What questions should I ask my vehicle lender?
Getting a vehicle loan either through a dealership or through our bank is often a simple process. To feel as confident as possible in your financing, here are some important questions to ask before you put your signature on a contract to buy a new or used vehicle.
What documentation do I need to get a loan?
Your driver’s license allows us to verify your identity. You’ll sign a form authorizing us to do a credit check, and that’s usually all we need. Occasionally some loans might require additional income or banking statements, but we’ll let you know if that’s necessary.
What interest rate will I pay?
When you know your interest rate, you can determine how much interest you will pay over the life of your loan, and it will give you a starting point to judge your options for the right vehicle and the right loan. Your vehicle loan interest rate could vary from lender to lender and it could be determined by many factors, including your credit score.
What loan term should I consider?
That’s different for everyone’s situation – and we’re happy to talk with you to help you decide what’s best for you. The shorter the term, the less interest you’ll pay, but your monthly payment might be higher than with a long-term option. A shorter-term loan also will make you less vulnerable to owing more on the vehicle than the vehicle is worth, known as negative equity or being “upside down.” Loans are typically between 24 months and 84 months, or two to seven years. Use our Auto Loan Calculator to get a good idea of what your monthly payments and interest will be.
What is GAP insurance and do I need it?
If your car is totaled in an accident or stolen and declared a total loss, your insurance company is only obligated to pay fair market value for it. If the vehicle has depreciated below what you still owe on it, you have to pay that remainder off even though you no longer have the car. This is where Guaranteed Asset Protection (GAP) insurance comes in. It will cover that difference for you so you can pay off the loan. Here are some reasons you might want GAP insurance:
• Your trade-in has negative equity and you finance that into your new loan.
• You have little or no down payment on the car.
• Your loan is greater than 60 months.
• You expect your car to depreciate quickly because you are planning to put a lot of miles on it early.
There still might be some costs for you even if you have GAP insurance, such as your insurance deductible as well as any late- or missed-payment fees you owed prior to your car being deemed a total loss.
What usual fees are associated with buying a car and how does that affect my loan?
There is a vehicle registration fee, sales tax and a documentation fee. These fees often are rolled into the loan when financed through the dealership. Through a loan at our bank, if you want to finance those taxes and fees, it helps to know the final price of the car before we send you to the dealer to complete the sale. If you can plan ahead and pay taxes and fees out of pocket, however, you’ll have a lower loan amount and pay less interest.
Can I choose when my monthly loan payment is due?
Yes, you can select the recurring due date so that it conveniently fits within your budget. Often clients will separate their auto loan payment from when their mortgage or rent payment is due so they aren’t making all their large payments at once. Any of our lenders can adjust this for you.
We’re here to help simplify the vehicle-buying process – whether you need us for advice when you take a loan from a dealership, know-how about the process itself or if you need to borrow money from us to get the vehicle you want. We don’t lend money to collateral; we lend it to people. So you’re going to get the service you deserve and the trustworthy relationship you desire from a bank.
Don’t hesitate to use these questions as a conversation starter with one of our local professional, knowledgeable lenders today. Call us at 740.653.7242 or visit us anytime.