Skip to main content

5 Car Financing Mistakes You Should Avoid

30 December 2019 AutoMarket, Tips & Advice

You’ve finally decided on your next car and you’re considering car financing. The question is, how ready are you to take that route?

For first timers, financing can prove to be a confusing process with lots of complex terminologies and options to choose from. 

So before proceeding to the next step, be mindful of the mistakes you should avoid when financing a car to ensure you end up with the best deal. Check out our list below:

Car Financing Mistake

Car Financing Mistake #1: Not Knowing Your Credit Score

This is a crucial mistake when applying for car financing. When you’re not updated with your credit score, you might end up paying higher interest rate than normal. There could be some erroneous negative events in your credit report that you haven’t been aware of, which raises your interest rates in the process. To avoid this, have your credit score ready and corrected before applying for financing.

Car Finance Fees and Charges

Car Financing Mistake #2: Not Understanding Fees and Charges

When considering to finance, you must research all the possible fees and charges such as upfront fees, ongoing management fees and exit fees. Not understanding such matter could cause you a headache and a bigger dent on your pocket. Make sure to read all the fine print handed to you not just once but twice.

Research Car Finance Options

Car Financing Mistake #3: Not Exploring on Different Financing Options

Financing comes in many different options – some of which can actually save you money. Therefore, it would be wise to explore on different options before making a decision. You probably aren’t aware, but there are several factors that impact the type of financing you are eligible for. Furthermore, each financing option offers different features as well. Familiarising yourself with these can help you avail the most sensible financing option fit for your budget and lifestyle.

Car Leasing Mistakes to Avoid

Car Financing Mistake #4: Not Knowing What To Ask

Asking the right questions give you a sense of clarification because you’re getting the answers you need to finalise the deal. Not knowing what to ask leads you to the opposite – confusion and lack of clarity, which may hinder you from making the right decision. Before dealing with a car financier or broker, research and write down key questions you’d like to ask.

Finance Budget

Car Financing Mistake #5: Not Setting Your Budget Accordingly

A car is a hefty purchase and even with financing, you have to determine how much you’re willing to spend and allocate on a payment. Take a step back, sit down and calculate how much you can afford. Financing should mesh with your existing budget and not compromise it.

Buying a car is a thrilling experience. Since not everyone has the cash to pay for a new car outright, financing becomes a very popular option. However, the process can prove to be notoriously complicated. By avoiding the car financing mistakes above, you can rest assured that you’re on your way to making a sound decision and driving away with a car you truly love.

Find your first or next dream car on Motor Matcher