5 Common Car Finance Mistakes and How to Avoid Them

Financing a car is one of the biggest financial decisions many people make — but it can also be one of the easiest to get wrong. At carloans 365, we’re here to make the process as smooth and stress-free as possible.

In this article, we’ll cover five of the most common car finance mistakes people make in the UK, and how you can avoid them to save money and stay in control of your finances.

1. Not Checking Your Credit Score First

Your credit score plays a key role in the type of car finance you’re offered. A low score can mean higher interest rates or limited finance options.

How to avoid it:
Before applying, check your credit score for free using services like Experian, Equifax or ClearScore. If your score needs improvement, take steps like paying off debts, registering on the electoral roll, and avoiding multiple credit applications in a short time.

2. Focusing Only on Monthly Payments

Low monthly payments might seem appealing, but they can sometimes hide a bigger overall cost — especially with long-term agreements or large balloon payments (like with PCP).

How to avoid it:
Look at the total amount repayable over the full term, not just the monthly figure. Make sure you understand any end-of-agreement costs, especially if you're choosing PCP.

3. Not Comparing Finance Offers

Many buyers take the first offer they receive, often from the dealership, without checking if they could get a better rate elsewhere.

How to avoid it:
Use a broker like carloans 365 to compare deals from multiple lenders. This gives you a better chance of finding a competitive rate that suits your credit profile and budget.

4. Underestimating Running Costs

It’s easy to get caught up in choosing a car and forget about the ongoing costs — like insurance, fuel, tax, and maintenance.

How to avoid it:
Factor in all running costs before committing to a finance deal. Be realistic about what you can afford monthly once everything is included.

5. Ignoring the Terms and Conditions

Some drivers sign the finance agreement without fully understanding things like mileage limits, early settlement fees, or charges for wear and tear.

How to avoid it:
Always read the small print. If anything’s unclear, ask the lender or broker to explain. At carloans 365, we make sure you understand every part of your agreement before you commit.

Need Help Getting Car Finance the Right Way?

Avoiding these common mistakes can save you time, stress, and money. At carloans 365, we work with a wide panel of trusted lenders to find finance that works for you — even if you’ve been declined elsewhere.

Apply online today or get in touch for free, no-obligation advice from our expert team.