Your car buying decision, whether cash or through car financing, should not be an impromptu one. You want to take into account every single aspect of the processes involved, ask questions, research, and dig deeper into the history of the people you’re dealing with. It can seem easy or simple to walk into a car dealership and drive off with the car of your choice, but sometimes it’s actually a painstaking process.
It’s even more involving when you’re having your car purchase financed by a lender. First, you’ll have to deal with the lender, secondly the cunning dealers, and last but not least, insurance agents. Now, car loan agreements are among the many complex documents you’ll handle in your quest to owning a car. This is because borrowing money is a commitment that requires some sort of agreement in place to protect both parties.
With his in mind, below are some things you need to know about car financing agreements.
1. Car Financing Agreements Are Legally Binding
The first thing you need to know is that car financing agreements are legally binding. This means that a breach of contract can land you into some serious legal problems. Below are various ways through which you can breach a car finance agreement:
Failure to make timely loan payments
One thing to note is that after signing the loan agreement, your primary duty is to ensure that you’ll provide the monthly repayment money as stipulated in the agreement you signed with your financing company. Failure to meet your end of the bargain would be considered a breach of contract. Provided you’ve cleared at least half of your total car loan along with the fees, interests, and balloon payment inclusive, you are free to terminate the agreement.
Improper termination of the loan agreement
Under the loan agreement, you have the right to “call it”. Before terminating the car loan agreement, you want to ensure that the financial lender is in the loop before making this decision. This means informing them weeks or a month before you terminate the loan agreement. If done right, terminating a loan agreement will not affect your credit score, which is the worry of most borrowers. But then again, do not make it a habit!
Other breaches
Most car financing agreements will allow the borrower to restructure the loan. This is in case you’re deemed bankrupt by the courts, when you need to amend the repayment dates, or when you want to consolidate your loans. Failure to notify your lender during such situations may and will be considered a breach of contract.
2. Countercheck Vehicle and Personal Information
While it’s not the most alluring part of the car purchase process, making sure that the information on the loan agreement is precise and correct is paramount to ensuring that the deal you’re getting into is fair. You’ll need to confirm that the names listed on the agreement correspond to the names on your identification card, that the addresses provided are correct, the repayment agreement terms are as per your choosing, and that the vehicle registration details match with those on the plates. Correcting these mistakes earlier on will help save you a lot of explaining in the future, a situation that can cost you valuable time and resources.
3. Taking Note of the Repayment Fees
When dealing with a car loan lender, it’s important to ask flat out questions. This doesn’t mean that you’re naïve. Rather, it simply means that you are into detail. Try to get the things that seem unclear out of your way as early as possible, especially when it comes to dealership fees you believe you shouldn’t pay. In addition to the interest rates, you need to know about the taxes charged on the car loan, documentation fees, registration fees, and if there are any hidden fees.
4. Look Out For Add-Ons
When it’s your first time buying a car on a loan, you may not be familiar with add-ons on your contract. These may extend from the dealership to the insurers. It’s important to ensure that your car loan agreement only includes the things you can see or notable services. If there’s an item on the contract that seems out of place, ensure it’s omitted before signing on the dotted line. No one will force you to sign a contract. If they had this allowance, most people would be bankrupt by now! Take the time to read the contract not once or twice, but as many times as it takes you to confirm it is fair and squire.
Finally, it’s of utmost importance to ask for clarity whenever you come across unclear terms. If you have an attorney or a financial advisor, you can always take a copy of the agreement to them for further clarification. This is in case you don’t trust whoever you’re dealing with. Hey, you’re not restricted to a single financial institution or a car dealership. You can always take your business somewhere else if unsatisfied.