How to Get a New (or Better) Car Loan

Walking into a gleaming showroom and preparing to test drive a new car is a pulse-quickening experience for anyone. Yet buying a new vehicle can also be a stressful time if you're worried about not getting the best deal on financing.

To help you navigate this process with confidence, let's take a closer look at how to secure a great deal on a new (or refinanced) car loan.

Auto loans 101

The basics of auto loans work like this: A buyer agrees to borrow enough money to purchase a car from a lender. A contract is signed, and the buyer agrees to pay the lender back a certain amount of money each month for a term of up to six years.

The key number to focus on when evaluating loans is the interest rate. The lower the rate, the better the deal. In fact, securing a loan at a lower interest can potentially save a borrower thousands of dollars over the course of a loan.

Many people are under the impression that auto loans must originate at auto dealerships. The truth is that dealerships often simply serve as a middleman between car buyers and banks. Borrowers can arrange financing through a bank or credit union before their car search begins.

There's a significant benefit to this approach: By getting pre-approved before walking onto a lot, auto buyers can search for the most competitive rates at their leisure, rather than attempting to find financing in the high-pressure environment of an auto dealer showroom.

When seeking a loan, it's important to bring the proper documents. These include:

• Proof of income (paycheck stubs, for example)
• Proof of residence (utility bills)
• Legal I.D.
• Banking and credit history information
• Personal references

 

After you buy

It's important to be aware that -- even if you opted for dealer-based financing -- you don't necessarily have to stick with it. If you follow a few smart steps, you can secure a better deal by refinancing or getting a new loan from a bank or credit union.

In conclusion

By following these tips, you can buy a car without stressing about getting a good deal, or qualify for a better rate on your existing auto loan. This in turn will help you save money for other things.

Please contact KeyPoint Credit Union today for help securing a better deal on your auto loan.