Buying a car is exciting, but also time-consuming. By the time you take your test drives, compare vehicles, make your choice, and sign the paperwork, you’re understandably ready to grab your keys and go!
One part of the car-purchasing process you don’t need to settle in the midst of this frenzy is financing. While financing at the dealership may feel easiest in the moment, it’s rarely in your best financial interests. By getting preapproved for a car loan, you can save a lot of money over the long run.
The idea is to secure a car loan before you go car shopping as opposed to the other way around. You know you’re going to get a car. By getting pre-approved for the amount you want to spend, you will not only shop with the knowledge that you’ve checked an important step off your list; you will stick to your budget and protect yourself from being upsold by the dealer.
Here’s what you need to keep when mind when searching for that perfect car loan:
Your potential lender will have to check your credit to determine how much you qualify to borrow, and at what interest rate. You don’t want to be surprised by what they find! By checking your credit first, you can uncover any potential problems, such as inaccurate information, fraudulent activity, or a less-than-stellar credit score you weren’t aware of. If you discover you have a low credit score, put off buying that new car as long as you can—at least six months—and work on repairing your score. By approaching a lender with the cleanest record possible, you will open yourself up to more options and savings.
If you’re new at car shopping, or new with getting a car loan, you’ll want to go into the process understanding common terms so you can make an empowered decision:
Loan term: The length of time you have to pay off your loan. Car loans typically have a maximum of 60 months. The shorter your loan, however, the better your rate. Go for as short of a loan as possible.
Down payment: The amount of money you put toward the car when you initiate the loan. The more you put down, the less you will owe over the course of your loan and the less you will be paying in interest.
Annual percentage rate (APR): This is the interest rate you will pay to your lender. Generally, rates for new cars are lower than rates for used cars.
Taxes and fees: When determining your total amount for a car, don’t forget costs such as state sales tax, license plates and registration, and other fees.
Pre-qualification vs. Pre-approval: A pre-qualification entails a “soft” credit pull, as it gives you only an estimate of your rate. A pre-approval requires a “hard” pull, which temporarily lowers your credit score but gives you a more realistic idea of what interest rate you can expect.
When shopping for a major product such as a car loan, you want to make sure you’re working with a partner who has your best interests at heart. At a community credit union such as Millstream Area Credit Union, you can rest assured that we will work with you to secure the best terms and rates, pre-approval, features like payment protection, and fast, friendly service. As a local institution, we are dedicated to building trust in the community. You can count on us to help you get a new or used vehicle you really want at a price you can afford.
Learn more at Millstream Area Credit Union about getting pre-approved for an auto loan and take a new approach to purchasing a vehicle.