1. Not calculating your budget. You should review your financial situation and be sure you can afford to pay back the loan within the given period of time. You have to be realistic about what monthly payments you can afford and not shoot yourself in the foot. You should not make the decision of paying back your car loan on ‘expectations’ but rather, you should make this decision based on reality. What does your financial status say at the time?
2. Not shopping around for the best deals. In your bid to get a car loan, do not rush to take the first offer you get. There are high chances that you can get better deals from other finance partners or as the case may be. Some may have a lower interest rate or higher payment period, depending on what they want to offer you.
3. Choosing a long-term loan. You may be tempted to solely focus on the monthly payment but the longer the loan term, the more likely your car’s value decreases which may make you go upside down on your loan. Again, you need to look around for the best deals.
4. Going upside down on your car loan. This simply means owing more than your car’s worth. If you decide to sell your car before the completion of the car loan payment, you may be selling it for a lower price but you will still have to pay the lender the difference between the value of the car and the loan amount. It is advisable that you choose a shorter-term loan so you can pay quickly.
5. Not making a down payment. The idea of having a 100% car loan sounds exciting but when you are able to make a substantial down payment on a new or used car, you will likely get a good financing deal. One of the factors that car loan financing institutions consider is the loan-to-value(LTV) ratio which is simply the comparison of the balance of the loan to the re-sale value of the car. The lower the LTV, the less risky the loan is to the lender and lower risk leads to better loan rates and terms.
That is why we at Autochek Africa give you the best car loan options with an initial 30% deposit and a friendly repayment plan. We have a pool of financiers ready to help you achieve your car dream. What are you waiting for? Visit www.autochek.africa to get started.