Today at cartime we are offering you some trusty car finance advice shared by tim himself! We’ve compiled a list of the top 5 most common mistakes that buyers make when choosing to finance a car. By remembering our car finance advice (and avoiding) as many of these as possible, you’ll save yourself headache, hassle and money in the long-run – and be more likely to bag yourself a fantastic car finance package.
Car Finance Mistake #1: Not taking the shortest possible loan term
Remember when we told you about car depreciation? That’s the difference between the value of the car when you buy it and the value when it comes to selling it. Cars depreciate quickly, so you want to try and pay off your loan as soon as possible. While the monthly payments might be higher in the short term, you’ll pay less interest and lose less in terms of car depreciation, saving you money overall.
Car Finance Mistake #2: Choosing the car first
Buying a car is fun. It’s ok to get excited, even when you’re just shopping around, but it’s important to consider your finance plan first. This way, you can avoid falling in love (yes it is love!) with a car that you simply can’t afford. Securing a great deal on the car of your dreams feels good – the disappointment of missing out does not.
Car Finance Mistake #3: Focusing on payments instead of price
When buying a car on finance, low monthly payments can be very tempting. By opting for the lowest possible monthly payments, the term of the loan will be longer and you’ll probably pay more in APR. It’s important that when you have decided on the car, that you settle on a price and keep that in mind – focus on this price, not what you’ll be paying monthly.
Car Finance Mistake #4: Not knowing your credit rating first
Accessing your credit report before you start shopping for car finance means that you’ll have a good idea of what kind of deals you’ll qualify for. If there are any errors, you can get them seen to before you apply for finance. This will open up possibilities for the best offers, including the coveted 0% finance deal. It’ll also give you more confidence when shopping around, as you’ll know exactly what information the lender is looking at too.
Car Finance Mistake #5: Not knowing what you can comfortably afford
When people take out a mortgage, they think long and hard about what they can really afford, even paying high fees to seek advice. Unfortunately with car finance, many people do not take the same careful consideration. “Oh, it’s only for a few years…” is a common excuse people make for not evaluating the true impact that car payments might have on their monthly budget.
Before choosing a finance package, it’s important that you consider exactly how much you can afford to put down as a deposit, and how much you can afford to pay monthly. Don’t ever stretch your finances too far – factor in potential periods of lesser income, or times where there might be emergency expenses that cost you money.
So, there you have it, our top 5 finance mistakes and some of our trusty car finance advice. If you have a question about a car finance package, or would like to know where you should get started, contact the cartime team today. One of our finance specialists will be happy to offer free, honest advice and help get you on the way to buying your next dream car.