READING BETWEEN THE LINE - WHAT AUTO LOAN DOCUMENTS REALLY SAY

For example, many car dealers “offer” etching as part of the new car buying experience. Etching is a vehicle identification system that requires the dealership to “etch” a number on the glass of the window on your new vehicle. If your car is lost or stolen, the etching number can help track the car and identify it more readily than just a license plate or the color and make of the car. However, that little etching can run anywhere from $400-600, depending on the dealer, and it is often hidden in the fine print of the document.

Second, make sure the document reflects the actual down payment you agreed to with the salesperson. Often when the salesperson is trying to make their quota, they will agree to one thing with the car buyer, but tell the finance dealer something completely different. Once you are in the “finance” seat, the finance manager will have the documents ready to review with the down payment as told to them by the salesperson.

Finally, watch the interest rate. Dealers will often throw different low interest rates your way to see which one appears to catch your attention most readily. 0% financing on an auto for a short period of time sounds great on paper, but it also means higher payments for you, which could be financially constraining if you’re not prepared to make the higher payments. Ensure the interest rate and the length of time you will be paying back the loan meet your expectations.

When sitting down to sign the final paperwork, make sure you read it carefully and ask as many questions as you need to feel comfortable about your purchase. Don’t worry if the finance manager doesn’t like to answer your questions—you will save yourself money in the long run by knowing exactly what you are agreeing to buy.

More information on car buying and personal finance

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