Saving on new car loans is essential to saving money and reaching your financial goals. Many new-car buyers may feel overwhelmed when considering their loan options. 

Our guide will share the biggest mistakes to avoid when getting a car loan. Learning tips for financing a new car is the key to saving cash on your new car loan. Keep reading to discover new car loan tips you can practice today!

Big Mistakes To Avoid When Getting A Car Loan

If you are getting ready to buy a new car—whether for the first time or as a repeat buyer—you should ensure you've researched saving money on new car loans. This guide is a great place to learn helpful tips for financing a new car. 

Not Keeping Track Of Your Credit Score

If you plan on getting a new car and want to have all your bargaining chips ready for that negotiating table, you must know your credit score and position. Please don't rely on a dealer to tell you your state of affairs or what they can offer you.

You can take advantage of the following resources to keep track of your credit score:

• Get A Free Credit Report--You can get a free credit report online from the government. 
• Visit The Credit Bureau's Website--Experian, Equifax, and Transunion all allow you to pull your credit report from their website directly. 
• Utilize Helpful Credit Apps--You can directly monitor your credit through helpful apps like Credit Karma, CreditWise, and Credit Sesame.

Not Exploring All Your Loan Options

Many people go to a dealer, find the car they want, and immediately negotiate the price and financing with the dealer. However, there is a better option. One of the most essential car loan tips is to make sure you explore all of your options. Better loan terms and deals can often be found from other lenders. Banks and credit unions usually provide better deals.

Dealers often have markups applied by their lending partners that benefit the lender and the dealer--but not you. To avoid that, make sure you do your homework and search around. Even if the dealer is offering an appealing promotion, make sure to research. Tools like Lending Tree can help you make financial comparisons.

Not Getting Preapproved Financing Before Shopping

Pre-approval is a vital car loan tip for multiple reasons. Firstly, it is a great way to keep your search in budget. Getting pre-approval means you have approval for a loan of a certain amount, which means you will have to shop for whatever fits into that budget. It will also greatly help you negotiate because the dealer will be forced to match your pre-approval or do better.

It also means you have forced the dealer to"unbundle" the deal. Dealers give away a lot when they confuse you by bundling the financing, the price, and any trade-in into one giant, complex transaction. By coming with pre-approval from another lender, you are forcing the deal to be separate, ensuring you get the price possible.

Ignoring Negative Equity On Your Current Loan

Here is another of the vital car loan tips: Be wary of a trade-in on a car you have negative equity on. Negative equity means you owe more on your loan than your car is worth. This happens for various reasons, mainly due to the quick depreciation of your car's value after you buy it. Unfortunately, most cars' monthly payments are so low that they don't keep up with the depreciation of the price, and you end up in a negative equity nightmare.

This is a real problem if you want to trade your current car in for a new one. The new loan will include whatever your equity is on top of your new car's price. For example, if you bought a vehicle and owed $25k, it is likely only worth $21k a year later. If you trade that car in, that extra four thousand dollars will get added to your new loan, and you will start your loan with negative equity. You will also have a more challenging time arguing for the best terms.

 

Not Considering A New Car Title Loan!

Now that you know the biggest mistakes to avoid when getting a car loan, you can begin to save cash. Remember these car loan tips as you start your journey to finding a new car! 

However, if a financial emergency arrives in your search, turn to Carolina Title Loans, Inc. for a title loan! If you own a car, you could take out a title loan and utilize the money for a financial emergency! To get started, fill out our online inquiry form today!

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.