Buying a car is one of the biggest investments you’ll make, second only to buying a home. Paying cash is always ideal – but most people need to finance the vehicle whether it’s new or pre-owned. Here are a few things you should know about car loans and auto rates before you start shopping:
1. Review Your Credit Report First
Your credit score is one of the most important factors in determining what rate you will receive for your loan. If you haven’t checked your credit report lately, you can obtain a free copy from all three credit bureaus at www.annualcreditreport.com.
If you do find errors on your credit report, you can have them corrected before you shop since they could potentially prevent you from getting the best possible loan rate and terms.
2. Get Pre-Approved. Then Shop.
It’s always a good idea to visit a dealership with a financing offer from a credit union already in hand. A pre-approval guarantees that you have a loan to cover the cost of the vehicle you choose – you’re considered a “cash buyer” at the dealership. It may also give you some additional leverage in negotiating the best price.
Baltimore County Employees Federal Credit Union offers pre-approvals to help you stay within your budget and simplify the buying process. Once pre-approved, you’ll have 60 days to purchase the vehicle you want.
3. Calculate Costs Before Accepting
While you may have a figure in mind of how much you want to pay each month, it’s a good idea to understand the factors that go into determining your monthly car payment. The APR (Annual Percentage Rate) is only one of them.
Other factors include: the total loan amount, whether you have a down payment or trade-in, and the loan term. Use our Auto Loan Calculator to play with the numbers—it could save you thousands in the long run!
4. Understand Dealership Financing
Sometimes dealership financing may seem like the better way to go. Incentives like 0% financing and large cash rebates often sound better than traditional financing.
Typically, rebates and incentives are only available to well-qualified buyers. If you have negative items on your credit report, your FICO score isn’t high enough, or have limited credit experience, you may not qualify. In addition, sometimes these deals are only offered on specific makes and models. A manufacturer’s rebate combined with low-interest credit union financing can often save you more money than a 0% rate.
Financing your new or used car with Baltimore County Employees Federal Credit Union is a great way to get the vehicle you want with the best terms. Keep these tips in mind when shopping for your next vehicle. Be sure to do your research, get pre-approved and run the numbers, and you’ll drive away feeling good about your ride and your financial situation.