When it comes to buying a new car, it can get intimidating. There are so many options — new vs. used vs. certified pre-owned, dealership vs. independent seller, base model vs. higher-end options — it’s no wonder the world of cards and credit can be mind-boggling. However, we will try our best to lower that anxiety for you by breaking down the common car buying mistakes.
With an advanced car buying process, the milennials may find themselves trapped in confusing financial options. Therefore, we have 5 tips to help you navigate your way around picking the right car. Our goal is to make your car buying process easier by initiating the best loan. From dealer scams to credit traps, these five car buying mistakes could cost you thousands.
1. Know Your Credit And Then Shop
One of the major car buying mistakes you can make before you even enter a lot is not checking your credit. Your credit will influence whether you can get approved for a car loan at all and the rates and terms banks, credit unions and dealership financing units will be able to offer you.
If you have no credit, you can still get yourself in a car loan and build your credit with that. Car loans generally have looser credit standards than credit cards. A big reason for this is because the dealer or bank knows they can always repossess the car if you stop paying them.
This means that people with no credit can still get a car, but they’ll be paying a higher interest rate. This may require them to put up a larger down payment, and they may also need a cosigner with decent credit to secure financing.
2. Not Researching Online
Thanks to the World Wide Web, car buying process has a ton of information available related to it these days. Before you take your first test drive, you should compare cars in your price range using websites like Car and Edmunds, decide which car is right for you, and what price is fair to pay.
Once you have selected a car to purchase, be sure to get the VIN number and look up the vehicle’s history report online. It is crucial to check a car’s history even if it’s new. A lot can happen to a new car on the way from the factory. There have been cases of unscrupulous dealers trying to pass off vandalized or damaged cars as brand new.
Plus, brand new cars damaged in floods or hurricanes often end up on the market. Avoid bad deals and lemons by doing your research online.
3. Thinking of Monthly Payments Instead of Price
A general car dealer way is to talk to you about a car’s cost in terms of what you are willing to pay each month instead of the actual price. This can be confusing and is often misleading. The reason is because the salesperson will use the longest auto loan term available (72+ months) to calculate your possible rates. But don’t be fooled. That extended loan term may seem affordable and budget-friendly when you look at just the monthly payment, but taking on a longer loan term means you’re upside down on the loan for longer, perhaps limiting your options for trading it in.
A $25,000 car with a five-year loan has the same monthly payment as a $16,000 car with a three-year loan. The difference? You’ll end up paying $2,500 more in interest for the more expensive car. Consider using our free online payment calculator to find out your monthly payments.
Visit the dealership knowing the total amount you can spend and stay below that number. Better yet, getting pre-approved for a car loan in advance will help you stay within your budget as well (visit www.canadauto.ca to learn more).
4. Purchasing Add-Ons From the Dealer
Add-ons are optional features that a dealer adds to your car buying process. Common add-ons include rustproofing, paint and fabric restoration, window etching, extended warranty and alarm. These features are often overpriced and used as a way to boost the sale price of the car. Plus, it’s been shown that add-ons rarely add long-term value to your car.
In some scenarios, such as an upgrade to a premium model, these add-ons can actually harm the resale value of a car. If you do decide that you need an add-on, check first with outside companies that may offer the service for less.
5. Not Looking Around for Car Financing
If you are not aware how car financing works, you may think your only option is getting a loan at the dealership. But, any car buying process should be strategic. You should know who to reach when you want to lower down the 19.99% interest on your car loan to save bundles on your dream vehicle.
Therefore, let Canada Auto Experts come to your rescue. Our dealer partners are well-equipped with a wide inventory of vehicles. In addition, they work with major banks to get you the best rate possible and help you build your credit.
If you have bad credit or no credit, Canada Auto Experts can help you establish your credit the fastest way with a car loan. Fill out this 2-minute online car loan application to get approved today. Alternatively, you can call 1-855-550-5565 to talk to a credit specialist and make your car buying process easy, convenient and hassle-free.