How do I properly review my car loan agreement?

I'm going to close on a car loan in about a week and I want to be prepared. How do I properly review the loan contract so I'm not surprised by anything?

Answer
Although reading a car loan contract may seem intimidating, doing a bit of research before closing will help you understand the terms of your agreement and catch any hidden fees before signing.
When you’re going over the contract:
  • Verify your personal information and vehicle information are correct
  • Make sure your payment schedule adds up to the total of payments indicated
  • Check for hidden fees: common terms include prepayment penalties, late fees, percentage penalties, precomputed loan, and rule of 78s
If you aren’t sure about the meaning of any terminology on the contract, don’t hesitate to ask the lender for an explanation on the spot.
The lender may try to pressure you to hurry up and sign, but you owe it to yourself to read and properly understand the contract—failing to do so can cost you hundreds or thousands of dollars.
Why pay more than you have to for loans or car insurance? Jerry can help you find a more affordable policy in just minutes. As a recognized car insurance shopping app and licensed broker, Jerry provides you dozens of competitive quotes from the nation’s top insurers.
Eric Schad
Answered on Oct 28, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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