Loan And Sales Agreements

Loan and sales agreements are drawn up after your loan has been approved and you have agreed to buy a car. The loan agreement includes everything you will need to know about the repayment of your loan. You should read this document very carefully before signing it to make sure there are no mistakes. A standard loan agreement should include the following:

Total price of the car
Interest rate
Down payment
Terms of the loan
Loan repayment information
Rights of car buyer

Total Price of The Car

This price will include the sticker price of the car, taxes, tags, registration fees, and other fees that you have agreed to pay. By putting a down payment on the car, you will be able to lower this amount. When you have money for a down payment, you are more likely to qualify for a loan and your monthly payments will be lower.

You should make sure that this price is the price that you agree to when negotiating with the salesperson. All too often ‘hidden fees’ will appear on these documents. You will need to question these fees because sometimes they can be taken off of the agreement. Fees include:

Advertising costs
Handling fees
Administration fees
Delivery fees - you may need to pay these fees if the car is being shipped from another location, but if the car is already on the lot, you should not have to pay them.
Features you did not agree to purchase

If the dealership refuses to remove these fees, you should consider not buying the car and walking away.

Interest Rate

Your interest will vary for a variety of reasons. Your credit history plays a large part in this decision. The amount of the loan and the length of the loan will also be taken into consideration. While bank loans have lower interest rates, they may not approve you because you are a first time car buyer. You may have to settle for a slightly higher interest rate through a lender who is working with the dealer.

Down Payment

A down payment is the amount of money you can use up front when buying a car. The amount of this down payment is up to you and what you think you can afford. Some people put more money down so that their monthly payment is lower, while others can only put down the minimum which is usually $500.00. Most lenders require that you put something down on the car in order to be approved. First time car buyers may not have established credit so they will have to put a little more down than those who have taken out car loans before.

Terms of The Loan

The terms of the loan include all the information you will need about the loan including length of the loan, amount of the loan, your monthly payment, interest rate, and possible penalties for missed payments. You will have to sign the loan paperwork which shows that you agree to these terms.

If you have questions concerning your loan, you should ask them at this point. Do not sign any paperwork until you understand what you are signing. Take time to read all of the information that is given to you. Once you have signed this paperwork, you are bound to these terms for the length of the loan.

You should also note in the terms of the loan if you will be able to make extra payments during the life of the loan. While most lenders will not place a penalty on you for doubling your car payments, some may charge for this. You should also understand the lenders policies about missed payments and your options concerning your loan.

Loan Repayment Information

While this information is usually located in the terms of the loan, you should check to make sure that the monthly payment is the payment you have agreed to pay.

Rights of The Buyer

As a car buyer, you have rights that you should be aware of when signing car loan paperwork. You should expect that your new car will work properly. You will be allowed to have one more inspection before you drive off the lot. If you find a scratch or a dent, you can ask for a ‘due bill’, which is a statement in writing which says that you will be returning to have the damage fixed at no cost to you.

These sections of the loan agreement should be read over carefully before signing the agreement. You should make sure all the numbers match what you were quoted by the salesperson and bank. The loan agreement will protect you and the lender.

Financing your new car can be the most stressful part of the car buying experience. For those who do not have perfect credit or who do not have any credit, finding a lender and being approved could take some time. You should be patient during this time. You have options when it comes to finding a lender and being approved for a loan.