Applying for an Auto Loan is a pivotal step in acquiring your dream car, so it’s essential to understand and avoid missteps that can reduce your chances of getting approved.
Avoiding These Auto Loan Application Mistakes Can Save You Time, Money, and Headaches
Purchasing a car, truck, or SUV comes with a series of significant decisions. Along with the primary goal of finding the best make and model for your needs, you should also position yourself for the car loan offering the best possible interest rate and repayment terms. Failing to address some of the issues within your control can result in wasting your valuable time and money. These are three auto loan application faux pas that can be avoided.
Auto Loan Application Mistake #1: Taking Out a Larger Car Loan Than You Can Afford
How much you ask for when filling out your auto loan application shouldn't necessarily match the cost of your most desired automobile. While luxury cars are enticing, the reality is that most families are best served by creating monthly budgets that prioritize necessities and carve out a set amount for leisure spending. Automobiles typically fall under the 'necessity' category because people need to get to work, school, shop for groceries, travel to appointments, etc. However, needing a vehicle doesn't necessarily mean you should opt-for the most expensive car on the lot. Start by taking a deep dive into your monthly expenses and see where you can cut, save, or reapportion monthly income to cover an affordable car loan.
The figure you arrive at shouldn't take away from emergency funds or prevent you from reasonable quality-of-life expenses. That’s largely because people who try reassigning too much money from dining out, catching a movie, or weekend getaways generally backslide into debt. Remember to buy a vehicle you can realistically afford. Be sure to utilize a free car loan calculator to help you determine an affordable monthly car loan payment based on an ideal purchase price. Adjusting your down payment, loan amount, and repayment period can help you find the terms you need to afford your next vehicle.
Auto Loan Application Mistake #2: Forgetting to Check Your Credit Score and Make Improvements
One of the steps you can take to boost your buying power is to improve your credit score. In many cases, there are things you can do to raise your credit score in as little as 30 days. Start by getting copies of your credit report from the three major reporting bureaus — Experian, Equifax, and TransUnion. You can receive a free report every 12 months by requesting copies in one of the following ways.
- Visit AnnualCreditReport.com
- Call 877.322.8228
- Download and complete the Annual Credit Report Request form. Mail the completed form to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281
Take the time to scrutinize your report and note any errors you find. Then, petition the credit agency to correct mistakes. Another strategy to consider is paying off existing credit card debt which can help you raise your score. Just remember to keep your lines of credit open (don’t cancel or close your cards) to demonstrate consistent and long-term access to credit.
Accessing your current reports can help you make strategic decisions to raise your score, giving you greater opportunities to secure a lower car loan interest rate that will save you money over time.
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Auto Loan Application Mistake #3: Not Getting Pre-Approved for Your Car Loan Before You Go Shopping
If you're curious about how large of a loan you have the potential of being approved for, a car loan pre-approval is the perfect solution. Getting pre-approved for an auto loan involves completing an application with a local lender. The process doesn't necessarily result in what is known as a “hard pull” on your credit, which means your credit score won't be significantly impacted.
Knowing how much you can count on from a local lender helps narrow your car options and determine whether to pursue a new or pre-owned vehicle based on your budget. Having your financing in order before heading to the dealership also allows you to skip the financing negotiations, saving you time and allowing you to focus on the actual car cost.
Car loan pre-approvals are usually good for for 30 to 60 days unless some change to your credit history or income occurs. Be sure you don't skip this essential step when beginning your car-buying adventure.
Peach State Has Your Credit Union Auto Loan Covered
At Peach State, our experienced lending team is ready to help you through the auto loan application process. Peach State members can also benefit from Auto Assistance, a free, exclusive car buying service that assigns you a shopping assistant to help with finding your next vehicle.1 You can count on local decisions, competitive rates, an easy online application, and help every step of the way! Apply for your auto loan pre-approval today, or contact us with questions.
Before applying for your credit union auto loan you need to find the right car! Review our "Car Loans 101: Car Buying Made Easy" guide to help you find the best car for your needs and budget!
1 Peach State FCU has contracted with Auto Assistance, LLC to make this service available as a convenience to our members. Any manufacturer’s warranties are not services of the credit union and are not obligations of or guaranteed by the credit union. The credit union makes no representations as to the services of any provider or any vehicles purchased.
