Just like a marriage, a car loan is a long-term commitment. So you need to ask yourself if you’re really ready to say ‘I do’ to the car of your dreams.
You’re about to embark on a three- to five-year journey with your beloved car. Before you apply for the car loan at the dealership, are you absolutely confident that you know everything there is to know, ‘til loan do you part?
When you say ‘I do’ to your car loan you’ll need to be ready for the commitment. The car will be in your name and the loan will be your responsibility, until the full amount owed to the bank is paid off. Luckily, WesBank is here to help us unpack the boot full of mistakes that first-time car buyers make, so you don’t get trapped in a cycle of debt.
Here are the DOs and DON’Ts that you should be aware of before you apply for your car loan.
DO stick within your budget
Apply for a car loan that is within your budget and make provision for all the mobility costs (petrol, maintenance, comprehensive insurance and car washes).
DO go big on the deposit
Make sure you saved enough to put down a big deposit. This knocks money off the purchase price, so you end up borrowing less from the bank, and can pay your car loan off sooner.
DO ace the credit check
Maintain a good credit history. Always pay your loans and bills on time. The bank looks into your credit history to make sure you are a good borrower.
DO keep yourself covered
If you are looking at a used car, consider extending the warranty or service plan to ensure you are covered once the current plan expires.
DON’T try to overdo it
If you go above your car-buying budget, your loan has a higher chance of being rejected because the bank can see that you can’t afford the monthly car instalment.
DON’T be afraid to start small
There’s nothing embarrassing about going for a cheaper or used car. A small car is the first step to one day owning your dream car.
DON’T try to rush things
Applying for a car loan just after starting a new job is a bad idea. Rather wait for a couple of months, as this helps to increase your stability status.
DON’T put off the pay off
The only excuse for increasing the length of your car loan is if money gets super tight. The quicker you pay back the loan the less you pay in interest.
Now that you know what mistakes to avoid, double-check your budget one last time before you apply for your car loan. Rather be sure than stuck with a car that is burning a hole in your pocket.
Remember to ask the car dealer every possible question before you structure your car loan. This commitment to your car should be the trip of a lifetime, and if you have budgeted correctly you should experience very few bumps in the road.
Don’t forget to check out our car section in our November issue. For more lifestyle tips, advice and info, click here.
