5 Car Finance Questions To Ask Your Lender

5 Questions To Ask a Car Finance Company
5 Questions To Ask a Car Finance Company

When looking for car finance people generally have a lot of car finance questions. There are a lot of things to think about when looking for the right car finance company for your next vehicle. The more knowledge you have regarding car finance the better financial decisions you can make.

Here’s 5 things to ask the lender before you sign your agreement.

Can I see the disclosure statement?

By law a lender has to show you the car finance agreement disclosure statement and know that you fully understand your weekly/monthly payments and all fees and charges related to the agreement.

If there is something on the disclosure statement you don’t quite understand, ask about it!

  • What happens if you miss a payment?
  • Are there late payment fees?
  • If you have a secured loan how many missed payments does it take before your vehicle can be legally repossessed? 
  • If you want to pay your loan off early are there early repayment fees?

If you don’t receive a copy of the disclosure statement or it is incomplete or incorrect you can cancel the agreement at any time and the lender cannot enforce the contract.

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What is my credit score?

If you don’t know your credit score before applying for car finance (you should check it before applying) then make sure you ask the lender what it is. Your credit score will partially reflect the interest rate you receive so if you know both you can compare them against each other.

There isn’t a direct interest rate to credit score conversion however if your credit score is high your interest rate will come down. If you find your interest rate is high and you have a high credit score, question why you have not received a better rate.

There could be other variables that are bringing your interest rate up – ones that you could work on if you waited another month eg; Perhaps you have no deposit or a low deposit. Wait 1-2 months until you have more money saved. A larger deposit will decrease your overall loan amount saving you money. It could also secure you a better interest rate because you have shown you can manage your money well and are seen as less of a risk to the lender.

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What is the total cost of the car?

Know the total amount with and without interest so you can understand the amount of interest you are paying over the term of the loan. Does it sound reasonable?

You’ll also pay a car finance establishment fee so include this in your total costs.

Paying off a flash new car over “x” amount of years can be wonderful but you need to make sure you’re not paying too much interest over the period of your loan. Your vehicle will depreciate in value so take that into consideration when looking at the final figures.

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Can I have that in writing please?

Promises promises promises!

A lender can promise everything in the world, but if its not written down its not worth anything! If you’ve been promised something in your car finance agreement make sure its written down. Free vehicle check-ups, a deal on your next set of tyres, whatever it is get it in writing so there’s no problems a year later. 

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What repayment period options are there?

The total repayment period will determine how much additional interest you are charged over the duration of the car finance agreement.

A longer car finance agreement means lower weekly/monthly repayments which seems more attractive however you will pay more interest over time. 

Ask what the total repayment costs will be for 24, 48, 36+ months and compare your total car finance loan amounts to see which one is a better deal. If you decide on a shorter agreement, make sure you have the disposable income to meet your repayments.

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