What to ask for when financing a car

What to ask for when financing a car? Buying a car is fun, exciting and possibly a scary operation. You probably have a model in mind, you found it, the price seems alright, so you’re looking forward to get the details finished with and start enjoying your new baby. Unfortunately, as natural as these feelings are, they are not the ideal setting for finding a competitive car loan. In fact not paying attention to your car loan can mean financial disaster for you and your family. This is completely unnecessary, with only a little research and understanding the basic principles of car loans you can finance your car the smart way.

Some people feel overwhelmed when talking to bankers, finance advisers and even car dealer salesmen. This causes them to not ask the questions they need to make to get the answers they need to make the right choice for their car loan. This article aims to suggest some of the questions you should not forget to ask your finance provider BEFORE signing your car loan.

What do you NEED to ask before you sign the dotted line?

What will be the total cost of the car. That is, what will be the cost after interest, setting up fees, etc…

It seems crazy but this question is often not even mentioned. We probably haggle over a few hundred dollars on the price tag on the car, but not even think about the final price. Ask for a clear breakdown of your car loan, the capital you are borrowing, the interest rates, the tenure (or lenght) of the loan and any “hidden fees” you might have missed. It is worth noting that if you find out about details in the loan you had previously missed you have a minimum of two days (up to a week under some jurisdictions) to cancel your loan, no questions asked.

What will be my monthly payments?

This is probably the most important question for many, and one that we rarely forget to ask. Just make sure you don’t forget, finding the right loan with the right monthly payments is the difference between enjoying your new car and stressing over payments you can’t afford. Don’t push your budget to the limit. Always leave yourself a safety margin in case the interest rates increase. Always have an emergency fund to see you through a couple of months in case you loose your job or have other emergency payments to make.

How long will my loan last for?

This question is strongly linked to the first question. The longer your car loan is the more expensive it will be, the more interest you will pay. However it is also closely linked to question 2. Because finance providers and car dealers know we stress the most about if we can afford the monthly payments and don’t think that much on our total buying cost, they are happy to drop the monthly payments and lengthen the car loan.

These are only two of the many questions you must ask your finance provider before signing any contract.