It’s 2020 yet car financing can still be tricky and challenging, especially if this is your first time. Mistakes can happen but can definitely be avoided. So before you decide to finance and buy cars New Zealand, take a look at this list of car financing mistakes that you should avoid. If you are aware of these, you will have peace of mind that you are doing the right steps with car financing.
Taking For Granted Your Credit Score
Before you can finance your car, you have to be aware of your credit score. There are two things that you have to make sure of regarding your credit score:
- First, it should reflect your credit history. Check it thoroughly to ensure that there are no errors that can negatively affect your credit score. If you get your credit score in advance before you apply for financing, you can correct any errors to avoid higher interest rates.
- The second thing to do is to make sure that the dealer will not lie about your credit score. If you know what your credit score is before you contact any dealer, they will not have a chance to scam you in any way possible.
Not Knowing Your Budget
If you just go out and look for a car that you want to purchase without knowing your budget, you might end up getting disappointed because, in the end, you will realize that you cannot afford the vehicle. So how much can you afford to buy? But keep this a secret with the dealer. That is because if you tell them your budget, they would do everything to make you a monthly payment buyer instead.
Getting Financing Options On The Last Minute
It is better if you have already lined up your financing options way ahead before you finally decide to proceed with the process. Application is now easier because you can do it online. It is best that you shop around first because you would know how much will you get approved for. You will also have an idea of what your monthly payments be like.
Focusing More On Monthly Payments
One of the mistakes that first-time car buyers do is they focus more on what the monthly installments would be like. They think that the lower the monthly payment will be, the better is it for them. What they do not know is that, if the monthly payments are low, that means that you will be paying for a longer period of time and the interest rates would also be higher, compared to paying bigger amounts monthly in a shorter term of your loan.
Not Fully Understanding The Term of the Loan
If you do not fully understand the term of your loan which is also called the “length of the loan,” you might end up paying more. Remember that just like other loans, the longer you finish paying your loan, the higher the interest will be. If you ask for lower monthly pay and a longer time to finish catching up with your loan, the dealer can give you that. However, what the dealer will not clearly explain is that your interest rates will be higher.
Car financing is one of the easiest ways to drive your dream car home without robbing your bank account. The dealers make the process easy for their interested buyers. But remember that there might be some things that they are not telling you. So educate yourself before you dive into car financing.