Common car finance mistakes and how to avoid them

Securing a car loan through a reputable Car Finance broker is a quick and easy process. But go elsewhere, and you might find the whole experience less straightforward, far from hassle-free (a bit of a nightmare, in fact!). That said, so many people making an application for finance do so unprepared, meaning that brokers and lenders have no option other than to turn them down. It can be staggering just how many applicants fail to do just a bit of research into the whole car leasing process, before picking up the phone.

Top 4 car finance mistakes (and some homework)

Whether you are struggling financially at the moment, or you can well afford car finance payments and simply want to go that route to get yourself cruising down the open road with the wind in your hair as soon as possible, doing a bit of homework on the process could really pay off. Don’t fret now that you’ll have to scour the Internet or pore over printed publications to get all the key info you need. Why? Because we at Albion Car Finance have done all that work for you, researching and listing (in plain English not car salesman gobbledygook) the four most common mistakes people make when seeking car a loan, and how to avoid making them.

homework written on a blackboard

Are you ready for this? (It’s where you check your thinking). OK. Hold on tight!

CAR FINANCE MISTAKE 1: Not knowing your budget

How much can you realistically afford each month? And can you really sustain those payments over a long period? So many people make the mistake of budgeting too high, convincing (or fooling?) themselves that they’ll be able to meet the payments. Also, in their eagerness to get a car sorted and to finally say goodbye (or should that be ‘good riddance’?) to waiting interminably at bus stops or taxi ranks, and to trudging home in the rain, they snatch at the first deal offered. Best to shop around, with a clear budget in mind.

CAR FINANCE MISTAKE 2: Being unaware of your current credit rating

If asked, how many of us can really respond immediately and accurately when asked: “What is your credit rating?” Not exactly at the forefront of one’s mind in the day-in-day-out, is it, what with everything else we have on our plates. Before even thinking about picking up the phone and calling a car finance broker, however, do take the time to find out.

Knowing your credit rating can save you a lot of wasted time – time spent in futilely applying for loans that you haven’t got a hope in hell of being granted approval for. Also, when talking to or sitting in front of lenders, you can rest easy, safe in the knowledge that (having already made the effort to access your credit report) your answers to their credit rating questions are precise and true. Honesty is always the best policy, after all, and being straight with a lender about your credit health may even result in another possibility opening up to you, even if your preferred option proves out of your reach, at application stage.

CAR FINANCE MISTAKE 3: Aiming low

By aiming low, we don’t mean deciding to get the cheapest possible car – to drive down the monthly repayment costs. No. What we’re talking about here is focusing upon getting the lowest possible monthly repayments (tempting, isn’t it?!), thinking that it will save you money overall. It probably won’t. Through doing that, you’ll almost certainly find you’ve been focusing on the wrong thing: prioritising payment level over price. As a general rule, the lower the payments, the longer the loan term will be, and the higher the APR.

And finally…

CAR FINANCE MISTAKE 4: Falling in love with a certain car (before you’ve even done your sums!)

When you were growing up and dreaming of romance, love, marriage etc. one day, your mother in all probability told you that: “When you meet the right one, love, you’ll just know,” right? Thought so. It’s a lovely thought, but please don’t adopt that mindset when choosing a car.

It’s true. The number of people who, in a blinkered way, mistakenly set their heart on a particular type of car (colour, model, year, sumptuous interior upholstery, state-of-the-art CD player etc.) is unbelievable. To avoid disappointment (getting the car you long for proving infeasible), it’s best to consider the financial side of things first. Know your budget. Access your credit rating report. And then start thinking about the kind of car that would be most suitable to meet you and your family’s needs. OK, you may not end up with your dream motor, but at least the car you drive happily away in once the loan is sorted will be affordable (and won’t have to soon go back). That’s the bottom line.

Hope that helps!