5 Biggest Car Finance Mistakes Australians Make in 2022

Finance is an extremely important part of the car buying process. With that being said many Australians make mistakes on car finance that often cost them thousands in the long run.

If you are looking for car finance, keep reading on below to learn the most common car finance mistakes made by Australians and how you can avoid them.

Let’s get started.

1. Not Shopping Around

When it comes to Car Finance the biggest mistake you can make is not shopping around for the best deal. The only way you are going to get the cheapest finance rate is by seeing what options are out there in the marketplace.

Before you choose a finance provider it is important that you research online what other finance companies are offering. Another option that you can use is to seek a finance broker to find you the cheapest lending rate based on your application and credit score. Performing a quick comparison of finance deals will save you hundreds if not thousands throughout the life of the loan.

2. Going with the First Loan Option

The second biggest car finance mistake you can make is going with the first lender who presents you with finance. As mentioned in point number one, you need to make sure that the finance option presented is the best available.

The most important factor when it comes loans is patience, you don’t want to rush and make the wrong decision. It’s best to wait, see what lenders have approved you for a loan and compare the rates provided.

3. Not Checking Your Credit Score

Credit Score is the most important part in gaining a loan. You should never apply for a loan without knowing your credit score. Credit score is an individual score that ranks your lending ability. The better your score is, the more likely you will be to receive finance approval.

It is important that you understand your credit score before you begin seeking finance. Once you know your credit score look at ways you can improve it. Try to reduce your current owing’s and credit card spend and if possible, try to have a history of savings. Having the best possible credit score will go along way to gaining the cheapest possible loan from a lender.

4. Not Understanding Loan Types

This one is so important! You should never approve a car finance loan without knowing what you are agreeing to. Before you apply or accept a finance offer it is so important that you understand the loan type, what is required and the terms and conditions.

Different lenders have their own unique terms and conditions, so it is important that you read through them thoroughly and you understand what you are agreeing to. Best practice is to consult with a relevant party or external professional.

5. Not Factoring in Interest Rate Rises

Interest rates are rising rapidly in Australia! A mistake that many Australians make is not factoring in interest rate rises and how it will impact your car finance loan. It is important to not stretch yourself too thin as you need to consider possible future rate hikes. Even the smallest rate hike can add hundreds per month in repayments depending on how much you owe.

Before you accept a loan it is important that you create a budget and analyse the impacts that probable rate hikes will have on your living allowance. It is also good practice to speak to a finance professional about interest rates and how they will affect your lifestyle before you accept a loan.

Final Word,

Finance has and always will be one of the most important parts of the car buying process. Before you begin looking for Car finance it is important that you research the market, understand loan types know your credit score, and choose the rate that is best suited to your means.

We hope you enjoyed reading this article. To read more articles like this, please visit the Shop for Cars latest news page here.

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DISCLAIMER: This is all based on opinion please research and consult with all relevant parties to make the best buying decision.