Top 4 Mistakes To Avoid When Seeking An Auto Loan

Whether you're looking to buy a new or used car, there's a good chance that you'll be seeking auto financing as a means of making the purchase more affordable for you. Of course, taking out an auto loan is a major commitment, which is why it's so important to find a loan with terms that are most favorable for you. Specifically, there are a few common mistakes you'll want to avoid as you seek financing for your next vehicle.

Not Pulling a Copy of Your Credit Report

Your credit has a huge impact on your ability to secure an auto loan, so it's a good idea to know where you stand in terms of your credit rating before you go filling out loan applications. There are plenty of ways to go about obtaining a free copy of your credit report, starting with contacting any of the three major reporting bureaus (Equifax, Transunion, and Experian). Be sure to review your report and dispute any errors that may be impacting your score.

Choosing the Longest Finance Term Available

When you're offered auto financing, you typically have a choice when it comes to the length of your repayment term. While it might be tempting to choose that 72-month (six year) note because it means lower monthly payments, keep in mind that you'll also be paying more in interest this way. If you can afford it, you'll actually save money by choosing the shortest financing term. You'll also enjoy the benefit of paying your car off while it still has plenty of value.

Focusing Too Much on the Monthly Payment

It's easy to focus on the dollar amount of your monthly payment, but keep in mind that there are a lot of other factors to take into consideration when it comes to choosing an auto loan. The interest rate, your down payment, and the length of your repayment term are all important factors that should influence your decision to accept an auto loan. Don't focus too much on the monthly payment itself.

Not Taking the Time to Shop Around

Finally, understand that the financing you're offered by one lender might not be the same as what another lender will offer you. It can certainly pay to shop around and to negotiate the terms of your loan. You might be surprised at just how great of an auto loan you can end up with by negotiating with the professionals at a dealership's finance office. Click here to investigate auto loans.