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Today’s consumers have the benefit of belonging to a generation where car buying is easier than ever before. Technology has made it possible to view, research, and purchase all types of vehicles and for most consumers, the car shopping and buying process has, in many ways, been simplified significantly.
Car loans from Latitude and other financial institutions make it easy for consumers to not only select and research a vehicle but they also have streamlined the car buying process. Even with the ease with which cars can be purchased, there are still an abundance of potential pitfalls when purchasing a car. However, consumers can avoid many of these common mistakes with a little preparation and planning.
Let’s take a look at some of the most common mistakes many consumers make when getting a car loan and what you can do to avoid them.
Table of Contents
Not Taking Financial Inventory
More than creating a budget, car buyers should first take inventory of their overall financial standing. Some of the factors that should be taken into consideration include existing loans, disposable income and savings. More importantly, car buyers should make sure they know their credit rating before heading into the financing office. Taking inventory of your financial position before going into the dealership or financing office can give you more leverage in seeking out a loan that best fits your budget and requirements.
Not Shopping Around
Typically, when purchasing a vehicle, the first instinct is to head to the closest dealership in search of the perfect vehicle without ever having considered alternative financing. Many times car buyers find themselves entering into loan contracts that do not provide them with the best possible conditions for the sake of convenience. Before even choosing a car, consider shopping around for financing deals from other institutions to ensure you get the best arrangement possible.
Most banks and financial institutions offer competitive car loans. In addition to conventional banks, credit unions and online financing companies also provide consumers with competitive interest rates. By shopping around, consumers can be sure of for securing the right loan.
Not Getting Pre-Approved
One of the best parts of financing today is that financial institutions have helped consumers in doing much of the footwork in terms of finding an appropriate loan. The pre-approval process involves the consumer providing lenders with all of the relevant information through the application process. The lender collects all of the consumer’s information in terms of employment history, income and wage, savings, and credit history.
With this information, the lender determines not only the risk but hey can also pre-approve you for a loan amount and interest rate. This is beneficial as the consumer goes into the car shopping experience knowing exactly how much he/she can spend. Furthermore, the amount of time devoted to buying a car is drastically reduced in that consumers do not have to fill out applications at the dealership, wasting time that could be spent doing something more constructive.
Not Making A Down Payment
The great thing for those buying a new car is that it is possible to finance the entire cost of the vehicle. The only caveat is that unless your credit is in good shape the interest rate on the loan will be slightly higher, and consumers with poor credit are at the mercy of financing companies that might hike the rate up in response to hedging the risk. However, one way to guarantee lowering the interest rate on your loan is to make a sizable down payment. As with other loans, when paying a down payment on the loan, you not only reduce your interest rate but you also reduce the amount of money you pay over the term of the loan.
Avoiding Mistakes Through Preparation
While the car buying process has changed significantly in recent years, consumers can gain an advantage by preparing themselves before ever visiting the dealership. By taking the right steps, you can make the entire process much easier, while reducing the amount of money spent throughout the loan term. Ultimately, by tackling these few tasks, you will end up with a positive car buying experience instead of one filled with potential problems.
