Purchasing a car with finance can cause you countless headaches and ruin you financially if you don’t take the necessary precautions and do your homework.

There’s no doubt that when you see a car advertised for an attractive weekly price that it can be easy to get carried away and commit to more than you bargained for. Often things like payout figures, balloon payments and fees are something that don’t get taken into consideration. Making an irrational decision before crunching the numbers and calculating the real costs can result in you paying as much as double a car’s worth in the long run. Here’s our list of things you should know before signing on the dotted line:

• Check out all finance options – shop around for other finance packages from banks and independent providers.
• Lifetime cost of the loan – calculate exactly how much you’ll be paying over the life of the loan.
• Consider depreciation – sometime the value of a car will become less than the outstanding value of the loan. So selling your asset won’t necessarily clear your debt if you need to.
• Find out about early pay-out penalties
• Legitimacy – check whether the loan provider is legally allowed to offer you a loan. They should have an AFSL number that you can research.
• Look into balloon payments and lump sums required in the loan – you would hate to get hit for a surprise bill for 25% of your car’s value at the end of your loan if you’re not prepared for it!

Getting finance on a car can be a great option for getting you the vehicle you need, just make sure that you’re making the right decision by doing your research, running the numbers and not biting off more than you can chew.