back to articles | March 03, 2019 | Dale Peterson

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5 Things Not To Do: Car Finance Loan

When the time for a new or used car purchase rolls around, you may need to apply for a car finance loan in order to complete the transaction. Although you cannot go back in time and change things on your credit report or pocket more money for a down payment, there are some things you can do in the present to increase your chances of obtaining a loan with desired terms. There are also some things you can do to decrease your chances of getting a car finance loan. Here are five things you should avoid doing in the weeks and months prior to applying for a vehicle loan.


1. Do not max out your credit cards or any other lines of credit. The ratio of debt to credit limit affects your credit score in a big way. A recent run on credit also looks suspicious to some banks. It makes it look like you are in the midst of financial distress and may be a high investment risk. If you do use your credit cards to pay for something like a vacation or large appliance, try to pay them down before seeking a car finance loan.

2. Do not miss payments on other debt obligations or allow accounts to reach the point of collection. Pay all bills in a timely manner and work with companies to develop a satisfactory resolution if issues do occur. Late payments can drop your credit score quickly.

3. Do not apply to dozens of institutions when the first four or five offers did not meet your needs. Every time you complete an application, there is a hit on your credit report. Each hit can reduce your credit score by several points, making it even harder to get a loan. If you want to shop around for a loan, consider applying with an online service like You complete one application and receive several loan offers.

4. Do not provide your personal information to companies you are not familiar with or have not researched. This is especially important online. Make sure you are entering your information on a secure server and the company in question spells out their privacy policy. Any time you are completing an application online for a car finance loan, ensure the site address in your browser begins with “https.” Some sites online are scams, seeking to steal your identity.

5. Do not enter a car dealership without preparing. You should have at least some idea about what vehicle you are looking for and how much they sell for in various places. You should also be prepared with information for financial purposes. If you have not received a pre-approved car finance loan offer, you should at least have your financial information with you for application purposes.

By avoiding some common notions about car finance loans, you can increase your chances for obtaining financing for your new car purchase. In addition to doing all the things financial experts advise before getting a loan, you should also avoid behavior that will make you look like a risky investment. Following these do nots will put you in a stronger position when completing a credit application and bargaining over a vehicle.