When it comes time to choose your vehicle finance options, you need to be prepared and knowledgeable about the process. This will help you avoid spending too much money or otherwise making a decision that could impact your finances for years to come. If you are interested in knowing the most common mistakes you need to avoid when choosing vehicle finance, consider the following g list of 4 all-too-common (but avoidable!) mistakes.
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Mistake #1: Not knowing what your credit score is BEFORE you apply
You should always have a recent credit score report before you begin to applying for any vehicle finance options. Once you begin applying, your credit score will become part of your application record. If your score is unexpectedly low, this means you will have a much tougher time finding good finance options. If you know ahead of time what your score is, you can tailor your applications—and which finance options you choose to apply to—accordingly.
Mistake #2: Not setting a budget before you begin
Always set a budget before you begin any applications. If you don’t set a budget, you will find yourself overwhelmed with the different options out there; you are also more likely to overspend and pick an option that isn’t financially sound for your current state of finances. If you set a budget before you even start, you’ll have a much easier time when finding an option that works for you.
Mistake #3: Choosing the monthly payment option
Monthly payments can seem tempting, but avoid them at all costs. Monthly payments will have you paying out more money in the end, and they can be difficult to keep up with regularly. Monthly payments also have stiff penalties and fees when compared to other types of payments, so you should avoid them unless you have literally no other options.
Mistake #4: Ignoring the penalties for early payoff
Early payoff is not a good thing when it comes to many types of vehicle financing. Most contracts will have some stiff penalty fees for an early payoff, which can make a serious dent in your finances unless you are incredibly financially secure. Make sure you know the penalties for early payoff so you can make an informed decision about whether or not it’s worth the fees.
Choosing your vehicle finance options isn’t always easy, especially if you are new to the process and have never attempted it on your own before. If you keep the above mistakes in mind and do whatever you can to avoid them, however, you will find it much easier to choose a financing option that is sensible, sound, and makes sense for your current financial situation.