Car buyer's guide: the questions to ask to get the best loan for you

What is the interest rate? This is the million-dollar question as the rates vary hugely depending on the term of the loan, loan amount and whether you want a variable or fixed rate.

Is the interest rate fixed or variable? The rate might seem attractive, but if it’s not fixed it could suddenly rocket up and leave you struggling.

What fees apply — are there any upfront or ongoing fees? Again, these vary wildly, so it pays to know exactly what you’re signing up for.

Are payments made every week, fortnight or month? You can often get this tailored to suit your needs, but it’s worth checking. You don’t want to be making weekly payments if you’re someone who lives on baked beans in the final week before your monthly pay hits. Also, check what day/date the payment leaves each week/month. Again, it can be painful to have to pay an installment just before you get paid.

How long will it take to repay the loan? It might seem like a good idea to make the payment amount as small as possible, but you could be stuck with paying it off for years and years. Work out exactly what is comfortable over the shortest term possible and go with that.

What is the total cost, including fees and interest over the entire term of the loan? This is worth knowing because it may make sense to go with a lender with a higher interest rate than signing up for another loan that is loaded with fees.

Can I make extra repayments without being charged a penalty? Some loans do penalise you for trying to pay the loan off quicker and it’s worth steering clear of such loans if you think there’s any chance you might want to overpay some months.

Can I pay out the loan early and if so, is there a fee? Especially worth noting if you’re going for a loan over a longer term as you don’t want to have to pay your way out of a loan when you it comes to replacing your current car.

Are there any penalties if I fall behind in repayments? The answer is likely to be yes, but exactly how much will vary, so check it out before signing on the dotted line as you never know what life’s going to throw at you.

Do I need to take out comprehensive insurance on the car? As the car is usually the security for the loan many institutions will insist of comprehensive insurance for the vehicle. It’s probably a good idea anyway, but you need to be aware of the cost, so shop around for insurance quotes too before committing to your car loan.