Look Out For These Car Loan Traps.
Some people think that the only dodgy car loan deals are those perpetrated by loan sharks, but when it comes to lending there are plenty of traps awaiting the unwary borrower from just about every lender in town.
Let’s face it, banks are in business to make money and you should expect them to try a few sales tricks on you to maximise your borrowing and to squeeze every cent out of you they can. Happily, you don’t have to become a victim when applying for your next car loan, in fact you can squeeze a better deal than you ever thought possible! If you do your homework and make sure you recognise the traps when they are presented to you, you will emerge with the best car loan for your circumstances and hopefully save yourself hundreds of dollars in the process.
- It really does pay to plan ahead when you are purchasing a new car and the same applies to your car loan. It doesn’t matter whether you are buying a used car or a brand-new car, the best plan is to get a preapproval from your chosen lender before you start to shop. Naturally, you will need to have some idea about what you will have to spend but before you set your limit, work out what you can comfortably afford to pay on your car loan. By setting this limit you won’t fall into the trap of buying a car that costs you too much. It is so easy to be talked into extras by the car dealer, especially when it only costs a couple of dollars extra per month. Believe me, these little extras soon add up and can leave you with a very sour taste in your mouth.
- Lenders will always try to upsell you when you are signing up for your car loan. Even if you have obtained a preapproval, the real sales process begins when you are in front of the bank officer signing the documents. You will more than likely be offered some form of insurance product that protects you in the event of illness or accident. Some policies also give you added death cover and some will even cover you in the event that you lose your job. Before you fall into the trap of signing up, check your insurance position before you start. You may have other insurance products that give you enough protection and signing up for these extras can only be a waste of time, they can cost you substantially more per month.
- When you are working out which loan is best for you, make sure you ask the prospective lender about any add-on fees such as application fees or ongoing monthly fees. It might come as a surprise to you to find that there are several hundred dollars involved in these fees and could be the difference between choosing one lender over another.
The facts are clear, when you are choosing a car loan you need to do your homework and prepare yourself for the sales pitches that are likely to come your way. Follow the above points and you will come out unscathed.
