5 Things to Look for When Comparing Car Loans


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It can be a challenging process to find a car loan that works with your individual financial circumstances. Not every car loan works for every person. You should always compare various car loans before signing any official loan documentation. Here are five things to seriously think about when you are doing comparison shopping for car loans:

Legitimacy – There are many websites out there that can help you see whether or not a car loan is a good deal. Many websites will do the loan comparisons for you, which certainly can make the car loan process quite a bit easier. Make sure that whatever car loan comparison website you visit looks legit; some websites just want you to purchase the loan products that their company offers. Car loan comparison websites allow you to easily compare loans with different interest rates, the terms of the loans and the quality of the loan providers.

Interest Rates – When you are comparing car loans, you should definitely see what each individual loan’s interest rate is set at. Do not sign for any car loan that contains too high of an interest rate in the loan terms. You also shouldn’t sign for a car loan that has an interest rate that continually rises over the term of the loan. High interest rates are uncalled for, unless of course you have very poor credit scores. Even then, try to get a car loan with an interest rate of no more than 18 percent attached to it.

Terms & Conditions – Comparing car loans can be difficult because you have to watch out for unbelievably crazy loan terms. Loan companies can set your car loan payments so high that you eventually won’t be able to afford to pay for the car. They can also make the interest rate on your car loan rise if you miss your car payment deadline by even one or two days. When you are comparing car loans, make sure that the terms of each loan will work for you.

Early Repayment Penalties – Some car loan companies can penalise you for paying off your vehicle loan too early. While this may sound ludicrous, putting a prepayment penalty in the loan contract can highly benefit the car loan company. When comparing car loan companies, try to make sure that the loan company that you select doesn’t make you pay extra money to shorten the time frame of the loan.

Cold Calls & Pressure – When doing comparison loan shopping for car loans, don’t fall for some loan companies that may call you to try to pressure you into signing loan papers immediately. Some loan companies love to tell potential customers that the interest rates that were initially promised to them may rise if the car loan papers aren’t signed right away. If certain car loan companies are trying to speed up the loan process to a point where you don’t have time to think about the terms of the loans that they offer, you shouldn’t choose any one of those companies to hold your car loan.

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