Financing a new vehicle can be a confusing process. MSUFCU Chief Marketing Officer Deidre Davis discusses what steps you can take to save money and get the best auto loan for you.
What’s the first thing you should do before applying for an auto loan?
Before you start car shopping, look at your budget and determine the monthly car payment you can afford. Also, factor in insurance, gas, and maintenance costs.
Next, talk to a lender and get a pre-approval letter. This will include the amount you are approved to borrow, the interest rate, and the loan term. A preapproval letter helps when you negotiate the vehicle price because it shows you are a serious buyer who has financing lined up.
How can you get an affordable auto loan?
Start saving for a down payment. It reduces the amount you need to borrow, saving you money in interest. You also may want to save for other annual costs such as title and registration fees and taxes. You often can add some of these costs to the loan but it will increase your monthly payment.
What should you know about loan terms?
Usually, the shorter the loan term — the time you have to pay the loan — the less the vehicle will cost overall because you pay less interest. A shorter term may result in a higher monthly payment but you also reduce the chance of owing more than the car is worth. A longer-term loan often results in a lower monthly payment, which may work well for your budget. Just remember that the additional interest will increase the overall cost of the vehicle.
Once you are ready to sign the loan agreement, be sure the paperwork matches the deal you agreed to and that all documents are signed.
How can MSUFCU help?
At MSUFCU, they help members get preapproved for auto loans in as little as 10 minutes. The Credit Union also offers auto loan refinancing and lease options. Members can apply through the MSUFCU Mobile app, online at msufcu.org, or visit a branch.
This segment is sponsored by MSUFCU.
