There are many car loans today that allows you to own any car you want. It makes it easy to own that dream car of yours finally. However, there are so many misconceptions about car loans that give people the wrong idea. You need to fully understand how loan terms and policies work before you get to signing the loan paper. Sometimes, the misconception is about what it takes to refinance auto loan. Due diligence is essential when applying for car loans. With this in mind, let’s check out four misconceptions about car loans and set the record straight.
Car Loan is Only for New Cars
Most people believe that auto loans are only available for new cars and never for used vehicles. That’s not entirely true but remains a common misconception. Used cars are quite affordable and help you save lots of money. You can even refinance an auto loan for a used car if you want. All you need to do is duly consider the quality of the vehicle and the dealer you’re getting it from. You don’t want to end up with a car that’s constantly breaking down.
It’s 100% Financing or Nothing.
It would be great if you were to get 100% financing. That way, you don’t have to touch your savings, and the credit union or dealership can cover all the costs. Although this sounds good, it doesn’t always turn out like that. When you’re fortunate enough to get 100% financing, you’ll mostly end up with high interest rates. Although you can always refinance auto loans to minimize the interest rate, it is usually challenging to obtain such financing. The ideal option is to always go for 80-85% financing if you can. You should cover the rest with your savings. The more down payment you can afford, the better for you.
There are No Better Deals Elsewhere
Car dealerships are usually quite aggressive when it comes to obtaining new customers. They offer attractive deals and then tell you there are no better deals elsewhere. You should know now that that’s not always true. Be smart and intentional with your actions by researching the market. You don’t have to work with dealers; credit unions also offer you great deals. Keep looking till you find a deal that fits right into your financial plan.
You Can’t Get An Auto Loan Without a Huge Down Payment.
Another common misconception about auto loans is that you need a substantial down payment before you get one. Although you need to make a down payment, it doesn’t have to be a huge one. You can get auto loans that cover 85% of the cost while you only pay 15%. However, if you pay a significant down payment, you’ll be saving yourself money in the future. It will also be quite helpful when you need to refinance auto loan. Car loans are tricky, but you can always put the misconceptions to rest when you carry out solid research.