7 Common Auto Loan Myths Debunked: By Financial Experts
Most people think that timing is the key to getting the best deal on a brand new car. But, when you ask them about it, some people will tell you about the days of the week, while others will randomly add a month. So what is the correct answer then?
Well, sorry for popping your bubbles, but what we have discussed before is just a myth. Therefore, you do not get any concrete answer to this question.
Myths or mistaken assumptions plague almost every industry since its inception in the market. And the auto loan segment is no different at all!
To help you stay away from these misconceptions, we’ve dismantled some common car lending myths throughout this article. Remember to stay with us until the end!
Popular Myths About Auto Loans To Avoid
Taking out a loan to buy a car is a tedious and lengthy process. Therefore, it is not necessary to turn the whole affair into a complicated one. Hope this section can help you in this regard to some extent.
Myth – 1: Providing Social Security Number Is A Must
Your social security number is quite essential if you or someone with authority wants to know more about your credit history. Therefore, in some loan cases, you may need to provide the same when submitting your application.
However, after consulting SG Lendela, we have found that the above statement is generally not applicable when you take out a car loan. However, some lenders may require you to provide your recent bank statements and pay stubs.
Myth – 2: You can only get a car loan from a dealership
Car dealerships will only offer information about your favorite car and offer you some great deals on it.
Nonetheless, if you wish, you can search from other lenders to get your preferred loan amount at ease. Just make sure you do adequate research on them before you do anything!
Myth – 3: Having bad credit makes it impossible to get loans
Well, that’s just plain wrong. There are many lenders who offer auto loans even if you have bad credit.
Besides, various used car bundles (if you plan to buy used vehicles) will also offer you the same. There is no need to worry about anything.
Myth – 4: A longer loan term saves your money
You will have to pay a small amount of money monthly if you have opted for a longer loan. However, since you are compensating for an extended period, your overall payout will be much larger than usual.
Plus, auto loans usually always follow the rules for low interest loans. Because, the longer you pay, the more your overall interest changes / increases.
Myth – 5: Get a better deal on a rainy day
Believe it or not, this myth was quite popular for a specific period of time. However, it goes without saying that the statement is also absolutely false.
A car dealership usually has deals during various important holidays like Christmas Day, January 1, Memorial Day, etc.
In addition, the time or date of it will depend on the dealer and his preferences. Therefore, if you have a favorite person (i.e. a brand of car), try to keep an eye on their schedule.
Myth – 6: Making a mistake leads to bad credit
We humans are prone to making mistakes, especially if we are trying something for the first time. Sometimes this can be quite expensive, while in other cases you can change things quite quickly. And luckily making the wrong choice when choosing an auto loan provider falls into the second category.
If you make a mistake on your first try, we suggest you shop around and refinance your loan at a better interest rate. In this way, you can avoid the problems of interest rate fluctuations and save your money.
Myth – 7: Being rejected once equals more approvals
Usually, each auto loan lender tends to have their own criteria for approving a loan application. Therefore, just because someone turned you down doesn’t mean everyone will. In addition, there are several lenders who can help you with bad credit scores and get financing to take out a loan.
Completing the entire documentation process and getting a car loan can be confusing. And, if you’re steeped in misconceptions, things will get even more critical for you.
Through this article, we have tried to help you debunk some myths to reduce your skepticism a little. Hope now everything will work out for you!