Buying a car can be an extremely overwhelming process. There are plenty of mistakes to make and fine print to miss when it comes to an auto loan. Be sure not to make these mistakes and your wallet will definitely thank you.
- When you’re signing up for a car loan, one of the first things you will want to do is check the yearly percentage rate of the loan. Some dealers will take the interest paid during the loan and add it to the initial loan amount; this will obviously cost you more money.
- Next, you want to know the date of your first loan payment. Mark it in your calendar, put it on your iPhone or Android reminders, do anything you need to do to remember this date. It’s very stressful to start off with a late payment, and it can drop your credit score by as much as 100 points!
- You also want to be sure to get a good deal with your extended warranty. Very often you can negotiate and get a better cost for your extended warranty. Haggling is a great skill for many reasons. Don’t be afraid to try. You stand to save a ton of money, and you have essentially nothing to lose. Credit unions will frequently offer cheaper extended warranties. You should also check around for good insurance before you begin the negotiation process with a dealer.
- You want to avoid extension offers on your loan. While your mileage may vary — pun intended — it is usually best NOT to add interest to your loan. If anything, you want to be paying the loan off faster.
- Speaking of the loan, make sure the dealer is actually giving you a loan. There is a car loan, and then there is a retail installment sales contract; the rate on the latter can be significantly higher, so always verify.
- When you get your loan, be sure to pay attention to ANY hidden fees and charges. Read the fine print to make sure you don’t get any unexpected charges. Don’t be afraid to ask questions. If the dealer won’t give you satisfactory answers, you don’t want to be doing business with them.
- You also don’t want to worry too much about dealer add-ons like paint sealant and other treatments. Some of these add-ons are pointless and will only cost you money. Don’t pay for anything you aren’t going to need. You also want to contest any extra fees that don’t seem right to you.
If you can follow these tips and tricks, you’ll be able to buy that new dream car and not have it cost an arm and a leg in the long run. Hopefully, you are now armed with the knowledge to make educated decisions during this tricky process.