Are you thinking of taking a loan to buy your next car? Well, that is a big step, and you will need to ask the right auto-loan interview questions, and answer the ones the lender will ask. Overall, getting an auto loan you can easily repay is the goal here.
On average, you can expect to get loans of up to $40,000 for new cars and $28,000 for used cars. Furthermore, the annual percentage rate (APR) is favorable for borrowers with good credit. The APR for borrowers with strong credit is 5.66%, and 21.54% for those with bad credit.
Moreover, when buying a car, you stand a chance to benefit from its resale value. Leasing a car means the resale benefits remain with the dealer.
Top 5 Auto Loan Interview Questions
How high is Your Credit Rating?
Suppose you choose to finance a car with an Social Finance loan or even a loan from your current bank. In that case, you have to ask yourself whether your credit rating supports your decision. Therefore, we recommend improving it before you talk to your lender.
But, overall, you will want to avoid giving them a reason to doubt your ability to repay their loan. The repayment rates can be generally punitive if the lender suspects you may default on your loan repayments.
Is Your Budget Sufficient?
It might come as a surprise, but the lender can help you make that decision. Just because you qualify for a loan does not mean that you will find it easy to repay. You will need to consider your existing debt, cash flow, and other expenses.
You should also factor into your unexpected budget expenses that befall us throughout our lives. You will be making a grave financial mistake if you budget to spend every dollar you earn.
Generally, you should feel safe if you still have at least 12% of your income left after making your monthly payments.
How Much Down Payment Do You Have?
The down payment can help you make smaller monthly payments and less interest during the loan’s lifetime.
For example, if you were to take a loan of $30,000 to buy a new car at a 3% interest rate, paying a $10,000 down payment instead of $5,000 will lower your monthly car payment by $95.
Moreover, it will save you a total of $750. That is what you would have paid if you had made a down payment of $5,000 and repaid the loan for five years.
Do I Have any Savings?
It is normal to feel that you should not touch any current savings you may have when taking a loan. However, that is never a good option because you will be losing more money if you do not lend yourself from your savings.
In the above example, if you can lend yourself the $10,000 and then repay yourself the $750, you could have paid the lender. That will allow you to “earn” $750 from yourself, buy a new car, pay less in terms of interest, and regain your savings.
Consider All Costs When Budgeting for a Car Loan
When buying a car, you need to account for maintenance costs and other fixed costs such as insurance premiums, fuel, and even parking fees. Unfortunately, it is easy to forget such recurring charges because they will only surface once you buy your new car.
Knowing what to expect once you get your loan and buy your car can help you plan how to repay your car loan. And talking to people who already know the vehicle you intend to buy can help you understand what to expect.
Talk to an Auto Loan Company
Your lender can give you that information, having supported other car buyers. You can ask them all auto-loan interview questions you may have.
Be honest in the entire conversation to avoid making costly financial decisions. So talk to an auto loan company such as Social Finance, to get a loan to buy your next car.