A very high percentage of people in Australia use finance to purchase their car. This is for a number of reasons, but generally financing a car allows you to buy now and pay later and purchase a better, more reliable car that you may not have been otherwise able to afford. However, there are a few common mistakes that people make when using finance to purchase a car that end up costing them up to thousands of dollars more over the life of their loan.

Being emotionally invested in one car

It is important to remember that unless you’re buying a one-of-a-kind classic, then there’s plenty of fish in the sea so to say. Don’t fall into the trap of paying more for a car just because it has all the features you want. Remember, there will always be suitable cars out there and if you rush into buying ‘that’ car, you may just end up regretting it later. A car is a depreciating asset, therefore it is important to make a list of all the things you want in a car and then use a website such as Carsales to find potential cars that meet your criteria. You can use their advanced search feature to filter your results. This may end up saving you thousands of dollars on your next car.

Finding a car before getting their finance sorted

It is worth considering getting a finance pre-approval before you start searching for your next car. Sometimes arranging suitable finance can take a day or two and if you start looking for finance after you’ve found the car you want, you run the risk of the car being sold by the time you’re in a position to purchase.

You don’t even need to know what car you want to get a pre-approval; you can always decide on this later. But what a pre-approval does is makes sure you’re able to act fast when you do find a really good deal. It’s like having the money in your back pocket.

Buying the first car they see without research

One common mistake people make when looking for a car is walking into a dealership and allowing themselves to be talked into a car without first doing research. These days there are many cars available that have very similar features and it is easy to choose a car that is ‘close enough’ to your desired budget and specifications. It is also extremely easy to get caught up in the hype of buying a car and overlook important steps in the purchase process such as checking the Personal Property Security Register (PPSR). A PPSR search can tell you if a vehicle has been written off, stolen or has finance currently owing on it. It helps protect you when buying a car, motorbike, boat or other personal asset.

Not protecting their car properly

Buying a car is one of the biggest and most expensive purchases people make aside from buying a house. It is imperative to make sure it is properly protected. There are a few options to consider when looking at protecting a vehicle such as insurance and warranties.

Before you pick up your car, make sure you have considered which type of vehicle insurance is going to best suit your needs. It is also worth considering whether purchasing Shortfall Insurance (GAP Insurance) or Loan Protection Insurance could be beneficial for you.

Not shopping around for the best finance for their specific circumstances

Like any purchase, shopping around for the bet deal can potentially save you a lot of money. There are some important considerations when shopping around for finance however.

It is important to keep in mind that financiers will look at your Equifax Credit Report and score. It is a good idea to know what’s on your Credit Report and to check it regularly. Equifax allows you to get a Free Credit Report once a year.

Each time you apply for finance or even a phone account, an enquiry is left on your credit report and this can impact your credit score. If you have many enquiries in a short period of time, it generally makes financiers a little uneasy about lending money to you. So try to keep enquiries to a minimum where possible otherwise it can actually hinder your ability to be approved for finance.

How to shop around without impacting your Credit Report

It is still possible to shop around without putting enquiries on your credit file by using a broker like Loans For U. We are able to look at your credit file without leaving an enquiry behind. Our expert Finance Consultants can then look at your overall profile as well as the vehicle you are looking to purchase and assess which financier would most likely be able to provide the most suitable finance option for your individual needs. This means that an enquiry in only left on your credit file if you decide you want to go ahead with finance.

We have access to dozens of Australia’s most trusted bank and non-bank financiers and can help you find the best possible finance for your needs. This helps to take the stress and guesswork out of financing your next car. So contact our friendly Finance Consultants today on 1800 538 287 for a no-obligation chat about your finance needs.