PERSONAL FINANCE: Top Five Car Loan Mistakes That Cost You Money

By  //  July 9, 2018

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Keeping a luxury car is not only the trend but also the need of this era. When you have your car, there will be no hindrance in your work schedule. You can visit the places that you want without remembering the overall schedule of public transport.

Keeping a luxury car is not only the trend but also the need of this era. When you have your car, there will be no hindrance in your work schedule. You can visit the places that you want without remembering the overall schedule of public transport.

Moreover, many dealers of auto-mobiles offer very affordable deals that will help you in realizing your dreams. You can also take a car loan from banks because there are also present many deals and long-term payment facilities in the banks.

A very successful survey is done to know the percentage of leased cars, and according to the consumer reports, approximately 34% of the cars on roads are purchased on loans. This is a lot percentage, but it is seen that many people commit big mistakes while getting cars on credit. You can overcome this problem by acting on five simple advice that can help you in getting the right car in best car loan rates.

1. Dealing without proper research

It is a prevalent mistake that people take car loans without searching for the right dealers. The benefit of having total research and figures cannot be denied. When you have the proper knowledge about the car that you are planning to buy, the price and also the deals regarding that car, then no one can deceive you. Choose the best dealer that suits your budget.

2. Long-term loan planning

Most people are attracted towards the long-term loan deals. It seems perfect, but I will prefer that it is a total loss. Don’t just focus on the monthly price because the deal is not just for a few months. You have to pay for years, so focus on the overall cost of the car. This thing can help you to estimate the percentage of profit that the dealer is getting. Short-term loans will help you as the markup will be less.

3. Not understanding the “Negative Equity”

This is a trap for the buyer. When the dealer says that there will be negative equity in the further loan payments then, you must get the explicit discussion about this. Most of the people don’t give attention to this fact and afterward they have to face many difficulties. This term refers to the increase in the monthly payment of the car. Even the rise of 2 to 4% of the car price will be a huge loss for you. So, get more precise about this.

4. Not visiting the market

This is also a great mistake that people do. When you do not visit several marketers, you will not be able to get the proper idea about the rates of cars and also the knowledge about the monthly payments. The people who have gained a lot knowledge about best car loan rates are successful in buying the right car. Just focus on your budget. Buying the car within your means is best. You will never get worried about the payment.

5. Advantage of high creditworthiness

This is the fantastic technique and also save your hundreds of dollars. The term “Creditworthiness” is actually the rating that is based on the credit score. It is assigned by the three expert agencies that are specialized in assigning credit reports. These are Equifax, Experian and TransUnion. When the dealer gets familiar with the creditworthiness of the buyer then the dealing is done according to that. If you have the high credit score then you can get the best car loan that is quite affordable. Imagine if the overall car loan is $18,000 and you have to pay it in 5 years then reducing just 1% can save you hundreds of dollars. In this way, creditworthiness can support you a lot.   

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