How to revise your auto loan agreement
The devil is in the details. A cliché, yes, but true – and potentially expensive – when it comes to your auto loan deal.
Auto loans at dealerships are grossed up by more than $ 1,700 on average, according to the 2018 car loan company Outside Financial. Markup index. The additional costs come from increased interest rates and additional products inserted into the loan agreement, explains Jon Friedland, co-founder of the company.
Additionally, Oren Weintraub, president of the Authority Auto car buying concierge service in Tarzana, Calif., Says he finds an error – intentional or not – about 3 in 10 times when reviewing contracts for cars. clients.
To avoid overpaying and protect yourself from confusion or sleight of hand, review any car loan agreement carefully. Whether you finance your car through a dealership or work with your bank or an online lender, follow these steps before signing on the dotted line.
Check vehicle and personal information
“As simple as it sounds, you want to make sure you’re buying the right car,” Weintraub explains. Be especially careful to verify that the Vehicle Identification Number (VIN) matches the car you are purchasing, that your name is spelled correctly, and that your address and driver’s license number are correct.
Most auto lenders say they don’t charge any fees. However, there may still be a fee required to start the loan.
Outside Financial Co-Founder and President Sonia Steinway recommends telling the lender, “Please help me understand exactly what I will have to pay to make this transaction go through, including the fees. you or for the [department of motor vehicles] and all taxes.
Another approach, recommended by the automotive site Edmunds, is to ask for an “out” price early in the dealership process. That way, Edmunds notes, “you’ll eliminate those extras and deal with them well before the contract phase.”
Separating legitimate fees from incidentals, sometimes used to create additional profit for the dealer, can be tricky. Check out Edmunds’ list of typical fees for each state.
Watch out for extensions
Some lenders may include other products in the loan agreement that you have not requested, such as extended warranties or gap insurance. Or dealers can install additional equipment on the car that is not clearly disclosed, such as custom wheels, running boards, or anti-theft devices.
Basically, they hope you sign the contract without spotting the addition and then commit to a higher monthly payment.
Once buyers get the contract and incur the extra fees, many sign it simply because they think it’s too late to back off. But be aware that you can ask the dealer to remove the extras and rewrite the contract for less.
“There is a bag of ancillaries that could be inserted,” says Steinway. “Some of these products offer value, but only if you understand them, and only if you buy them at the right price.”
An easy way to spot these additional charges is to search for the section of the loan agreement where the lender or dealer can list products or charges, Weintraub explains.
Make sure the numbers match
Often, consumers begin the loan process by discussing terms with a loan officer or dealer. Therefore, when reviewing your car loan agreement, it is important to make sure that the numbers written in the agreement match what the lender has verbally offered to you, says Steinway.
You can put the numbers in a auto loan calculator to see if the numbers are roughly what you thought you accepted. If they don’t, there is a problem. The lender or concessionaire may have extended the term of the loan, added extras, or inflated the interest rate.
Report any issues and speak to the lender
As you review your loan documents, grab a pencil and circle any languages you don’t understand and any fees or additions that weren’t previously discussed.
Give the lender or dealership a chance to explain anything you’ve reported in the contract, says Steinway. But make sure you get an explanation that you fully understand, rather than just evasive non-response.
And whether you’re in the backroom of a dealership or on the phone with an impatient loan officer, don’t be pressured into signing something you’re uncomfortable with.
While reviewing the loan deal is important, Weintraub says it is the numbers that form the heart of the deal. Make sure you understand each charge.
Get the best deal you can
Experts agree that get pre-approved for a good loan before going to buy a car can help you get a better interest rate. Understanding the loan process and knowing what to look for in a car loan deal are essential to making sure you get what you bargained for – and the best deal possible.
If you are buy a car loan Where refinance your car, you are probably reviewing several offers. To make it easier for you, get all quotes based on the same conditions: loan balance and term. Only by making direct comparisons can you see the differences and find the best deal.
Friedland says the best defense at the dealership, or when considering loan offers, is knowledge. “Let’s face it, people are leveraged in this process in direct proportion to their readiness,” he says.