3 Major Mistakes People Make With First-Time Auto Loans
Buying a new car for the first time is an exhilarating experience. In a lot of ways, your car is an extension of your personality or your persona, so picking out just what you want can take some doing. However, buying a car for the first time will also probably bring along something else: your very first auto loan. Taking out a loan for a new car is a good way to get behind the wheel of something you really want to drive, but just because you can get a loan, it definitely doesn't mean you should make hasty decisions. Check out this short list of mistakes to avoid as a first-time auto loan signee.
1. Don't assume you should spend as much as you are offered.
If you have decent credit, you can get pre-approved for an auto loan fairly easily, and you will likely be approved for a substantial amount of money. Lenders provide you with these pre-approval offers to give you an idea of how much money you could get, but you don't have to accept all the loaned money they are offering. It is best to be mindful of things like your budget, your payment limits, and the extra expenses that can come along with buying a more expensive vehicle.
2. Don't forget to shop around for a new car instead of buying the first one.
You may have spotted a ride that you love at one car lot, but before you sign the deal on a new auto loan for that particular car, shop around a bit. You can often find a car you really like for a little less than the first one you spotted. In some cases, you can save yourself thousands of dollars just by taking the time to see what similar vehicles are offered at different places.
3. Don't underestimate the importance of a good down payment.
It is not uncommon for auto lenders to offer loans with no down payment to people who have worthy credit, and this is definitely nice if you don't really have the money to pay down. However, if you do have some money stashed away specifically for a down payment, go ahead and make that down payment even if it is not a requirement. Paying down a portion of the overall cost up front can do two things: Get you a lower interest rate and potentially a lower payment every month.
For more information on auto loans, contact your local loan officer.