4. Put as Much Down as You Can: A lot of dealerships offer deals like “no money down” but while spending less today can be tempting, it can end up costing you down the road. Putting down a larger down payment means you’ll end up financing less, which translates to less interest being paid out over the life of the loan. Putting down 20% is a good starting point and can translate into significant savings while you finance the remainder. If you don’t have 20% to put down on a new car, consider waiting and saving up until you get there—your future finances will thank you!
5. Use Cash: There can be a lot of extra fees added to the final car price that aren’t included in the sticker price. Tax and title fees, dealer fees, warranties, and other additional costs can really add up. If you’re able, use cash to fund these additional fees rather than rolling them into your new auto loan. When you choose to finance all these fees, you can find you owe more than the car’s worth before you even drive off the lot, a financial situation known as “being underwater” or “upside down,” neither of which is desirable.
If you do owe more than the vehicle is worth and the car is stolen or totaled, your insurance company might not provide enough to get a new vehicle. This is a situation where GAP insurance is vital, a topic we’ll touch on in greater detail later.
Coming prepared with everything you need to lock down with your auto loan before you head to the dealership gives you the ability to think long term about this important purchasing decision. By implementing just a few easy steps like the ones outlined above, you’ll have the best setup possible for your new ride.
Negotiating to Get Better Car Loan Terms
You may have heard the phrase “everything’s negotiable” and while that might not hold true for every event in life, it can for car loans. Car loans are handled by loan officers who look over all of the facts of the transaction, including the borrower’s financial situation, the asset being purchased, and if the deal makes financial sense for the banking institution. When you’ve had a chance to research different loan options, ask for better terms from the lenders.
Some lenders are more willing to work with you than others but it never hurts to ask and you may be able to score some major savings. Generally, credit unions are usually able to offer better interest rates and terms than large, traditional banks, so use this to your advantage as you shop for the best loan for your situation.
Getting Pre-Approved for an Auto Loan
The first thing to understand about a pre-approval is that it’s not signing on the dotted line for your auto loan. Pre-approval simply states how much the financial institution is willing to loan to you and the interest rate you can expect. Many pre-approvals come with a set time where the offer is valid, giving auto shoppers a window for checking out different vehicles. A pre-approval is a smart choice because it allows you to have everything you need to know about your loan hammered out ahead of time, before you get to the dealership.
Buying a new car can be very exciting and sitting in the financing manager’s office with what seems like an attractive offer isn’t the best time to try to evaluate if their loan package is the best available. By getting your pre-approval ahead of time, you’ll also know how much you’ll have to spend before you shop, so you aren’t disappointed after discovering what financial institutions are willing to loan you. You can effectively use this limit during negotiations to try to get the best deal possible on a new vehicle.
Getting pre-approved for an SCCU auto loan
comes with the advantage of our low rates and a fast approval process for both new and used vehicles
. We also don’t charge application fees, don’t have prepayment penalties, and have flexible terms with our no payments for up to 120 days offer11
. With all of this information in hand, you’ll be walking into a dealership with the same clout as an all-cash buyer—giving you negotiating power.
Auto Financing From the Dealership
Now that we’ve gotten this far, you may be thinking you need to avoid dealer financing at all costs. While a lot of in-house financing options at dealerships aren’t able to offer the same low rates and great terms as credit unions, there are opportunities to find the perfect car and get financing all in one smooth transaction at the dealer.
We’ve partnered with participating dealerships to offer SCCU auto loans straight from the dealer
. Participating dealerships are Watchdog approved, which means they’ve demonstrated a commitment to helping consumers get a great vehicle, with great financing terms. These dealerships can take your application and submit it straight to us for a fast and easy auto loan process. Request a dealer near you
for more information on this exciting program.
Getting the Best Rate for an Auto Loan
Comparing your options for auto loans definitely needs to include a rate comparison as this is one of the most impactful parts of how much you’ll end up paying over the life of the loan. Even just a few percentage points can mean thousands of dollars saved (or spent) on an otherwise similar car loan.
So who has the best rates on auto loans? Credit unions are able to offer some of the best rates available because of how these we financial institutions operate. By passing on the savings to members, new car loans can come with attractive rates and terms that other lending institutions and car dealerships won’t be able to match.
But the number one thing to scoring the best rate on your new car loan is to compare your loan options. Though your first loan application can temporarily ding your credit score, you typically have a 14-day window to rate shop with additional lenders without additional hits to your credit. And with no fees to get pre-approved for a car loan, you can see exactly how much you can borrow and the payment your new rate gets you. Compare how much you’ll pay with other lender options to see who has the best overall package for your individual financial situation. Comparison shopping is by far the best way to get a great rate on a new auto loan.