5 ways to avoid overpaying on your car loan
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