7 Questions to Ask about Your Auto Loan

With all the low price auto finance options our lenders offer, selecting the right loan might seem like a daunting task. Here are seven questions to ask to help you select your auto loan.

1. What is my APR? Whether you're getting a low price auto finance loan, credit card, or a mortgage, you always want to ask what the loan's APR is. A loan's APR takes into account interest rates and all up-front and ongoing charges and fees. Thus, an APR is a more accurate reflection of the total annual cost of borrowing than the interest rate alone. The APR is also the most reliable way to compare different low price auto finance loans. By law, lenders must compute APR the same way, so it's the most valid basis of comparison. Lenders also must disclose your APR in bold on your customer loan agreement.
2. What is my monthly payment? Though a monthly payment shouldn't influence your low price auto finance decision too heavily, it is still important to know exactly what you'll be paying each month. Without knowing your monthly payment, you will not be able to accurately gauge whether you can comfortably afford a certain car. Make sure the monthly payment you're quoted fits into your budget.
3. What is the total cost of the loan? Even though one low price auto finance loan may offer a lower payment than another, the loan still might end up costing you more in the long-run because of interest expense. For this reason, always ask your lender for the total cost of your low price auto finance loan. This number will include all monthly payments you will make over the life of the loan in addition to fees, charges, and interest.
4. Do I have prepayment privileges? You want to know what the prepayment privileges of your low price auto finance loan are in case you ever want to refinance or pay your loan off early. Ask your lender if you can pay your loan off early, and, if so, how many extra payments you are allowed per year.
5. What are my prepayment penalties? Especially if you decide to refinance down the road, you don't want to face excessive prepayment penalties on your low price auto finance loan. Ask how much it will cost to pay your loan off prematurely.
6. What is the term of the loan? The most common low price auto finance terms are 36, 48, and 60 months. Some lenders offer terms as short as 24 months and as long as 72 months. Experts generally recommend keeping the term of your low price auto finance as short as possible to minimize interest expense.
7. What up-front fees do I have to pay? Low price auto finance usually involves certain up-front charges and fees that you'll have to pay when you finalize the loan. Such fees might include application and origination fees. Your lender should be able to tell you exactly how much your up-front expenses will be so you can budget accordingly.

If you have any questions, please visit our "FAQ" page.