If you’re considering financing a car, you need to be extremely careful. There are various financing options available, and each one comes with distinct features, pricing, and complex terminologies. Given the vast and overwhelming number of options, many people make mistakes when financing a car.

Here’s a list of 5 common mistakes committed when shopping around for car financing that you should be aware of:

Not finding out your credit score before car financing
Before you head out to finance a car, an important pre-requisite is to know your credit score. There are two aspects to this. The first is to ensure that your credit report is 100% accurate, and it includes getting any mistakes rectified for improving your credit score. Second, there could be certain mentions in the credit report that may have lowered your credit score. If that’s the case, you might be charged a hefty interest rate when you’re out looking for a car financing deal. So, knowing your credit score can help you take measures to improve it before applying for a car loan.

Not ascertaining the budget
One of the 5 common mistakes made when shopping around for car financing is that often buyers do not work out their budget before applying for a loan. If you do not know the amount that you can afford as the monthly payout after making your other expenses, you will not be equipped to negotiate the terms of the loan. Not to mention, the lender deciding the terms may not work in your favor, so it’s best to work out your budget before shopping for a car financing deal.

Not negotiating on the rate of interest
When your credit score is higher, you are naturally in a position to negotiate on the car loan interest rate, which is charged depending on an array of factors like the down payment, credit score, and principal, among other things. If you do not have a thorough knowledge of these factors, your lender might overcharge you. So, always do your homework before applying for a car financing loan.

Ignoring the term of the loan
The tenure of your loan will decide your monthly payout, so don’t always pick a loan with the lowest monthly payout because that would signify a long term. This way, you could end up paying much more in the long run. So, work out all the factors before deciding the terms of the loan.

Not seeking a deal online
Another major mistake on the list of the 5 most common mistakes committed when shopping around for car financing major is not checking for car financing deals online. Online platforms have several lending companies that are willing to offer car financing deals at lower interest rates. Also, getting a loan online is faster and much easier.