How do I have an Unaffordable Car Loan in Copetown?

How do I have an Unaffordable Car Loan in Copetown?

Posted on July 1, 2021

We have had a couple of clients contact us this week who were in the unfortunate situation of an unaffordable car loan. It’s an unusual occurrence and something that doesn’t happen as often as you might think. Which is why we thought it might make a useful blog post.

Our Copetown auto loans team explains common reasons why you could end up with an unaffordable car loan.

Unaffordable auto loans in Copetown

One common thread in most of our car loan posts is the recommendation to do as much research and checking as you can before signing on the dotted line. That way, you can avoid some serious mistakes that can impact your financial wellbeing.

In our experience, there are four main reasons you might end up with an unaffordable auto loan.

Not doing your research

Research is the single best tool to help manage your finances. The internet is an amazing resource with enough information to last several lifetimes. There are also banks, our own Copetown auto loans team and other experts all willing to help.

Research should include types of auto loan, loan term vs monthly payment, average interest rates for your credit score, quick ways to improve your score, the impact a larger down payment might have on the loan and so on.

You should ideally put as much effort into researching your loan options as you do the car!

Being seduced by a more expensive car

One key message we try to get across is to set your budget before you enter the dealership. Car showrooms are designed to make you spend money and if you don’t have a budget and some willpower, you may find yourself overspending.

Auto manufacturers specifically design their trim ranges so the most expensive options are the most appealing. Whether it’s by offering unique colours, specific body trim, special alloy wheels or something else, the premium models always look better than the base model.

Set your budget before you begin shopping for cars and stick to it!

Not considering running costs

The loan principal, the amount you borrow is only part of the cost of owning a car. You also have to factor in auto loan interest and any fees, car insurance, servicing, gas, maintenance, tires and all those other expenses that a car comes with.

It costs around $1,500 per year to run a car so you need to factor that into your calculations when thinking about car loans.

Not looking closely enough at the loan terms

Many borrowers spend a lot of time looking at how much they are borrowing and not enough on the interest rate, the loan term and the total cost of borrowing.

Other terms such as early settlement fees, limits on overpayments and other loan terms can also make life more difficult than it should be.

When you’re researching auto loans in Copetown, make sure you understand every element of the loan, from how much you’ll pay in interest over the term to whether you can overpay without fees.

When you’re ready for a car lease or loan, get in touch with the Copetown auto loan experts at Northway Ford for great deals on auto finance.

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