It seems obvious: of course you should read all of the fine print before you sign anything. In today’s world where you have to read a novel to simply log on to a web page, it’s easy to get in the habit of skipping through the crux of the details when you are signing something. But when you are taking out a loan for a large sum of money, it’s incredibly important to pay attention to everything. What may seem like a throw away line might actually have big implications for you financially. So today we are going to talk about what fine print you can’t ignore and what you should look out for in your car loan contract.
Yo-Yo financing means that you are offered one rate when you initially discuss the loan, only to have that rate not apply to you. This tactic is also referred to as spot delivery. The dealer will tell you that you are free to take the car home even though the paperwork is not finalized, only to call you several weeks later to tell you that the paperwork fell through and you need to renegotiate. When you come in to settle this they will change the terms, and you may be left with a less than desirable rate and car loan contract.
You want to read the contract carefully to ensure that the rate that the dealer tells you is the rate that is actually listed in the contract AND that the financing paperwork is 100% complete before you leave with your new car. Yo-yo financing is illegal in some states, but not in all states so it is something you very much need to be aware of before you get a car loan. And remember: if a rate sounds too good to be true, it probably is.
It’s very common to see deals advertised as “only available in CA, NJ, FL” etc. And these deals usually exclude A LOT (as in most) states. So it’s important to ensure that the deal you are offered and the deal that you think you are getting are actually valid in the state you are in. You may be under the impression that you are agreeing to one rate or term, but the contract may have something else listed entirely.
One of the most common practices is for dealers to add on purchases and products to your car loan. These add ons commonly include:
While some of these items may be something you are interested in, you need to make sure that they are not listed in your contract without your knowledge. You can usually cancel these add-ons after you sign, but doing so can be complicated and annoying. Additionally, you should ensure that the car does not have unnecessary features added on without your knowledge. Car add-ons can very quickly cause your car loan to increase by thousands. These upgrades may include:
Again, some of these might be features that you want, but you need to be sure that the specific features you want are included on the contract.
When you are looking to buy a new car, you want to be extra cautious when it comes to signing anything. Here are our top tips to ensure you don’t get roped into signing a bad contract.
There are a number of reasons your car loan contract might be less than ideal. Perhaps the rate you are offered is too high, or maybe there are add ons that you didn’t realize until after you signed on the dotted line. Either way there are some ways to amend your situation and get you out of the bad terms you are dealing with.
If you realize that your car loan contract has add ons that you did not agree to, you should contact the customer service department listed on the contract immediately. Your contract should have time limits and details on the cancellation procedure, so that should give you a good idea of what to expect. Calling the loan company and explaining the situation will be your best bet if you are trying to get an exception after the cancellation period has ended. If the loan company agrees to refund your money, be sure to keep an eye out for it to ensure that it is actually canceled. It may take weeks or even months, so it may easily fall off your radar. But make a note to follow up if more than two months pass without a resolution.
If there are other terms in your contract that you are unhappy with, such as the rate that is listed, your best bet is to refinance your car loan. When you refinance a car loan, you enter into a new loan that has new terms, including a new car loan interest rate. Preparing your personal finances and working to increase your credit score will help you to secure the best car loan rate possible when you refinance. When you enter into a new car loan, the new company will pay off your old car loan and you will be released from that contract (and from the terms that come with it). But be sure to read the new car loan contract carefully as well, or you may end up in the same situation all over again.
Refinancing your car loan with a company that specializes in car loan refinance, like Auto Approve, can help make this process super simple and easy. By streamlining the application process your car refinance agent can help you save time, money, and a whole lot of aggravation. And most importantly: they can help you get out of a bad contract.
It’s incredibly important to read the fine print and pay attention to all of the details. But if you end up in a bad car loan contract, the best thing to do is to refinance your car loan and get a better car loan contract.
Contact Auto Approve today to see how they can help.