Home » News » Miscellaneous » Traps to look out for when getting a car loan
Getting a car loan is exciting. It means you’re on your own journey to getting on the road in a vehicle that you want. It’s important to remember though that there are a few things you need to consider before you agree to a car loan and some great steps to take to fully prepare you for the commitment.
 
Car Loan Traps
 
• Don’t buy your car before you’ve got your loan
 
This is a real instance where it pays to be patient. Too many people rush into buying their dream car, and then consider getting a loan afterwards. Always make sure that your loan is completely sorted out before you even start to look at cars. You need to understand exactly how much you’ll be able to spend on the car and you’ll only know this when you have pre-approval on your loan
 
• Do your sums
 
With car loan calculators everywhere, it’s never been easier to figure out how much your repayments are going to be and to work out exactly how much you can afford. You need to do some budgeting before you get a car loan so make sure you’ve worked out exactly what your incoming and outgoing costs are each month and how much you can dedicate to paying back a car loan
 
• Watch out for advertised rates
 
It’s easy to spot an advertised rate online and sign up to that car loan as quickly as possible. What you need to be looking at is the comparison rate – this can often be very different and will make a huge difference to the amount that you pay in interest over the course of the loan.
 
• Ask about hidden fees
 
This is something that many car loan users often find out too late. If you’ve got a really low interest car loan or a deal which you thought was too good to be true, chances are that it is. Hidden fees can really throw up problems further down the line especially if you want to repay your loan early.
 
• Don’t add a car loan to your home loan
 
Some people are tempted to add a car loan to their home loan using a redraw facility or line of credit. Sometimes this provides you with a lower interest rate but you need to think carefully about the loan terms – generally these are much shorter on a car loan than they would be on a house loan so it may not work on to be a financially helpful option.
 
Do Your Research
 
The best thing you can do is to do your research and take your time. Getting a car loan is a big commitment and a huge investment financially so it’s important that you know everything possible about the agreement you’re entering into, before you’re in it.
 
Don’t wait until it’s too late as you may not be able to get out of your car loan once you’re in it. Take your time before you purchase a vehicle to make sure that everything is in the best shape possible.

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