Buying a car is one of the biggest investments anyone can make. When it seems a little bit difficult to pay for a car through cash, there are other options available like an auto loan. When it comes to an auto loan, you don’t have to feel like you are the on the spot and having to answer all the questions. Lenders may be looking at you and your ability to pay the loan but you also need to interview them. You need to be prepared with your own set of questions and get them answered so that you fully understand all the details and terms pertaining to your auto loan.
If you have no idea where to start, here are some of the most important questions you should include on your list.
Questions to Ask Your Dealer
What are the required documents and how long is the processing time?
One of the very first things you need to know is the documents you need to submit so that you can have ample time to get them ready and avoid possible penalties for the late submission. Also, find out how long those documents will be processed.
What is the interest rate I am paying for?
To find out the exact interest you are paying, check your APR or Annual Percentage Rate. It is the actual interest rate you pay on a yearly basis based on the unpaid balance of your loan. This is where your credit report comes in. Your credit score will determine the extent of the rate that the car dealer will offer you.
How long should I pay the loan?
When it comes to any kind of loan, it’s important to be aware of the terms of the deal. You need to know how long it will take before you can completely pay it off. Also, it’s important to note that the longer the term, the higher the interest rate. It means more money for you to spend. If you can have the loan paid in fewer years, do it that way so you won’t incur higher fees. It is always best to get everything paid as early as possible.
Are there any other penalties?
You also have to ask if there are any possible penalties if, for example, you will be paying off the loan early. Ask if there are any other possible charges that could occur during the entire duration of your loan. This is how to find out if there are hidden charges that will seem like they’re penalties. Remember that you have other things you also have to spend for like documentation fees, sales tax, and many others. There are even some car dealers who charge additional fees just so they can earn additional profit. The sooner you find out about all these things, the easier it will be for you to make a decision whether the car is worth buying or not.
Is it possible to negotiate the interest rates?
You may be able to negotiate an interest rate if you have good standing from the bank or the dealer you are borrowing from, especially if you have already had transactions with them and you were able to maintain good payment history.
Can I have a breakdown of all the fees?
It is important to know where your money is going so you may also want to ask for the breakdown and the exact price of the vehicle. Also find out the total amount that will be financed, as well as the credit and finance charges.
What about credit insurance?
Some lenders demand or offer credit insurance and before you make a decision, find out what it will exactly cost you. Make a comparison if you already have an existing insurance that has the same coverage. Check what is required in your state and if you must pay, make sure that it is included in the cost of your loan.
Applying for an auto loan may be a tedious process, but to make sure that you get your money’s worth, ask your dealer these important questions.