WHAT TO ASK WHEN GETTING A CAR LOAN
By asking the right questions, you can save yourself money and trouble
Do you know what to ask your lender when applying for your car loan? By asking the right questions, you can save yourself money and trouble. Understanding the loan process is key. Before signing a loan application, ask your lender these questions:
What is the interest rate?
Of all your figures, this is the most important. This will advise you of the amount of interest you’ll pay over the life of the loan.
What is the term of the loan?
The “term” refers to the repayment period of your loan, or the length of payment. Typically on car financing, this is between 36 and 60 months, depending on your loan amount. Your term will also help determine your monthly payment.
What will my monthly payment be?
Your car payment is based on your interest rate and term. Get the exact figure from your lender so you can work your monthly payment into your overall financial picture to make sure you can afford the loan.
Is there a Prepayment Penalty on the loan?
Some loans charge a penalty for paying ahead of schedule. If you’re planning to pay off the loan faster than the loan schedule, check with your lender to see if you’ll be penalized.
Are there any late charges on this loan?
Lenders may charge you for any late payments, but the penalty depends on the lender.
Does the advertised rate mean that’s the rate I’m going to get?
The rate of financing depends on an individual’s credit, so your rate may vary based on your financial situation. This means the better your credit, the better your rate may be. It could potentially be better than the advertised rate.
Will I need my credit checked to apply for a loan?
Yes, your credit will help determine your interest rate and ability to borrow.