As we help you get the best auto loan in Oklahoma City, we want to make sure you make informed and wise decisions along the way. We discussed below some common mistakes car buyers make when taking out an auto loan. Here’s how to avoid them.
1) Negotiating for the Wrong Thing
You may not realize it but dealers like it when you negotiate for a lower monthly payment. It gives them a lot of room to play with the numbers. They can give you the exact figure you want for the monthly payment and still make good profit. They have many ways to do so. But to avoid paying more for your car, negotiate the car price down instead. The car price is jacked up, believe it or not, and you can demand a figure thousands lower than what is shown in the sticker. Read about dealership pricing to learn more about how dealers come up with their prices.
2) Choosing an Offer by Rate
It’s wrong to pick an auto loan offer solely because it has the lowest interest rate. The monthly interest rate is just one of the several things you need to consider when comparing auto loan quotes. But among others, there is the annual percentage rate or APR, monthly payment, loan term, total interest paid and total amount paid.
Instead of comparing auto loans by the monthly interest rate, compare them by their APRs. The APR is not the same as the monthly rate. It is the aggregate cost of the loan, with fees and taxes included in the computation, expressed as a yearly rate. The APR is a more accurate indicator of how an auto loan would actually cost you.
3) Going for the Nicer Car
And this is where many car buyers fall. It is really tempting to buy a car that’s nicer than your original choice and just slightly more expensive. At first, compromising is not a big issue. But it will be as you realize the costs later on. Before you walk into a dealership, commit yourself to the budget you have set and the car you’ve planned to buy. It’s okay to consider other models as long as they won’t cause you to compromise on your finances.
4) Ignoring Your Credit Standing
It’s ironic: People are often anxious about their bad credit, but they won’t pull out a copy of their credit reports when they need to apply for an auto loan or mortgage. Not checking up on your credit prior to applying for an auto loan can cause you troubles later on. Reviewing your credit report beforehand allows you to be familiar with your credit situation, dispute errors and improve your credit score which can help you get approved for a low-interest auto loan.
5) Extending the Loan Term
There’s no pot of gold at the end of the rainbow. What we mean is we don’t see anything like treasure in long loan terms. If you think extending the repayment period will help you afford that nice car and pay it off on time and save money in the process, think—and compute—again.
Long loan terms only make you pay more interest while dressing up the loan with low monthly payments to appear cheaper. Just like what experts say: Keep the loan term short. You’ll save more money this way.