Buying a new car can be an exciting time. With so many colors, options, and features, it can be hard to choose which car is best for you. But if you are financing your new car for the first time, there are a few key questions you should ask your loan officer or manager.
What are the potential penalties attached to the loan?
Many dealers and lenders will actually charge you a penalty if you pay your loan balance off early. Be sure to ask them if there are any types of penalties or fees that you can encounter during the duration of your auto loan.
How much am I actually paying for this car?
With so many percentages and dollar signs, it can be hard to keep track of what you are actually going to end up paying for your new car. Ask your dealership or loan officer to create an easy to read template that allows you to see exactly what you will be paying in total for the auto loan.
This should include the base price of the vehicle, option costs, interest expense, and any penalties or fees associated with the loan.
If the price of the car sounds high, try finding other dealers with lower-priced versions of the car you are looking at. You are also not obligated to take financing from any lender, so be sure to shop around and find the lowest rates possible.
How much is the deposit?
Almost all vehicle lenders will require that a borrower places a deposit towards their auto loan. In most cases, this deposit is usually $1,000 or 10% of the vehicle sticker price, whichever is usually less. If you have less than ideal credit, some lenders could potentially require a larger deposit.
What are the exact monthly payments?
With so much complex terminology, your monthly auto loan bill can seem confusing. Be sure to break down the monthly cost of owning the car and see if there are any odd fees or charges that stand out.
If you multiply your monthly payment by the amount of total monthly payments you will make, it should add up to the answer you came up with in question 1.
What is the financing charge?
The financing charge is essentially how much money you are paying in order to purchase the vehicle. If you take your answer from question 1 and subtract the base purchase price of the vehicle, you will receive the financing charges.
Can a Car Loan Be Paid Off Early?
Many consumers actually find themselves in a situation where they have enough cash to repay their loan. Sadly, many lenders and creditors do not allow borrowers to repay their auto loan off early. The ones that do allow this practice, however, often have a penalty attached to it.
All in all, purchasing a new car can be an exciting time. However, if you have less than ideal credit, you may have a harder time finding financing. CrediReady can help you get the financing you need regardless of credit scores or credit history. Take a moment to fill out our free no obligation loan inquiry form to get approved for the car of your dreams today!