Check your credit score ahead of time, think about your monthly budget, and scope out the kind of car you’re looking for before you start test driving. Your credit score will impact the auto loan you qualify for, as will your income. The same goes for picking out your new vehicle. Spend time researching features, options, and various makes and models.
Do the math
Sure, you have the vehicle's sticker price and the price you negotiate at the dealer to think about. But your loan will cost you some money too. Take the monthly payment of your loan and multiply it by the number of months you’ll pay. The difference between that number and the sales price of your car is generally what you’ll pay in interest. Essentially, you want to find the loan with the lowest interest rate and the shortest term you can afford since that will reduce your interest costs. But take the time to pull out your calculator and figure out the actual price of your car when you factor in all the extra costs, insurance, and interest.
Save up your down payment
A 20% down payment will save you money in the long run since that lower principal reduces the amount you pay interest on. A higher down payment also decreases your loan-to-value ratio, which lenders look at when considering financing. If you can’t save a 20% down payment before you need to buy the car, don’t panic. It’s still possible to find reasonable rates and great deals on an auto loan without it. But the more you can put down, the less you’ll spend over the length of your loan.
Get your quotes before you shop
Before you head to the dealer and fall in love with your new ride on a test drive, shop around for loans. Your credit union is a great place to start because interest rates tend to be lower at member-owned institutions like RMCU. But no matter where you wind up financing, you want to round up some loan options before you go to the dealer. While car dealers offer financing options, you never want to go into car shopping unprepared. The way to get the best rate is to compare before you’re ready to buy.
See how your financial institution can help you get into the driver’s seat of your dream car and fill out an auto loan application with RMCU. If you’re not a member yet, joining and enjoying all the benefits of financing your next car purchase through a credit union is simple.