If you’re looking to purchase a new vehicle, you also may be considering an auto loan. There are common mistakes that many people make when applying/purchasing an auto loan, so it’s important to be aware of all the factors and important information to consider before deciding on one. In order to make informed decisions and get the most out of your auto loan, here are some mistakes to avoid:

1. Not considering all of your options

You have many resources and options at your fingertips when it comes to auto loans, so use it. Before settling on the first auto loan you come across, do your research and shop around. Look at all of the different lenders, including online options, banks, credit unions, and more, to find the best loan terms possible before signing off on anything.

2. Not knowing your credit score or financial health

Knowing your credit score and understanding your financial health is essential as it helps you make smart decisions about what you can afford comfortably. If you have good credit, you can expect favorable terms on an auto loan, but if you have a mountain of debt, things will look different. Be sure to understand where your financial health falls so you can manage expectations appropriately and find the best outcomes.

3. Choosing the wrong loan term

Loan terms typically range from 24-72 months, and you might be tempted to go with the longest term for a lower monthly payment; however, this isn’t the best idea. Having a longer loan term also means more time to accumulate interest, leading you to owe more than the car is worth. Be sure to consider all of your options and choose a loan term that is affordable but as short as possible.

4. Not considering future financial changes

With inflation and the ever-changing job market, it’s essential to always be thinking about whether your financial situation will stay the same or possibly fluctuate. Before signing up for  a long-term auto loan, you must consider all future financial changes. Maybe you want to move, maybe you want to start a family—whatever it may be, these life changes cost money, and your monthly budget will definitely change.

5. Not making a down payment

People commonly finance the full amount of the car without taking as much off the top as you can, which is a big mistake. Financing more means paying interest on more than you need to for a longer period of time—if you can comfortably take some money off the price by giving a down payment, you will save the interest and finance charges for your future self.

6. Rushing through the process

This is one of the biggest mistakes consumers make, and it means you might make every mistake listed in this article. It’s imperative that you take your time and shop around, consider all of your options, look into your financial health and financial future, and more. Furthermore, you should not allow the salesperson to rush you. Take a breath, step back, and be sure to think things over before jumping into a big decision.