An auto loan is a long-term financial commitment. Before signing an auto loan contract, make sure you fully understand what you are getting yourself into. The following questions should be asked before finalizing your car financing agreement, as they will indicate whether the auto loan is the right choice for you.
Fees
Ask your auto lender what fees are being charged as a part of your loan. Whether you are financing your car through the dealership or with an outside lender, there are almost always several fees charged. These fees can include a documentation, processing, application and credit check charge. Sales tax is easy to overlook while deciding if a car is within your budget, so make sure all prices you are being quoted include the sales tax for your state.
Average Insurance Costs
The estimated cost of insuring the car you are buying should be worked into the expected monthly expense for the vehicle before you agree to an auto loan. Ask the salesperson at the dealership if they know the average insurance rate cost for the car you are buying and check online for quotes from your preferred insurance provider. If you do not take this expense into account, you may be signing on to make monthly loan payments you cannot actually afford.
Cost of Add-Ons
When buying a new car, always ask if the cost of optional feature add-ons have been included in the price you are quoted. As you and the dealership's salesperson go through the features you can choose to have in your car, take notes on each you want and how much it is going to increase the asking price. Compare your notes to the total price listed in the auto loan agreement to make sure the final cost for the car is in agreement with the original offer from the salesperson. This important line of questioning will eliminate surprises after the auto loan is final.
Mileage and Maintenance
Ask about a used car's mileage and maintenance record. These two questions are valuable negotiating tools you can use when purchasing a used car. Also, a used car with high mileage or spotty maintenance history could need expensive repairs sooner rather than later. Consider how much ongoing repairs could cost you before financing a used car purchase.
Before you get an auto loan, ask as many questions as you need to make sure you understand all aspects of the financing agreement. You should know everything that is being charged and your expected ongoing expenses prior to signing a car loan contract.
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