7. Read the fine print. Take the loan paperwork home and read it before you sign anything, advises Massachusetts consumer attorney Yvonne Rosmarin. If a lender or dealer balks at that, walk out. This is a binding agreement that's going to last for years, so you need to know exactly what's in it.
Some points that warrant special caution:
- Mandatory binding arbitration: "It takes away your right to go to court for anything," says Rosmarin.
- A variable interest rate: Figure out the highest possible payment. If you can't afford it, the loan's not for you.
- Prepayment penalties: How much will it cost you to pay off the loan early if you want to sell or refinance?
- Is everything the lender promised in the contract? Oral promises are hard, if not impossible, to enforce, Rosmarin says. If there's something missing that's important to you, don't sign until it's included. If it's work that's promised, don't sign until it's completed.
8. Check the math. If the monthly payment is even slightly different from your calculations, the loan might not have the terms you think you negotiated. Use Bankrate's auto-loan calculator to double-check.
9. Avoid conditional financing. Never take a car from a dealer until the financing -- down payment amount, interest rate, length of loan, monthly payments -- is completed. If the financing is "contingent" or "conditional," it can change later, and you could get stuck with less advantageous terms.
10. Investigate your lender. "Check on anyone you're dealing with," Rosmarin says. Try the Better Business Bureau, your state attorney general's office and consumer-affairs office or any other government agencies (state or federal) that regulate lenders. Search online to learn what customers and former customers are saying. Though you should take online comments "with a grain of salt," Rosmarin says, they can also provide an early warning to possible problems.
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