Car financing is a popular way for Australians to purchase vehicles, but it’s important to be aware of common mistakes that can be costly in the long run. In this article, we’ll discuss some car financing mistakes to avoid.

1. Not Knowing Your Credit Score

One of the biggest mistakes people make when applying for car financing is not knowing their credit score. Your credit score is a key factor in determining your eligibility for a car loan and the interest rate you’ll be offered. The higher your credit score, the better the interest rate you can expect to receive. Make sure you check your credit score before applying for car financing so you have a good idea of what to expect.

2. Not Understanding the Total Cost of Ownership

When buying a car, it’s important to think about the total cost of ownership. This includes not just the purchase price, but also ongoing costs such as fuel, insurance, and maintenance. Make sure you factor in these costs when considering how much you can afford to spend on a car. A car that seems affordable at first may end up being too expensive once you factor in all the associated costs.

3. Not Considering Used Cars (especially in the current market)

Many people assume that buying a new car is the best option, but used cars can sometime present better value. Used cars are generally less expensive than new ones, and they depreciate at a slower rate. This means that you can often get a great car for a lower price if you’re willing to consider a used vehicle. In addition, it is important to consider the current climate and car market. Most new car dealerships are finding it hard to get new car stock and some dealerships are warning potential customers that they may be waiting for a new vehicle for up to 18 months.

4. Choosing a Loan with a Long Repayment Term

Another mistake people make is choosing a car loan with a long repayment term. While this can lower your monthly payments, it also means you’ll be paying more in interest over the life of the loan. A shorter repayment term can help you save money in the long run, even if your monthly payments are higher. Before choosing a shorter repayment term, however, make sure it fits within your budget and you won’t be leaving yourself in financial hardship.

5. Not Reading the Fine Print

It’s important to read the fine print when applying for car financing. Make sure you understand all the terms and conditions of the loan, including any fees or charges that may be associated with it. Don’t be afraid to ask questions if something isn’t clear, that’s what your Loans For U broker is here to help with. We work for you – we’re here to help make sure you know exactly what your obligations are in terms of your finance contract.

6. Not Shopping Around for the Best Deal

Another mistake people make is not shopping around for the best car financing deal. Don’t assume that the first offer you receive is the best one.  Similar to any other purchase, shopping around can result in significant savings as it can when it comes to financing. However, there are some critical factors to consider during this process.

Whenever you apply for finance or a utility account, an enquiry is registered on your credit report, which can have an impact on your credit rating. If there are a number of enquiries made within a short timeframe, lenders may become apprehensive about approving loans for you. Therefore, it is advisable to limit your applications as much as possible. Otherwise, it could ultimately impede your eligibility for financing.

So how do you shop around for the best finance deal without impacting your credit rating?

If you want to compare finance options but don’t want to leave a multitude of enquiries on your credit file, you can use a broker such as Loans For U. Our team can view your credit report without leaving any enquiry behind. Our expert Finance Consultants will then analyse your lending profile and the vehicle you are looking to buy and identify the most appropriate financier that can offer the best possible finance solutions to suit your particular requirements. An enquiry is only added to your credit file if you decide to proceed with financing and your application is submitted to the financier.

Our services provide you with access to numerous reputable bank and non-bank financiers across Australia, making it easier for you to secure the most favourable financing option for your specific requirements. By utilising our services, you can eliminate the stress and uncertainty associated with financing your next car.

Contact our friendly Finance Consultants today on 1800 538 287 for an obligation-free chat about your finance needs.