June 13, 2008, Newsletter Issue #82: Online Auto Loan Problems

Tip of the Week

Just like any other auto loan, online auto loans can be confusing and complicated if you don't know what to look for. When you apply for an online auto loan, it goes without saying that you should always shop around for the lowest available interest rate first. Interest rates, however, are not the only thing that makes a loan a good one. You should always pay attention to the terms of the loan, and know how much you can truly afford to pay each month on your auto loan. Do not trust what the lender says you can afford; they are simply looking at your credit report and do not have a truly accurate idea of what your monthly expenses are. Be on the lookout for extra fees on your auto loan. Even the most reputable lenders will try to get you to sign up for life and disability insurance, guaranteed asset protection, and extended warranties. The less reputable lenders will tack these extras on to your loan and try to get you to sign the documents without fully explaining the costs associated with the extras. You should also make sure that you are never paying an application fee to apply for a loan, and you should also not have to pay a prepayment penalty if you pay the loan off early. Don't be shy about asking questions about anything you don't understand; sometimes it is only applicants who aggressively ask questions that actually understand the terms of their auto loans.

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