Navigating the world of car finance can be pretty confusing, which is why we’ve rounded up our top do’s and don’ts when it comes to car loans. Whether you’re looking to buy privately or on finance, here’s what you need to know.

Do: your research

It goes without saying that the more prepared you are before taking out a car loan, the better off you’ll be in the long run. Know exactly how much you can afford for repayments and make sure you’ve got an idea of all the factors that will affect your repayments (like interest, insurance and any ongoing fees).

Don’t: apply for the first loan you see

If you’re looking to finance a new or used car, shop around and get a few quotes from different lenders. This will give you a better idea of how much money you can borrow and what the repayment terms are. You can use a website like Driva to compare all of your finance options in one place and ensure that you’re getting the best rate possible.

Additionally, if you’re making a large number of applications, this can have a negative impact on your credit score, as it will record many enquiries on your file (making it even harder to get a loan in the future).

Do: check your credit score

A poor credit score isn’t the end of the world, but it can affect your car finance options. You’ll find that most car loan providers will require a good to excellent credit rating, so avoid applying for loans with lenders who don’t disclose their criteria and you could be wasting your time (and theirs).

Don’t: overcommit yourself

If you don’t have an emergency fund, or your repayments will push you over the edge, it might be best to hold off on getting new wheels. Remember too that if any part of your loan goes unpaid for a period of time, it could affect your credit rating and make other loans more difficult to get.

Do: make sure you can afford your monthly loan repayments

If you’re financing your new or used car, you should know how you plan on making repayments. If you’re planning to borrow heavily on credit cards or through an overdraft, that might not be the best temporary solution for covering finance repayments while your loan is in process. As with most things in life, it’s all about balance.

If you aren’t sure how much monthly finance repayments will be, try putting together a rough idea of where you spend every month and work from there. In other words, don’t underestimate how much it really costs to run a car. There are a number of ongoing costs, like petrol, insurance, registration and toll road costs, so you’ll need to make sure you’re budgeting for these too.

Don’t: forget about the life of your loan

With many finance options offering a timeline as long as seven years, you can often forget that your repayments are fixed for this period. If you’re already earning what you need to afford those monthly payments, don’t let yourself get carried away with buying goals and try to stay on top of budgeting.