• Sign in
  • |
  • Sign up

Checklist: Questions to ask your auto lender

RELATED READING
RESEARCH BY MAKE
Honda cars, trucks and SUVs Nissan cars, trucks and SUVs Ford cars, trucks and SUVs Toyota cars, trucks and SUVs Lexus cars, trucks and SUVs Acura cars, trucks and SUVs Hyundai cars, trucks and SUVs Mercedes-Benz cars, trucks and SUVs
Acura cars, trucks and SUVs Alfa Romeo cars, trucks and SUVs Aston Martin cars, trucks and SUVs Audi cars, trucks and SUVs Bentley cars, trucks and SUVs BMW cars, trucks and SUVs Buick cars, trucks and SUVs Cadillac cars, trucks and SUVs Chevrolet cars, trucks and SUVs Chrysler cars, trucks and SUVs Dodge cars, trucks and SUVs Ferrari cars, trucks and SUVs FIAT cars, trucks and SUVs Ford cars, trucks and SUVs Freightliner cars, trucks and SUVs GMC cars, trucks and SUVs Honda cars, trucks and SUVs Hyundai cars, trucks and SUVs Infiniti cars, trucks and SUVs Jaguar cars, trucks and SUVs Jeep cars, trucks and SUVs Kia cars, trucks and SUVs Lamborghini cars, trucks and SUVs Land Rover cars, trucks and SUVs Lexus cars, trucks and SUVs Lincoln cars, trucks and SUVs Lotus cars, trucks and SUVs Maserati cars, trucks and SUVs Mazda cars, trucks and SUVs McLaren cars, trucks and SUVs Mercedes-Benz cars, trucks and SUVs MINI cars, trucks and SUVs Mitsubishi cars, trucks and SUVs Nissan cars, trucks and SUVs Porsche cars, trucks and SUVs RAM cars, trucks and SUVs Scion cars, trucks and SUVs smart cars, trucks and SUVs SRT cars, trucks and SUVs Subaru cars, trucks and SUVs Tesla cars, trucks and SUVs Toyota cars, trucks and SUVs Volkswagen cars, trucks and SUVs Volvo cars, trucks and SUVs
RESEARCH BY STYLE
AWD/4WD
Commercial
Convertible
Coupe
Hatchback
Hybrid/Electric
Luxury
Sedan
SUV/Crossover
Truck
Van/Minivan
Wagon

The options available to a car buyer have never seemed greater: flexible loan-term lengths, varying Annual Percentage Rates (APRs) and even zero-percent APR financing. And the lenders vying for your business seem to be proliferating as well. The trick is to arm yourself with information before going loan hunting and to talk with several lenders. As interest rates rise, be sure to compare multiple loan offers to find the deal that’s right for you.

Go through the following questions with a prospective lender:

  • What documentation do I need? Your lender will most likely require income statements, a list of employers, account numbers and current balances on other loans, and current banking statements. Call ahead and ask what’s needed so you can have everything ready and can get your loan quicker.
  • How much do I need for a down payment? The greater your down payment, the lower the cost of your loan and the sooner you can pay it off. Typically, every additional $1,000 you put toward a down payment reduces your monthly payments by $50 a month. A substantial down payment can also help you to avoid going upside-down on your loan – owing more on your loan than the car is worth. However, if you don’t have a lot for a down payment, there are still many options available.
  • How will my credit rating affect my loan? Typically, the better your credit rating, the better your chance of getting lower interest rates. The zero-percent financing that’s advertised by many car dealers is often only available to people with impeccable credit ratings. If you don’t know your current credit score, click here to order your credit report today.
  • What will my monthly payments be? Your monthly bill will probably include principal, interest, taxes and other fees that will vary depending on your lender. The lender may suggest you lower your monthly fees by extending the loan term. Try to avoid this as you risk going upside-down on your loan. You will also pay more total interest charges in the long run.
  • How much interest will I pay? Your interest payments will vary depending on the lender and your credit score. Each lender will evaluate your credit rating in different ways, so the interest rate you are offered can vary widely from one source to the next.
  • What is my APR? The APR is usually higher than the base interest rate because it includes your interest rate (which, as stated above, will vary depending on your credit rating and where you live) plus other fees. The APR is usually the best way to compare loans, because it is calculated to include all borrowing costs.
  • Will I go upside-down? The best ways to prevent becoming upside-down on your loan have already been mentioned above: put more money down and arrange for the highest payments and shortest loan term you can afford.
  • Can I make extra payments? Ask your lender if extra payments are possible and if there’s a fee or penalty attached. If the fee isn’t too high, putting more money towards your loan will help pay it off faster and you will pay less in the long run. Make sure that all of the extra payment goes toward the principal.

To find the right auto loan for you, visit lendingtree.com, the preferred auto loan provider for AutoTrader.com.

Provided by LendingTree.
Copyright 1998-2008, LendingTree LLC. All rights reserved.

This image is a stock photo and is not an exact representation of any vehicle offered for sale. Advertised vehicles of this model may have styling, trim levels, colors and optional equipment that differ from the stock photo.
Close 
Checklist: Questions to ask your auto lender