Point Breeze Credit Union Blog

What You Need to Know Before Buying a Car

Your vehicle might be one of the largest and most important purchases you’ll make besides your home – and just the idea of such a major investment can cause a little anxiety to set in. But armed with the right tools and knowledge, it doesn’t have to be a scary process. Doing your homework in advance can save you big and make car buying a smooth ride. Before shopping for a car, consider these 5 things:

Do your research ahead of time

Determining how you’ll finance your car should be one of your top priorities before you make your final car selection. In most instances, this includes two options: you can get financing terms ahead of time (through a bank or credit union) or you can obtain financing at the dealership. If you choose to work with a bank or credit union ahead of time, you may be able to save time at the dealership after you negotiate the price of the car you’re interested in purchasing. If you do explore other financing options, having loan terms already in hand doesn’t just make the process easier, it gives you a point of comparison, so you’ll know if your loan is the lowest rate or if there’s a better deal out there.

Check your credit score

Your credit score will not only determine whether you get approved for a loan, but it may also be used to establish your interest rate. Familiarity with your credit report and knowing your credit score and locally available interest rates can help you negotiate a good deal and save hundreds, if not thousands, of dollars.

Get pre-approved for a loan before going to the dealership

If you've purchased a vehicle before, you’re probably like most drivers: you researched the car you like, shopped around for the best deal and made a trip to the dealership for a test drive. Then once you’ve made up your mind, you’re ready to sign on the dotted line. In this scenario, you’re leaving it up to the dealership to define your creditworthiness and match you with a lender. Instead, visit a credit union to get pre-approved before purchasing. This not only ensures that you get the lowest interest rate that you qualify for, but it also helps you understand what type of car you can truly afford.

Negotiate the total cost of the vehicle, not the monthly payment

Most dealers will immediately start asking about what monthly payment you can afford. This trick allows them to adjust your interest rate and loan terms to determine a payment that fits within that budget. This could leave you paying thousands more over a longer time period. Instead, know ahead of time what you can afford and focus on getting the best possible deal for the vehicle.

Shop for the best deals on add-ons instead of purchasing at the dealership

If you've purchased a car, you know how this works. You've been at the dealership for hours, you're tired, you've settled on a price, you've haggled over the trade-in — then you get handed off to the finance manager. They’ll try to sell you on additional services that might protect you and your vehicle (e.g., insurance, warranties, or extra services). Most of these services are actually cheaper when purchased separately, so make sure you do your homework beforehand.

If you’re interested in financing or re-financing a vehicle, one of our member service specialists can help you navigate your auto loan. Learn more about an auto loan from Point Breeze here, contact us at 888.233.7228 or visit one of our offices.