Buying a car is a very big decision, and you need to take your time when shopping for a car loan. Rushing through this process will lead to pitfalls, and the following are common mistakes you must avoid when working with a car mortgage broker:
1. Not knowing your credit history
You need to know your creditworthiness to understand which loan terms you qualify for and what to expect when going into lean negotiations. Not knowing your credit history will cause you to make bad decisions, and if your score is low, you can try to improve it to get a better interest rate.
2. Failing to calculate your budget
Review your finances to determine whether or not you can afford to pay back your debt. You must add your monthly loan payments into your budget to see if it makes sense; otherwise, you can fall behind on your payments which will result in high-interest fees and a damaged credit score.
3. Choosing a loan term that doesn’t make sense
Many people select a longer loan term because they like the idea of lower monthly car payments, but this will result in more interest payments. Not only do longer terms come with a higher interest rate, but a longer term will also cause the value of your car to decrease. If your budget allows for it, select a shorter term length with higher monthly payments to avoid high-interest rates.
4. Settling for the first loan, you are offered
Not shopping around for the best possible terms is a big mistake because you may lose out on great opportunities. You shouldn’t settle for the first loan that is offered to you and must shop around to ensure you are not passing on a better deal. Look at different car mortgage brokers to see what terms are being offered, as some lenders will have lower interest rates or different options for term lengths.
5. Not getting a pre-approval
Car dealers offer loans, but this may not be your best option. Not speaking to a car mortgage broker can cause you to miss out on better options, and getting preapproved for a loan is a great step. Do this before you start shopping for a car to know how much you can spend and which rates are available to you.
6. Agreeing to unnecessary warranty options
Some dealers will try to convince buyers to purchase expensive and unnecessary warranty options, but these may only cover a small list of issues you’re not likely to face. This fee can add to the overall cost of your loan, and your total will be a lot higher than it needs to be.
Want to avoid mistakes when taking out an auto loan? Contacting a reputable car mortgage broker is the right choice because they will guide you through the process and will help you secure the best loan. Dominion Lending Centers-Mortgage Mentors (Charlene Elliott) is ready to assist you with your car purchase, and we will make sure you are aware of the terms and conditions that apply to your loan.
If you are looking for an experienced car mortgage broker in Fort McMurray, contact us today! Call 780-838-1449 for more information.