Taking out an auto loan without feeling under-confident is a rarity, especially for the first-time borrower, which is why it’s great to be armed with questions to ask lenders before paying a visit. Luckily, you’ve reached the right place to find those questions. So let’s take a look at some great one’s that will have you feeling empowered the day you stroll into a lending office.
#1: What Documents are Needed?
The first on the list of questions to ask to lenders is what you need to take with you when taking out an auto loan. Lenders will tell you to bring your income statements, information on current loans (account numbers and balances), a list of employers, and current banking statements. However, to be sure, it’s best to check with the specific lender.
#2: How Much Should be Brought for Down Payment?
While there is no set dollar amount required for a down payment, keep in mind that the more you bring, the lower your monthly payments will be. In fact, for every additional $1,000 you put toward your down payment, your monthly payment will reduce by $50 a month. That’s a huge saving!
#3: How Does Credit Affect Taking Out an Auto Loan?
Credit has always been an important factor in taking out an auto loan, but it is now more than ever. In general, the better your credit rating, the better chance you have of obtaining a lower interest rate. Keep this in mind and consider repairing your credit before visiting a lender.
#4: What is My APR?
Your APR (annual percentage rate) will vary greatly depending on your credit rating and other factors; however, it’s good to know that it is usually higher than the base interest rate. This is because it includes the base interest rate, as well as other fees.
#5: Can I Make Extra Payments?
This is one of the more popular questions to ask to lenders because many borrowers know that making extra payments can help pay off the loan faster. However, this decision varies from dealership to dealership. Some allow you to double-up on payments, or pay bi-monthly, while others will charge penalties for altering the schedule.
Since taking out an auto loan can be so demanding, make life easier for yourself by preparing these and other questions to ask to lenders before visiting a lending company.