From car financing, shopping and negotiating, being a first time car buyer is an overwhelming task. Receiving an auto loan from a trustworthy lender is a great option to make the financing process much easier. Consider these five tips to guarantee a successful experience while getting your first auto loan.
Check your credit
Checking your credit reports is one of the first necessary steps towards financing your new car. Your credit rating determines the interest rate of your auto loan and if any errors are present, it will leave you paying more than you should have to. Check your credit score before applying for a loan and address any mistakes. If you have no credit, consider building good credit by taking out a secured or store credit card.
Determine your budget
When planning for your first car, determining a budget and figuring out how much you are willing to spend per month is one important step you do not want to skip. Use an auto finance calculator to figure out a monthly payment that you can reasonably afford. Make sure to factor in other expenses that come with owning a car including insurance, repairs, and maintenance. While planning your budget, don’t forget that although low monthly payments might be appealing, the lower they are, the longer your term will be and the more you’ll end up paying in interest.
Save for a downpayment
First time buyers should consider putting at least 20% of the car price down. A no-money down deal sounds great, but it has the potential to leave you in a risky situation. You can avoid getting into a situation where the car is worth less than what you owe by putting down a larger down payment. It saves you money on interest over time and shows the lender that you are committed to your investment.
Get a pre-approved loan
Getting a pre-approved loan before making a large financial decision is always a good idea. Pre-approval means you are approved to borrow a certain amount of money before you even enter the car lot. It’s a great way to know how much you can afford before you start shopping, and it offers more credibility to car salesmen that you are firm on your budget and serious about your offer.
Find a cosigner
If you are unable to qualify for an auto loan on your own, using a co-signer is a great way to finance your first car. A co-signer is a trusted individual who signs off on helping you with any missed payments but you’ll maintain all rights to the car. Using a co-signer often improves the chances of your approval and helps to improve the terms once approved.
Are you looking to buy a car for the first time? This fall we are offering auto loan rates as low as 2.5%, making first time financing easy. Visit our auto loan promotion page or contact us to learn more.
Did you know that CTFCU now has an online Education Financial Center for members? Learn more about buying a car through this 3 minute course!