Common Mistakes to Avoid When Financing Your Next Vehicle
Buying a car can be both exciting and stressful. How financially prepared you are may depend on why you’re purchasing a new vehicle. If you hadn’t planned on getting a new car, truck, or SUV but don’t have a choice due to an accident or breakdown, you may not have a lot of savings for a down payment or the bandwidth in your monthly budget for a large car payment.
Even if you have saved up some money for a new vehicle, you’ll likely still need to finance part of the purchase price. Choosing how to finance your purchase, and who to finance it through, can be tougher than choosing the vehicle itself.
It’s a good idea to understand the advantages and disadvantages of your borrowing options so you can make an informed decision and avoid some of the more common mistakes.
Skipping the Pre-Approval Process
Browsing your options and picking your vehicle is the fun part of the car buying process. Filling out calculators and researching loan options feels more like work, which is one of the reasons many buyers walk into a dealership without knowing what interest rate they actually qualify for.
Getting pre-approved through your credit union first gives you a clearer budget and stronger negotiating power. It also shows the dealer you’re a serious buyer, not just a browser.
Focusing Only on the Monthly Payment
A low monthly payment might seem like a win, but it often means a longer loan term and more interest paid over time. In some cases, buyers end up owing more than the car is worth after a few years of depreciation. That can create a problem if you need to sell or trade in the vehicle but still owe more than it’s worth. You may essentially be required to pay someone to take your car.
Instead of asking “Can I afford the payment?”, ask “What’s the total cost of the loan?” The right financing helps you save both now and over time, and prevents you from getting stuck with a vehicle for longer than you want.
Not Comparing Financing Options Outside the Dealership
It’s easy to rely on dealership financing. They handle everything on the spot, and it feels convenient. But that convenience doesn’t always mean you’re getting the best deal.
Taking time to compare your options, especially with a local auto lender like Ouachita Valley FCU, can help you feel more confident about your loan terms. Even if you decide to go with dealer financing, getting a pre-approval first gives you a clear reference point so you can spot inflated rates or unnecessary add-ons.
Not Considering the Full Cost of Ownership
Your monthly auto loan payment will just be one of many costs you’ll need to pay when you purchase a new vehicle. Insurance premiums, maintenance, fuel costs, and registration fees can vary depending on the car, truck, or SUV. Before you commit, take a minute to add it all up.
Rolling Over Negative Equity
If you still owe money on your current vehicle, tread carefully. Rolling that balance into your next loan might seem easy, but it puts you deeper into debt and could leave you upside down on your new loan from day one.
You may determine that it’s better to pay off your existing loan or trade in for a car that keeps your new balance manageable.
Why It Pays to Work with a Credit Union in Northeast Louisiana
At Ouachita Valley FCU, we don’t just look at the numbers. We look at the overall financial picture of borrowers in Ouachita Parish and the surrounding areas. That means helping you choose a loan that fits your budget now and your goals down the road. Our team takes the time to explain terms, walk you through your options, and make sure you understand what you’re signing—not just what your payment will be.
Before you visit the dealership, use our loan calculators and talk to our lending team about pre-approval. Call 318.387.4592 or start your application online.
