1. Interest Rate (APR)
- Why it matters: The Annual Percentage Rate (APR) determines how much interest you’ll pay over the life of the loan.
- What to check: Compare the APR with rates from other lenders. Make sure it’s fixed (not variable) unless you’re fully comfortable with rate changes.
2. Loan Term (Length of the Loan)
- Why it matters: A longer loan term can lower monthly payments but may cost more in total interest.
- What to check: Make sure the term aligns with how long you plan to keep the car. Typically, 36–60 months is standard.
3. Monthly Payment Amount
- Why it matters: You need to ensure the monthly payments fit comfortably within your budget.
- What to check: Verify the total amount includes all fees, taxes, and insurance (if bundled). Ask if there are penalties for early payments or late fees.
4. Total Loan Amount and Fees
- Why it matters: The total loan may include hidden fees, extended warranties, or add-ons you didn’t request.
- What to check: Ask for a full itemized breakdown of the loan amount. Watch out for extras like gap insurance, service contracts, or administrative fees.
5. Prepayment Penalties and Early Payoff Terms
- Why it matters: Some lenders charge a fee if you pay off your loan early.
- What to check: Confirm whether there are any penalties for early repayment or refinancing. Flexibility can save you money in the long run.
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