5 ways to avoid over­pay­ing on your car loan

The Denver Post - - BUSINESS -

Car-buy­ing ex­perts and in­dus­try in­sid­ers rec­om­mend these key strate­gies:

1. AVOID LONG LOAN TERMS

While you can get loans up to 84 months, Ed­munds.com rec­om­mends fi­nanc­ing a new car for no longer than 60 months. Used car loans shouldn’t be longer than 36 months.

2. SHOP YOUR BEST RATE

Ap­ply­ing to mul­ti­ple auto lenders lets you com­pare of­fers to en­sure you get the most com­pet­i­tive rate — ei­ther from an out­side lender, like a bank or credit union, or from the dealer.

3. DON’T FO­CUS ONLY ON MONTHLY PAY­MENTS

Some sales­peo­ple at the deal­er­ship may ask what monthly pay­ment you want and then covertly in­flate the sales price.

4. WATCH OUT FOR SUR­PRISE FEES

Make sure you un­der­stand your lender’s fees. Banks, credit unions and on­line lenders may charge orig­i­na­tion fees. These are of­ten rolled into the to­tal loan amount, so you can sim­ply com­pare of­fers based on the pay­ment and in­ter­est rate. Oc­ca­sion­ally lenders also may charge pre­pay­ment fees. And loans through out­side lenders and deal­er­ships of­ten as­sess late fees.

5. REVIEW VI­TAL LOAN TERMS

Loan con­tracts are bind­ing, so review the terms care­fully. — Nerd Wal­let

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