Busting Auto Loan Myths – Facts You Need to Know Before Taking Out an Auto Loan
Introduction
One of the best investments you can make in your life is purchasing a car. But unless you have the money to buy it outright, taking out an auto loan may be your only alternative. Here we look at some of the common myths about auto loan financing, as well as the facts you need to know before taking out an auto loan.
Myth #1: You Have to Have a High Credit Score to Get a Car Loan
This could not be further from the truth. Even if you have a low credit score, there are still many options available to you. All you need is sensible documents such as pay stubs and proof of address. The process of getting an auto loan has improved over the last couple of decades.
Furthermore, you can look for a cosigner with good credit if your credit score is less-than-perfect. This will increase your chances of getting a loan with reasonable interest rates.
Myth #2: Your Loan Should be Less Than The car’s Value
This depends on your financial situation and budget restraints. It is essential to consider the total cost of the vehicle, including taxes, fees, and potential upgrades.
You may choose to finance the total amount of the car, as long as you can cover the monthly payments. Alternatively, you may want to get an auto loan for less than the total value of the car and pay the difference yourself.
Myth #3: Get the Longest Loan to Minimise Monthly Payments
This is true and false. A long loan can result in lower monthly payments, as you’re spreading out the cost over a longer period of time. This can be beneficial if you’re on a tight budget and need a smaller monthly payments. However, this will also result in higher interest rates, leading to more payments in the long run.
If you want to pay off your auto loan faster, it may be worth getting a short-term loan that comes at a higher monthly payment. You will save on interest rates overall and be able to pay off the loan quicker.
Myth #4: Dealerships Will Offer the Best Rate
Dealerships may have the best options for new cars, but second-hand car dealers and online lenders may also be able to offer competitive terms and better rates. You may also want to think about getting pre-approved for the auto loan, which will give you bargaining power when it comes to negotiating the price.
It is also wise to compare deals from different lenders and auto loan companies to make sure you are getting the best rates. It may even be possible to secure a low-interest auto loan online with Weathercheckers.com, so check what is available.
Conclusion
Before taking out any auto loan, it is important to know the facts and dispel any myths. The above points provide some insight into common beliefs when it comes to automobile financing.
By being informed, you are more likely to make the right decisions and secure an auto loan that suits your particular needs.
