Car Financing DOs and DONTs

With the large amount of money and time involved in auto loan deals, car finance, van finance and other vehicle financing offers, making a mistake is completely unacceptable and may cost you thousands of dollars. To help novice car buyers avoid common car financing pitfalls, here are some DOs and DON'Ts related to car finance: 

DON'T apply for an auto loan without knowing your credit rating first. The interest rates that a bank gives will depend largely on the status of your credit score. This has an added negative effect because applying for an auto loan with a bad credit rating and having your application rejected will effectively ruin your standing with that auto loan company, along with your chances of getting a loan with them again. 

DO an extensive assessment of your credit report and try to find out if there are past mistakes that may affect the chances of getting a good rate. This has an added benefit of allowing you to see and correct errors or issues, and will let you catch any signs of fraud or identity theft.   

DON'T overspend. For many car buyers, it is very tempting to spend outside of your intended budget when you are already in front of all the gorgeous cars and accessories at the dealership. Car dealers know this, that is why they will sometimes offer a relatively low price and when you bit it and finally go to the showroom, they will tempt you with lots of extra features and accessories. Some of the really good ones can even influence you into buying a different, more expensive car. 

DO set a budget for the car you want to buy. Be very strict and unflinching in your budget, especially if your current cash flow is not very flexible. Remember that you can buy and install accessories and extra features later when you have extra money to spend. You can also have a go for guaranteed car loans. 

DON'T go to the showroom or dealership without first doing some research on the current prices and interest rates being offered in the marketplace. It is important to know if the car dealer is offering you a competitive rate. 

DO some research on the internet. There are lots of websites these days that give you the ability to compare prices and interest rates between various car dealerships with only a few clicks of your mouse. This is an important service that you should never ignore especially considering how accessible the information is. 

DON'T sign any documents or close any deals when you feel like the dealership staff is rushing or putting you under pressure. People who are under pressure tend to make bad financial decisions.  

DO pay attention to your comfort zone. If you feel like the dealership staff is coercing you or putting you under pressure, walk away from the deal. Car dealers usually try to take advantage of buyers' feelings of anxiety and try to get you into a position where you want to do anything just to get everything over with, then they'll offer you an expensive car with high interest rates.