Don’t Get Stung – Finance Mistakes That Will Cost You More

Smart money management when purchasing a car is always advisable. Car finance agreements have gained popularity in recent years, with many opting for this option. However, there are common mistakes that could result in higher costs in the long term.

Before considering a car loan, thorough research is essential. Samuel Brackenbury, Consumer Direct Operations Manager at First Response Finance, emphasises the importance of exploring options before making a decision. Just as one would not purchase a car from the first dealership visited, one should not feel pressured to take out a loan with the first lender encountered. Comparing what different lenders offer can help in finding a deal that is suitable for individual needs and budget.

Ignoring one’s credit score is a mistake to avoid. Understanding one’s credit score is crucial when negotiating a car loan deal. It provides a better idea of eligible interest rates and helps in avoiding overpayment through higher instalments.

Additionally, looking beyond the monthly payments is crucial. Many make the mistake of solely focusing on monthly payments without considering the bigger financial picture. Understanding the Annual Percentage Rate (APR) can help in calculating extra fees and comprehending the overall loan cost. This allows for comparison of borrowing costs between different lenders and products, aiding in determining whether a specific loan fits within the overall budget.

Careful consideration of add-ons is important as well. While items such as heated seat covers and extended warranties may seem attractive, they come with additional costs that increase both monthly instalments and overall interest paid on the loan. Furthermore, it is possible that one may already have the benefits of a specific add-on through existing car insurance or warranty.

In conclusion, car loans can be a useful way to manage the cost of purchasing a vehicle, but it is important to avoid common mistakes that could result in higher costs in the long run. Through thorough research, understanding of one’s credit score, consideration of the APR, and cautious approach towards add-ons, informed decisions can be made to secure a loan without costly surprises. Therefore, it is crucial to be prudent with finances and carefully weigh any financial commitments.