Getting a secured auto loan can be a confusing and overwhelming process for many, and there are several things that can go wrong in such a loan. You need to be very sure about the terms and conditions of such a loan before you sign your auto loan contract. Feel free to ask questions, carry out research, and explore all your options before you seal the deal. Here’s a look at some of the most common pitfalls while applying for a secured auto loan, and how to avoid them:

• Sitting across the desk from your financier with your fingers crossed as you wait to hear your credit score is not a good idea. You need to be very sure about where you stand, and make an effort to improve your credit rating, before walking in to get an auto loan. Contact a credit bureau for information on how you can rectify errors in your credit report. Even a small change in your credit can have a big impact on your loan and the interest rate you get.
• One of the easiest ways to ruin your auto loan is to end up spending more than you had set out to. If you are sure that you want a cheap auto loan, it is important to know exactly how much you can afford to spend towards monthly car payments (no more than 20% of your net monthly income) and stick to this figure.
• Take time out to carry out some basic research on the going interest rates on secured auto loans in the market, before visiting the dealership. This way, you will know whether the rate being offered to you is a fair one.
• Do not let the loan officer drift to insignificant aspects of the deal, by intertwining them with what really matters. Your primary focus at all points should be the APR being offered to you, as this is what shall actually matter in determining how much you end up paying in the long run.
• Signing the papers under pressure in a rush to finalize the deal is another common pitfall that most buyers make. If you feel that you are losing control and succumbing to the seller’s pressure, a better idea would be to walk out and return, if you must, once you have cooled down.

Keeping your head cool and doing your homework before entering the loan agency office can help you get that lowest used car loan that you have been looking for, leaving you with a loan that you’ll be happy about for as long as you drive the car. 

• Loan Term: A lot of people opt for a longer term loan thinking that they can easily repay the amount. However, with this, they have to pay a greater amount of interest. On the other hand, short term loans can help you save thousands of dollars on your interest payments but requires a much higher monthly repayments to be made. If you have sufficient funds to pay off the loan easily, consider going for a loan with an optimum term and easy monthly installments.
• Interest Rate: Mainly, credit unions offer two types of interest rates to the borrowers, fixed and variable. In the former one, the rate of interest and monthly repayments remain fixed throughout the loan tenure. In the latter option, the interest fluctuates as per the current market rates and so does the amount that you have to pay. It is advisable that you choose a fixed rate for a specific term and switch over to variable when the market rates are low. 
• Extra Fees: Besides the interest rates, you must also check out any additional fees or charges levied by the lender. These may include the application fees, lender’s mortgage insurance, valuation fees, break fee, penalty for late payments etc. All these can make substantial changes to your monthly repayments. 
• Additional Features: Make sure you clear all your doubts before signing your home loan contract. Ask your credit union if they offer redraw facility and if the loan is portable. This will help you to transfer your home loan to another property without having to carry out the entire process all over again. You should also ask if they offer any discounts for the repayments.