Buying a car is a complex, calculated decision. Preparing yourself and learning all you can is vital before venturing out to the car lot or showroom.
You may be thinking, "I am ready. I know what I know. Let's go car shopping." How much do you really know about your financing options and budget? Shopping for your vehicle should not feel like a guessing game. Avoiding these seven car-buying mistakes to save money, save time, and avoid added stress.
- Not shopping around for the lowest rate on your loan or lease. A loan from your bank may cost you less than one from your car dealer, or it could be the other way around. Check out a few different options so that you can get the best rate you can.
- Comparing car prices instead of the cost of borrowing. You may get a better price at one car dealer for the same car but end up paying more to finance your vehicle. The purchase price is often less important than the interest rate when it comes down to what it is really costing you to buy the car.
- Not getting the best rate for the whole time you borrow. Some dealers offer financing as low as 0%. It may look like a great deal at first, but that low rate often lasts only a few months before it increases. Be sure to find out how much interest you will pay over the full time you borrow. Compare that to other loans, and make sure it's still the best deal for you.
- Not sticking to your budget. Know how much you're comfortable spending beforehand and stick to your budget.
- Not looking at the total cost of ownership. Loan payments are only part of the cost of owning and driving a car. Do not forget about the cost of gas, repairs, licenses and parking. Look closely at your expenses to see if having a car is realistic.
- Looking at the size of the monthly payment rather than how much interest you're paying. Some people think the best deal is the lowest monthly payment. They forget to look at how long they are borrowing the money, which can lead to paying a lot more interest by the time the loan is paid.
- Using a credit card to pay for the down payment. Some people do this because they cannot get any other loan. It could take years to pay back what you borrow for a car. In the meantime, you'll throw away a lot of money on high-interest payments. The interest on a credit card will usually cost twice as much as a bank loan of the same size.
Download a PDF of fixed and variable car expenses to help you budget for your new set of wheels.
Whether you are shopping for a sports car or an SUV, we are here to help you choose from a wide variety of financing options designed to accommodate every vehicle and lifestyle. We offer great rates, fast application, and a range of options to make securing your next ride more convenient than ever. Do you still have questions? Let us help you find the answers. Give us a call or stop by your nearest branch.