Car Loan Tip - Avoid Hidden Fees

Once you've found the car you want, it's time to sit down with your sales rep to negotiate the terms of your car loan. After a little back and forth on price, figuring out your interest rate, and calculating your monthly payment, you're ready to sign on the dotted line, right? Not so fast.

When you read the fine print you may find that additional fees and charges have found their way into your auto loan contract – including add-ons you didn't necessarily ask for.

Most car buyers are so focused on getting the best interest rate and negotiating the most affordable monthly payment that they're unconcerned with the car loan contracts fine print. By the time they get to the step where they review and sign the paperwork, if the sales rep is throwing industry terms at them that they don't fully understand, they become exhausted from the entire process and just want to get it over with.

Here are a few insider tips to make sure you have no regrets.

First - Read the Fine Print

While this seems pretty obvious and self-explanatory, it's amazing how trusting the consumer can be. Honestly, the last time you

bought a car, did you read and fully understand the auto loan contract before you signed it? Most people don't. Some unscrupulous car dealerships are betting on that.

Because most people don't read the fine print, some sales reps can slide in additional, undisclosed charges or extras with huge mark-ups.

Also, make sure there are no blank spaces on your auto loan contract that can be filled in later - wherever there are blank spaces, write in "$0" or "N/A."

Second - Typical Extras

Most of us are familiar with learning about the standard features of a vehicle and then figuring out which additional features we are willing to pay extra for. But here are some extras to look out for when reviewing your contract:

  Fabric Protector                   Window Tinting          Pinstripes
  Bed Liners (for trucks)         Paint Sealant             Credit Life Insurance
  Car Mats                              Car Alarm                  Lo-jack

If the sales rep attempts to tell you that some or all of these extras are "standard" for every vehicle on the lot, ask to order your car from the factory, or suggest the dealership trade with another dealer that hasn't pre-packaged their vehicles. Extra products can add thousands to the negotiated price of the vehicle.

The Problems With Extras Occur In Two Areas:

First - Rather than suggest specific extras individually priced, the sales rep lumps all the products together and pushes you to buy them as a package. A WAY OVERPRICED package.   

Second - Unscrupulous sales reps can add thousands of dollars to the amount financed for these products, but not disclose the price increase until the last possible moment, when the contracts are being signed. For instance, most dealerships pay about $30 to have a car pinstriped. But it's not uncommon for them to charge the buyer $150 or more. And when they couple it with all the other "extra's" it's typically about $2,500 for the whole "package."

Your best bet - as always - is pre-approval for a car loan. With pre-approval you will know how much you are pre-approved for a new vehicle, and will be able to leave a little room for warranties and GAP insurance, without getting duped by the dealership into purchasing unwanted items.

For a list of our recommended car loan lenders click here.

You can protect yourself from blindly signing an unfavorable car loan contract by doing your homework, going to a car dealership with a good reputation, being prepared, asking questions, double checking behind your sales rep and being pre-approved.