An Easy Approach to Financing
Getting financing for a new vehicle can be fast and relatively easy…when you’re prepared. When you know you want a new (or used) car and need financing, taking a few basic steps can make the process smoother and help you avoid many common problems.
1. Research Your Credit
You may have heard that your credit score matters when applying for a loan. Not only does your credit score and credit standing affect whether you get a loan, it affects what rate your loan will be. The better your score, the lower your loan rate, the less money you spend on interest. There are 3 major credit reporting agencies, and each will let you get a free credit report once a year (each score may vary slightly). Review yours, make sure that all their information is right, and report any problems right away. Check your credit score as well, though this is one of many scores, and it may be slightly different from the one reported to the credit union.*
2. Decide How Much You Can Afford
This isn’t referring to the price of your vehicle per se, but how much you can afford to pay each month without breaking your budget. Make sure your budget includes costs for insurance and vehicle maintenance, which you’ll have to pay for separately. If you’ve never insured a vehicle before, call an insurance agent for estimates, and check online for typical maintenance costs for the vehicle you want. When you have a maximum amount, enter that into our Auto Loan Comparison Calculator on our Auto Loan page to see how your numbers work out. Don’t have a budget yet? It’s a great idea to put one together. If you’re not sure where to start, ask us for help!
The Loan Calculator will ask you to enter the loan term: how many years/months you have to pay the loan down. While a longer term may mean lower monthly payments, the total amount you pay will generally be more, so find terms that are a good balance of your monthly cost vs. total payments.
3. Apply For Your Car Loan
When you know how much you can afford, make an appointment to sit down with one of our Loan Representatives. They’ll work with you to determine what your credit and financial standing is, the type of loan you’ll need, and the terms that work with your lifestyle and budget. Let us know if you plan to buy new/used from a dealer, or in a private deal. If you qualify, our goal will be to get you pre-approved for your loan, giving you a certain amount of time to shop for a vehicle. Pre-approval gives you extra buying and negotiating power when you’re talking to a dealer. You’ll know the highest price you can go, and you won’t be dependent on the dealer for financing. If you buy an auto for less than your pre-approved loan amount, you’ll simply get a smaller loan (with smaller payments). If you have no credit history, let us know; we can discuss your options, such as asking someone to co-sign your loan.
4. Shop For Your Vehicle
Armed with your pre-approved loan amount, you’ll need to know how much you would consider putting down for a down payment, or any trade-in value on an existing vehicle, either of which will affect the vehicle you can afford.
Be cautious in your price negotiations; when dealers know you have financing already, they may offer you a longer-term loan with lower monthly payments, but that may cost you more over the term of the loan. If you’re looking at used vehicles and we’ve pre-approved you for a used car loan, you may need to limit your shopping to vehicles within a certain age or mileage limit.
5. Let Us Know
Once you’ve made the commitment to purchase your auto and negotiated the final price, the dealer’s financing department will contact us to finalize the sale paperwork. They will almost certainly try to convince you to purchase extras, such as extended warranties, rust-proofing, fabric protection, and more. Research all the options ahead of time so you know what’s recommended and what’s not. If you’re buying in a private deal, let us know so we can finalize the payment.
After the sale is complete, you will begin your payment schedule. We offer a number of options, such as online bill payments, automatic deductions, and ways for you to prepay if you ever decide to pay off the loan faster.
Visit our Auto Loan page to learn more about how Auto Loans work, and to set up an appointment with one of our friendly representatives to discuss your needs.
*Free credit reports are available under Federal law at AnnualCreditReport.com