If you don’t have the ability to pay for your new vehicle in full, you're not alone. Most Americans rely on car loans to help finance their new or pre-owned vehicle. While some might find the idea of financing a car daunting, we're here to simplify it into five straightforward steps.
What Does It Mean to Finance a Car?
Financing a car essentially means you are purchasing a vehicle with money (a car loan) provided by a local lender. While a cash down payment on the car, truck, or SUV, helps keep monthly loan payments manageable, it may not be required.
After gaining auto loan approval and purchasing the vehicle, you’ll be required to make monthly payments. The installments will be applied to the principal as well as accrued interest of the loan. Automobile loans usually involve fixed interest rates and consistent monthly payments, making it relatively straight forward to finance a car loan.
5 Steps to Finance Your Car
It’s important to take proactive measures to ensure you qualify for an Auto Loan, receive the best possible interest rate saving you money in the long run, and obtain the best car loan for your needs and budget. These are five steps that can help you accomplish these goals and get you into the driver’s seat faster.
1: Check Your Credit Score and Make Improvements
A higher credit score can mean a lower car loan interest rate, a lower monthly payment, and extra savings. To improve your credit score, start by finding out where your credit stands today. Request copies of your credit report from the three major reporting bureaus – Experian, Equifax, and TransUnion. You have a right to view your credit report every 12 months and can do so in 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
Review the details of these documents and ask the agencies to correct any errors. You can also use them as a guide to improve your credit score by strategically paying off credit card balances, among other things. The length of time it will take to improve your credit score depends on your financial situation, but you may see a change as soon as 30 to 45 days after you've taken steps to positively impact your credit report.
2: Find Out How Much Car You Can Afford
Determining how much you can afford before speaking with a local lender involves taking a realistic look at your monthly budget. This includes running various interest rates and terms through an Auto Loan calculator to find your potential new monthly car loan payment. This ensures that you’ll be making a responsible decision and find a loan payment that will comfortably fit into your monthly budget.
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3: Get Pre-Approved for Your Car Loan
One of the major missteps that car buyers make is not getting pre-approved for a car loan. Without a pre-approval, shoppers arrive at the lot only to get pitched on the incentives they'll gain from using the dealership’s preferred financing option. This can often leave car buyers with high-interest loans and spending more than they can afford. By contrast, getting pre-approved for a credit union auto loan gives you the bargaining power to negotiate a price and a lower interest rate without paying excessive fees. It also sets you up with financial parameters so that you don’t set your eyes on a vehicle outside of your budget.
4: Find Your Perfect Vehicle
At Peach State, we offer member benefits that include access to a FREE Auto Assistance program designed to help our members find the right car for their budget and family.1 The no-cost program helps you shop, provides CarFax reports, and negotiates your current vehicle's trade-in value. For added convenience of one stop car shopping, you can count on Peach State to help make your car purchase as easy as possible!
5: Apply For Car Financing
When financing a car, truck, or SUV, you’ll need to gather a variety of documents. Having these ready when you start your application will significantly streamline your application process.
- As you may expect, you’ll need to provide a driver’s license, passport, or other government-issued form of ID.
- Determining the amount of the loan requires your proof of income information. You will need your paystubs, tax returns or in some cases financial statements to complete the application.
- Other information you will need includes trade in information (if applicable), down payment amount and proof of insurance.
With all these documents in hand, it’s time to get pre-approved for that Auto Loan!
Peach State Makes Financing Your Car Easy!
Enjoy a hassle-free car buying experience with Peach State. Our local team of experts and tailored programs are ready to help first-time car buyers, those in need of a second chance, and car buyers looking for a car loan payment that fits their budget. Get pre-approved and finance your car today!
Before financing a car, make sure you've done what you can to save money and get the best deal! Review our "Car Loans 101: Car Buying Made Easy" complete 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.
