, early repayment fees, or administration fees. These additional costs significantly impact the total cost of your finance agreement. Review the terms and conditions carefully, and do not hesitate to ask the lender about any potential fees before finalising the deal.

Hidden Fees - mistakes to avoid when searching for car finance |

Skipping the fine print: Hidden fees and charges. 

Avoiding another common mistake: not thoroughly assessing your budget before committing to a car finance agreement is essential. Although choosing a pricier car or a longer loan term might be tempting, you can easily manage the monthly payments at crucial ends. This step is necessary to avoid financial stress or even loan default. Before finalising your car finance decision, take the time to carefully analyse your income, expenses, and economic objectives to determine what you can realistically afford. 

By taking these simple steps, you can ensure that you get the best possible deal on your car loan and avoid any potential financial headaches. So, take your time, do your research, and happy car shopping! 

Still have questions about car finance and how it works? We have you covered over on our Car Finance, everything you need to know guide.

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