To make sure you’re making the right choice regarding an auto loan, here are four questions to ask before you sign the dotted line:
1. What is the loan type and amount of the interest rate?
With any type of loan comes an interest rate, but all rates are not the same. They vary among factors like your credit score, how much you’re putting down on the car, etc. The interest rate percentage can vastly impact your monthly payment amount. Knowing what the interest rate is will help you determine how much interest you’ll pay over the life of the loan.
2. What is the loan’s term?
A term is the length of your repayment period. Finding this out is essential because some finance contracts require that there be a specific time period, typically two or three years. If that’s the case, your monthly payments will be higher.
3. What will my monthly payment be?
Make sure the dealer factors in the interest rate and any other fees bundled into that payment. For instance, if you’re purchasing add-ons to your vehicle, like fabric protection and paint sealant, that is an extra cost that should be calculated into your repayments. It’s important to understand the exact amount that you’ll be paying each month.
4. What documentation is needed?
To apply for a loan, you’ll need to provide several documents, such as, proof of income and a current pay stub. Also, you may need to acquire comprehensive insurance coverage.
Most important, if you don’t understand something, please be sure to ask us!