Things you need to know about your future car loan

Things you need to know about your future car loan. Do you remember the first car you bought? I do. Didn’t you spend hours deciding which model would be the right one for you. Petrol, diesel, sporty, economical, the list of variable knew no end. The endless day dreaming finally led to a choice on the type of vehicle, maybe even the model you wanted. Then came the test driving, a second opinion from your parents, and just to be sure another opinion from a mechanic.

This planning is fun and an important part of getting the car you need and will enjoy owning. Similar effort and planning is needed to get the car loan you will need to pay for the car. Too many people spend endless time choosing the vehicle and no time at all choosing a car loan. That is like spending a million bucks on a yacht and employing a janitor to be your captain, not the best idea. Making a mistake with your car loan could cost you a small fortune in penalties, hidden costs and ultimately could make you lose your car and end up with bad credit.

This of course is not necessary. You just need to spend some of your time planning what car loan you need. Ask your car dealer or finance provider some key questions and use some good old fashioned common sense.

So what questions should you think about before you choose a car loan?

1) What will the interest rate be?

When comparing loans, because compare you must, make sure you are comparing the same kind of interest. There are a few types of interest out there and they can be confusing. The APR index is as good as any. It is an average of the yearly interest on the balance of the capital you owe.

2) Find about ALL the costs of the loan and any penalties you could incur in the future.

Hidden costs are often found in Car Loans, make sure every cost you pay for is explained clearly to you. Don’t pay for extras you don’t need and have been “kindly” introduced in the deal without asking you. Car loans are expensive loans with high interest rates, sometime in the future you are likely to want to pay it off and avoid the pesky high interest rates. Find out if you will have to pay penalties for paying early. Try to get these penalties cancelled or reduced and if that is not possible try to get some saving elsewhere.

3) Get financial approval before you leave the auto dealer. Some car dealers will agree to a financial package and let you drive the car home. Then you get a phone call stating the finance provider they were “hoping” to get fell through. Not to worry though, you can keep the car, we have this other finance provider that will be willing to give you a loan, but unfortunately with higher interest and fees. Don’t fall for this trick. Get the finance set in stone before leaving the dealer.