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Money Matters Blog

Wednesday, November 1, 2017

Steps to Take When Getting a Car Loan

Ready for a new car but not sure what steps you need to take? Getting a loan can seem daunting if you’ve never done it before, which is why Community Financial aims to make auto loans easy. Here are four steps you can take when applying for an auto loan.

1. Check Your Credit 
Before shopping around for loans be sure to check your credit report. The better your credit, the cheaper it is to borrow money. With a higher credit score, you may be entitled to lower loan interest rates, and you may also qualify for lower auto insurance premiums. If you have a lower credit score and would like to give it a bit of a boost before car shopping, pay off any credit card balances or smaller loans. Take some time to improve your credit score before you apply for loans.

2. Determine How Much You Can Afford 
Know what you can afford before visiting the dealership. If you don’t already have a budget, start with your monthly income after taxes and subtract your monthly expenses and how much you plan to put in savings each month. You’ll also want to plan ahead for new car costs, such as vehicle registration and auto insurance, and regular car maintenance, such as oil changes and basic repairs. Once you understand where you are financially, you can decide on a reasonable monthly car payment. For many, a good rule of thumb is to not spend more than 10% of your take-home income on a vehicle.

3. Get Preapproved 
Before you visit the dealership you might want to consider getting preapproved first. Research potential loans and then compare the terms, lengths of time, and interest rates to find the best deal. When you’re preapproved, the lender decides if you’re eligible and how much you’re eligible for. They’ll also tell you what interest rate you qualify for, so you’ll know what you have to work with before you even walk into a dealership. But keep in mind that preapproved loans aren’t the same as final auto loans. Depending on the car you buy, your final loan could be less than what you were preapproved for.

A great place to shop for a car loan is at your local credit union. For instance, Community Financial auto loans offer: competitive rates as low as 1.74% APR*, no application fees, and flexible terms.

4. Go Shopping for Your New Car! 
Now you’re ready to look for a new ride. Put in a little time for research, and find cars that are known to be reliable and fit into your budget. You’ll also want to consider size, color, gas mileage, and extra features. Use the Community Financial Auto Resource Center to start the shopping process. You’ll be able to research dealer inventory and car options, learn the market value of your trade-in vehicle, and calculate a monthly payment you can afford.

By following these steps, you’ll be ready to make the best financial decision when getting a car loan. Still have questions about acquiring an auto loan? Visit a branch or call us at (877) 937-2328 to learn more.

*Annual Percentage Rate (APR) of 1.74% is as of October 25, 2017 and is only available on 2017 or newer models. The stated 1.74% APR includes a 0.25% discount for automatic payments from your Community Financial checking account. Rates vary and are dependent on individual credit history and other factors including LTV and term. Visit Community Financial’s Auto Loans webpage for more details or see a Community Financial team member.

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