Financing a Car: Questions to Ask

Reader question:

What kinds of questions should I ask about financing when I’m buying a new car?


Fantastic question.

Getting a good deal on financing can be as important as getting a good base price on your car. Some people negotiate a great deal for their car, and then turn around and get slapped with ridiculously high interest rates that take the price back much higher than it would have been at the normal price. It’s important, then, to continue the process of negotiation to more areas, including financing, and to know what you’re allowed. Ask these questions to educate yourself about the financing plan you’re being given.

  • What is the interest rate that I’m actually going to pay? The best way to find this out is to get the APR. The amount of interest you pay will be determined based on your credit score, which the financers will check before offering you an interest rate.
  • Does the loan come with penalties? Sometimes you can be charged penalties if you pay off your car sooner than expected, so check if your loan is like this. Also make sure there aren’t any extra charges hidden under the surface that they don’t tell you about right away. Are these charges penalties?
  • What exactly am I paying for the car? Knowing the actual price of the car is very important in making sure that you are being charged correctly.
  • For what amount will I be financed? This is the amount of the car, plus taxes and interest and other charges.
  • What am I paying for credit? This is called the finance charge.
  • How many payments will I be making?
  • Is everything settled? Sometimes, they’ll offer you a certain rate and so on and then call you after you’ve left with the car to say that the deal didn’t go with that financer, but they can offer it to you for a different, more costly deal. To avoid this, make sure you settle everything before taking off with the new car.
  • And credit insurance? Your financer could offer you, or require you to have, credit insurance. Lucky for you, though, the law doesn’t, so check the law for your state before going in. Hardly ever will a financer require this, though. If they do, check to see if it’s in your credit cost as it should be, and look to see how it fits into your APR.


Fashun Guadarrama.

About the Author:

Austin Davis, consumer car repair advocate. "Hi there! I love to help people solve their car repair problems and I hope my site was helpful to you today. Thank you for stopping by."