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  • Jan 03, 2023

Common Misconceptions People Have About Auto Loans

Considering buying a new or used car? Learn about some common misconceptions people have about auto loans to make the most of your financing options.

Many people share the aspiration of buying a new or gently used vehicle, but coming up with all the necessary money at once discourages some from trying.

Fortunately, receiving funds from lenders helps eliminate this obstacle. However, there are common misconceptions people have about auto loans. Discover the truth about financing your car to learn which mistakes to avoid.

You Should Take Your First Offer

Shopping around is in your best interest when securing an auto loan. If you stick with your first offer, you have less room for negotiation. Failing to consider different options can cost you, so be sure to investigate several lenders before deciding.

Your Credit Score Will Suffer If You Shop Around

While this is a legitimate concern, seeing as different auto loan companies will check your credit, you can avoid issues with proper pacing. You’re generally safe if you consistently shop around within a short period of a few weeks. Most lenders will understand what you’re doing, and not every creditor is going to make a hard inquiry.

A Low Monthly Payment Is a Great Deal

You want your loan payment to be something you can afford. However, if it's too low, that can sometimes cost you more over time. Pay attention to the loan term and interest rate to weigh all your options. When you are aware of these conditions, you will likely pay less for your auto loan.

You Can Buy Any Car Once Approved

While your choices broaden when you have car financing, knowing what you can afford is important. The amount the lender approves you for shouldn’t be the only factor you consider. Like any important decision, buying a new vehicle requires proper budgeting.

It’s in your best interest to plan for the following expenses:

  • Down payment
  • Monthly payments
  • Car insurance
  • Repairs
  • Gas

Bad Credit Keeps You From Getting a Loan

One common misconception people have about auto loans is thinking they are incapable of receiving one due to bad credit. While this poses a challenge, some lenders are more forgiving than others. You will have to accept that your car financing will have higher interest payments, so putting more money down is key. A co-signer with a good credit score can also unlock loan opportunities.

GFA wants to help you get your next vehicle. If you’re considering getting a car loan in Massachusetts, we welcome you to apply today.

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