Car Loan Mistakes that May Cost You Money

Car Loan Mistakes That May Cost You Money

Are you shopping for a car? There are plenty of dos and don'ts to keep in mind, and mistakes to avoid. Here are the top car loan mistakes people make when arranging auto financing.

  1. Not reviewing your credit before you buy - Before you purchase a car, get your credit report and know your FICO score. This is easy to do on LendingTree.com. You can clear up issues with your credit before you make a purchase and save money -- because your interest rate is based on your credit score.
  2. Not setting a budget - Determining how much car you can afford is important to do before you go car shopping. You should also know how much down payment you can come up with. Keep in mind that the cost of the car includes tax, title, and registration, along with dealer fees. These extra costs impact the amount you can afford. Need help with the auto loan calculations? Let us help you with the auto loan calculator below:

Auto Affordability Calculator

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Monthly payments are an estimate and are for informational purposes. They do not represent a finance offer. Other tax, license, title, or fees may apply. Disclosures

 
  1. Not looking at all your car loan options - The key to getting a good deal on your auto loan is researching all options. Many people are too quick to accept the first financing offer they get. With LendingTree, you can get several loan offers from different lenders to compare to the dealer financing. You may also want to consider local banks and credit unions.
  2. Focusing on the monthly payment amount - Dealers can manipulate the loan term and rate to get you the payment you want, but in most cases, this will mean paying more over the life of the loan. Make sure you don't fixate on the monthly payment. Know the total price, the percentage rate, the APR, and the loan term; otherwise, you'll likely pay more for your car in the end.
  3. Focusing on the interest rate - Just like your home mortgage, the interest rate you're paying is only part of the equation. You also need to consider the loan terms and fees.
  4. Not walking away - Don't get so attached to a car that you can't walk away from the deal. If a negotiation isn't going well, or you are having second thoughts about a particular car loan, walk away. Clear your head and go over the numbers before you go back to the negotiation table.

Auto financing is not a mysterious thing, and finding the best deal on offer isn't rocket science. Simply get several quotes from competing lenders before you sign and drive.

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