Are you in the market for a new or used car that requires financing? If so, beware of these common and very costly car loan mistakes. Not only are they preventable, these car financing mishaps can end up costing you a ton of extra money and stress. Instead, do your research and steer clear of these common car buying errors…

1. Buying under time crunch

Oftentimes we can’t predict when we’ll need a new car following an emergency or car accident. However, most times car buyers can be proactive and realistic about the state of their current vehicle and permit themselves time to shop around for a deal.

2. Agreeing to a dealer loan

Do you often buy a car through a dealer’s loan? When the dealer has full negotiating control of the loan terms, you know you’re not getting the best offer you can get. Instead, prior to visiting a dealership, do some shopping online for low interest loan with a lower interest and walk onto the dealer’s lot armed with loan comparisons that will sway the negotiating in your favor.

3. You don’t know your credit rating
Many bargain shoppers are often intimidated by the idea of their credit rating, so they go to a dealership with no knowledge of what they’re credit rate is, just assuming it’s poor. That means they jump at the first offer from a dealer, even if the interest rate on the loan is too high. Get your credit score online for free.and demand a rate that’s fair.

4. No pre-approval

The best way to sway negotiating power in your favor is to secure a pre-approved loan rate from a bank and then go to the dealer demanding them to find you a better deal. You can also pre-price your financing online, using tools that work out the interest rate, monthly payment, and even your trade in costs. Also, take a look at what specials and incentives competitive dealers are offering.

5. Agreeing to a long term loan
Of course a long term loan looks appealing when the monthly payments work out to less, however, when buyers agree to an agreement that finances a car over a 5-year, or more period of time, you wind up paying more in interest over the long run. Dealers like pitching longer term car loans with higher interest rates because it means they sell a pricer vehicle, which looks good for their commission. So look past the monthly payment and focus on the total cost you’ll be paying for the car before you decide if the deal is good. Otherwise, you may be paying far too much for what the car is actually worth.