How to Spot a Bad Auto Loan

A bad auto loan in the U.S. often has high APR, a very long term, payment-focused selling (no OTD first), or expensive add-ons (e.g., extended warranty, gap rolled in at high cost). Here's how to spot a bad auto loan.

TL;DR Bad loan = high APR for your credit, 72+ month term when you could afford shorter, or payment agreed before OTD. Also: add-ons rolled into the loan at high cost. Compare APR to market; agree on OTD first; use autopremo.com payment calculator and OTD calculator. Use autopremo.com.

High APR for Your Credit

If your credit is good but the dealer offers a high APR, that's a red flag—they may be marking up the rate. Shop banks and credit unions to see market rate. Use autopremo.com payment calculator to see total interest at that APR. Get your numbers at autopremo.com.

Long Term to "Fit" Payment

If they stretch the term to 72 or 84 months to hit a payment, you pay more interest and stay in negative equity longer. Agree on OTD first; choose the shortest term you can afford. Use autopremo.com. See payment at autopremo.com.

Payment Agreed Before OTD

If you agreed to "payment" before agreeing on out-the-door price, they may have inflated price or rate to hit the payment. Always agree on OTD first. Use autopremo.com OTD calculator. Check at autopremo.com.

Bottom Line

Spot a bad loan: high APR, stretched term, payment before OTD, expensive add-ons. Agree on OTD first, shop rate, use autopremo.com payment calculator so you don't take a bad loan.