Common Mistakes When Getting A Car Loan

There are a lot of mistakes that you can make when getting a car on a loan. Getting a car loan does not mean that you should buy whatever you want. Being reckless may cause you more trouble than you can handle such as repossession, ruining your credit score or it may even force you to file for bankruptcy.

The very first rule you should think about is the value of the car you plan on buying. A responsible way of buying a car is to limit yourself to cars that are worth around 50% of your annual pay. Just take your net annual income and divide it in half. Take that value and look at cars that you can find within that price range and look for decent financing options.

Another common mistake is not to test driving the car. This matters the most if you are buying a used car. You do not want to get a car loan for a vehicle that barely runs and drives because you will end up spending even more money on repairs.

Lastly, a lot of car buyers fail to negotiate and get a discount off the sticker price. Even if you are getting a car loan and a small discount may not seem to matter, that is not a valid reason not to negotiate the price. If you are getting a new car, try to get a discount or some free bonuses such as free oil changes, winter tires, etc.

If you are getting a used car and it runs and drives but has some small problems that need you to spend some money on repairs, use that as leverage. Negotiate the price based on an estimate of what the repairs will cost. Most dealers will be open to negotiating even if you plan on getting a car loan to finance the car.