If you're like most people who are planning to buy a new car, you'll need to get an auto loan in order to make it happen. Here are a few questions that should be asked before applying for the auto loan that you need:
Will the Interest Rate Be Locked In?
One important question to ask before applying for an auto loan is whether your interest rate will be locked in. If the rate won't be locked in, there is a good chance that it will change before you're done paying the loan off – and you could end up spending a lot more money on your vehicle that you anticipated.
If the rate will be locked in, you will know exactly what to expect when paying your auto loan off and you'll be able to more effectively plan for your financial future. But even if you choose a loan without fixed interest rates, it's good to know what kind of fluctuations you can expect beforehand so there aren't any unwanted financial surprises to deal with later down the line.
How Long Does the Application Process Take?
It's also a good idea to find out how long the application process typically takes upfront so you know how long it will be before you get an answer and can drive your new car home. Don't just assume that your application will be processed right away and you'll get an an approval the same day before leaving the dealership.
Some loan providers can take several days to process loan applications, in which case you'll have to wait until you can take your new car home. But if you know that you'll be waiting a few days beforehand, you can make transportation arrangements accordingly an ensure that you aren't left without a vehicle to use while waiting for your loan to be approved.
What if the Loan Terms Are Broken For Some Reason?
While you have a good idea of how your future will unfold, nothing is guaranteed so you may find that your circumstances change when you aren't expecting them to and those changes might affect your commitment to your auto loan. Whether due to the loss of a job, a loss of interest or lack of need for the car you got a loan for, or a serious change in household circumstances, you may find that you can't make your loan payments at some point.
And it's important to make sure that you'll be prepared for situations like these in case they do develop before your auto loan is paid off. So find out how your loan provider will handle the situation if you break your loan terms for any reason.
They may offer extensions and auto loan term changes if you give them advance notice of anticipated late or missed payments. But if you don't know about those opportunities upfront, you may not know how to take advantage of them until it's too late.