Buying A New Car Soon? Watch Out For These 8 Costly Errors

Did you know you can avoid most financial mistakes by simply planning ahead? Car upgrades are fun and exciting, but with little planning, they can also make you broke. A bigger screen, good mileage, better safety features, and of course, that new car smell. If you are in the market for a new vehicle, it’s easy to see why upgrading your car always feels like the right decision.

In the excitement of picking out your next car and features, many people forget to stop and look at the numbers. After all, a new car upgrade should be relaxing – not stress you out every time you get your monthly bank statement.

Take a breath. Before you make your next car purchase, familiarise yourself with these common money mistakes so you can happily drive your new ride guilt-free.

1. Not Researching Your Car Loan Properly

Most people purchase new vehicles using car loans. But did you know that not all car loans are created equal? Research and compare different lenders and find one that offers competitive interest rates and reasonable terms. You can save yourself thousands of rupees by shopping around for a great rate.

2. Stretching Your Budget

Buying a new car is exciting. “It’s understandable that you want to upgrade to a higher model with more features. But remember to create a budget beforehand and stick to it! Don’t stretch yourself too thin by purchasing a car that you’ll struggle to make monthly payments on,” says Adhil Shetty, CEO, Bankbazaar.com.

3. Not Checking Your Credit Score

Your credit score determines if you qualify for a car loan and what interest rate you’ll be offered. Check your credit score before applying for a loan, and if it’s low, work towards improving it. A better credit score can qualify you for loans with lower interest rates and save you money.

4. Forgetting about the down payment

Sure, you can sometimes get a car loan with little to no down payment. However, if you can pay down/up front on your next vehicle, you’ll thank yourself later. A large down payment lowers your monthly payments and the total interest you’ll pay over the loan period.

5. Letting EMI be the decider

Many first-time car buyers will base their loan decision on the EMI amount. But what about the interest you’re charged over time? “Go for the shortest tenure that you can comfortably afford. Lower tenure means lower interest payments,” says Shetty.

6. Forget About The Hidden Costs

Purchasing your dream car isn’t just about the price of the car. Remember to leave enough room in your budget for extra insurance premiums, registration costs, taxes, fuel and maintenance. These things add up!

7. Forgetting About The Future

Sure, brand new cars are great, but have you thought about how much your car will be worth when it’s time to upgrade again? Try to buy a car that is popular and will have good resale value. That way, you’ll lose less money when it’s time to leave your old car behind.

8. Not Getting Pre-approved For Loan

Always get pre-approved for a car loan before heading out to a dealership. Knowing how much you can afford gives you a budget to stick to, and you’ll feel more confident negotiating with dealers. You also won’t feel pressure to accept a loan you’re uncomfortable with just to secure the car of your dreams.