Avoid These Car Loan Mistakes To Stretch Your Dollar Further 

Your experience at the car dealership can feel overwhelming, but remember: You have control over whether you accept a loan offer or not. Always think carefully about the loan you are accepting and whether you can afford it.


Avoid these car loan mistakes to improve your outcomes at the dealership. 

Focusing Too Much on the Monthly Payment 

Dealers may present you with an enticing loan offer by focusing on the monthly payment rather than other factors, like the interest rate, loan term, and fees. “You could own this car for just $400 a month!” they might say. This certainly sounds like a good deal until you discover that the loan term is 72 months, meaning you’ll pay almost $30,000 in monthly payments alone. 

Instead of focusing too heavily on the monthly payment, closely examine all of the factors affecting the loan cost. Always calculate how much you will pay over the course of the loan as well.

Overborrowing Beyond Your Means

If you haven’t examined your finances recently, you may not know exactly how much you can afford for a car loan. It’s easy to accept a car loan that sounds affordable enough. Surely, you can come up with an extra $300 per month, right? 

Instead, take a close look at your income and expenses each month before heading to the dealership. Determine how much you can reasonably spend on a down payment and the maximum you can afford for a monthly payment. Then, stick to these amounts during your loan negotiations.

Not Reading the Contract Closely

Taking out an auto loan is a big deal. It ties you to a monthly payment for years. Before you accept the loan terms, read the contract closely and make sure you understand the implications. 

Look specifically for these factors that could lead to car loan mistakes:

• High interest rates: Interest rates above 15% are steep. You may be able to find a lower rate elsewhere. 
• Hidden fees: Be sure you understand all the fees involved in your loan and factor them into the total costs. 
• Long loan terms: A 72-month loan term means you’ll owe the monthly payment every month for the next five years. Can you sustain this payment throughout? Also, consider that long loan terms increase the chances of having negative equity, meaning you will owe more on the car than it is worth. 
• Early repayment penalties: Some lenders penalize you for paying off the loan before the end of the initial loan term.

Not Shopping Around for a Better Offer

A dealer’s first loan offer certainly isn’t the only car loan available to you. You may be able to find a better offer elsewhere. 

Instead of accepting the dealer’s offer, spend time looking for other loan options. Better yet, arrive at the dealership prepared with several offers; this could encourage the dealer to try to beat them with an even better one.

Find Auto Financing Through Edge Financial Services

Don’t risk any of the car loan mistakes above. Apply for financing today through 1803 Capital. 

We focus on your individual circumstances rather than an automated assessment of your creditworthiness. We can improve your chances of securing financing and match you with favorable terms. 

Contact us today to apply for affordable financing.