Five Auto Loan Tips
Important auto loan advice to help you get the rates and terms that are right for youNow that you've found the perfect car, it's time to find the perfect auto loan. Since a variety of factors impact the interest rate you'll pay as well as the terms of the car loan itself, it can be confusing determining which auto loan is right for you and your personal financial situation. In this section, we outline five auto loan tips to help you make the best car financing decision.
Pay attention to APRWhen it comes to comparing auto loan interest rates, pay special attention to the Annual Percentage Rate (APR), since this is the true rate you'll pay with all fees included. Your credit score will ultimately impact the APR you're quoted. If you're unclear what the annual percentage rate is, be sure to clarify this with your lender.
Beware of auto loan penalties and hidden feesAs with any contract, review your auto loan agreement carefully for hidden costs. Be mindful of additional charges such as loan processing fees or loan transaction fees, and watch out for penalties associated with paying off your car loan early. Don't forget to ask the lender if there are any additional costs that may occur throughout the life of the loan.
Seal the auto financing deal before you leave the lotWhen it comes to dealer financing, be sure you have a firm commitment regarding the lender, the APR and the loan terms before you leave the dealership. If your lender, rates and terms aren't confirmed, you could receive a call from the dealer several days later with a higher interest rate and higher monthly car payments quote. Be sure to seal the auto loan deal before you leave the lot.
Calculate all the dollars and centsWhen securing auto financing, be sure to calculate the all of the dollars and cents involved, including the final price of the car you're buying, the total amount you're financing, the annual percentage rate with all fees included, the exact dollar amount of your monthly car payments and the total number of car payments you'll make over the life of the loan. Information is power, so be prepared when it comes to signing on the car financing line.
When it comes to credit insurance, do your homeworkCredit insurance, or insurance that pays off a loan in the event of a borrower's death or disability, is not required by all lenders and states, so be sure to determine whether or not your lender or state requires it when considering car financing. If it's required, or if you simply want credit insurance for added peace of mind, check your existing insurance policy to see if you're already covered. If you're not covered and you're required to pay for it on your own, review your contract closely to determine exactly how much it will ultimately cost you.
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