Things to Look For in a Car Loan

If you buy a car, chances are you will have to finance the purchase. To do so, you are probably considering a car loan. If you are, here are the top ten things to look for:

• The price of the vehicle- Nothing is more important than this. This is the amount the loan is based on. It is the beginning of all that financially follows about your purchase. So, make sure you know exactly what the final purchase price is.
• Add-ons- Don’t forget the add-ons in the total purchase price. This not only includes all of the options you selected but the taxes, destination and title transfer fees plus any other costs that get tacked on to the final price.
• Interest rate- It’s easy enough to compare interest rates for auto loans in your area by doing an internet search of current market rates. Many other factors impact the interest rate, however.
• Credit score- Know your credit situation. It’s one of the biggest factors influencing the interest rate you’ll pay on the car loan.
• Monthly payment- It’s easy to make this the most important factor. While monthly cash flow is important for most individuals and you have to able to afford the payment, resist making this the only factor that matters.
• Trade-in- Know the trade-in value of your car. It is typically much less than if you sold it yourself. Research the wholesale price of your car to make sure the dealer is giving you a fair trade-in value.
• Source of the loan- Who will be providing the funding for your loan? If it’s the dealer, you may be paying more than you like. It may be wise to do some comparison shopping on the internet. It also may be worthwhile for you to shop for a loan at your local bank or credit union. It may be less expensive to find car financing via one of these sources.
• Leasing- Is leasing an option? While technically not a loan, it’s still a way to finance your vehicle that you may want to consider.
• Insurance- Often, auto loan makers will want to sell you insurance that will pay-off the car if something happens to you. Carefully consider if that’s something you want. It will add to your monthly payment.
• Length of the loan- The shorter the term, the faster the loan will be paid off and the least amount of money will be spent financing the car.

Taking out a car loan is a major financial move. Carefully consider all of the aspects of it.