FAQs About Car Loans

Where should I look for the best financing? Every lender sets their criteria on who they'll accept, and what interest rates they'll offer various scores, individually. And interest rates offered change frequently. For this reason, you really want to shop around. I suggest looking at five different companies and comparing to get a good idea of what's out there and available to you. And always make sure to read the terms and conditions! A lot of companies offer lower interest rates, but then make up for it by charging lots of hidden fees in their terms and conditions. Be aware of what you're signing up for to avoid ending up in financial problems when you can't afford these high fees later on.

Is getting a loan at the car lot a good idea? Generally, no. This follows the comparing five companies rule mentioned above. Car lots are depending on you wanting to get your vehicle right then and there and making an impulse decision. They may tell you, oh, I can only offer you this special rate right now, tonight. Don't let this get to you, this wasn't the deal for you, then.

Should I get a cosigner? A cosigner can be a great idea if you have a bad credit history, or no history at all--for you, that is. It's a great deal for you because it'll make it a lot easier for you to get approved for financing because the company has someone else to go after if you fail to make your payments. For this same reason, however, it can be very risky for the cosigner themselves. If you fail to make your payments it becomes their responsibility, they have to make your car payments and if not it gets marked off on their credit report and they have financial problems because of it. It's important that before you ask someone to do this for you that you have a detailed budget written up and know what you're getting into and that you can handle the payments.