Do Some Homework Before You Shop
Whether you plan to shop for the perfect vehicle or you need to make a quick decision, there are some important steps that can save you money.
CHECK YOUR CREDIT REPORT
If you've not checked your credit report lately, it may be a good idea to obtain your free credit report. Check for discrepancies and dispute any misinformation that may lower your credit score. Credit scores have a direct impact on your interest rate, and any negative or misinformation on your report, could cost you money.
Credit Reports: What You Want to Know
How to Get Your Free Credit Report
1. Determine How Much You Can Afford
Payment is a big factor to consider when shopping for a big ticket item like a car, but be careful not to base your purchase on payment alone as terms and rates can be adjusted to accommodate your payment quote in many situations.
Monthly payments that fit into your budget are important, but doing some additional math before you shop can save you big bucks!
As a rule of thumb, your transportation costs should not exceed 15% of your monthly income and that includes fuel and repairs. ECU Member Service Representatives are available in-branch and by phone to help you determine what makes the most sense for you and your budget.
If you'd like to calculate on your own, use these calculators to determine what makes the most sense for you.
What would my auto payments be?
How much vehicle can I afford?
2. Get Pre-Approved
Getting pre-approved for your loan is one of the best things you can do when shopping for a new vehicle. One of the first things you must determine when purchasing a new car is your budget.
Eastman Credit Union offers members the opportunity to get pre-approved for a loan via our phone or web application or by visiting a branch. A pre-approval allows you to go ahead and complete most of the loan application before you know what vehicle you will be purchasing.
- Contact ECU and complete as much of the loan application as possible – provide your personal, income and employment information.
- Discover the amount you qualify for along with payment and rate information.
- Receive your pre-approval letter which indicates your pre-approval amount along with any additional information that will be needed to close the loan once you’ve chosen a new vehicle.
- Shop with confidence knowing that your loan is approved and the amount you can afford.
3. Choose Your Vehicle
Now that you know how much you can spend, you can begin the search for your new vehicle.
Once you choose a make and model, you’ll also want to be on the lookout for cash rebates or incentives. Many dealers offer cash rebates or incentives that lower the total price of the vehicle. This could allow you to choose a car that might not otherwise fit into your budget or make an already budget-friendly choice an even better bargain. Rebates and incentives can sometimes save you thousands of dollars!
If the dealer has 0% financing available or would like for you to consider other financing options, remember the following:
- Are there pre-payment penalties?
- If the dealer wants to check multiple financing sources, make sure that credit checks are performed within a 14-day period in an effort not to adversely impact your credit score.
- If you choose another financing source, be sure to compare the total interest you are expected to pay on the loan in addition to the payment amount and term.
4. Negotiate Your Price
The price of a car is usually negotiable, even with rebates or incentives. What kind of discount can you expect? Research is available online (on websites such as www.edmunds.com) that can reveal the average price buyers are paying for a certain type of car in your area. You can also adjust the price of the vehicle by choosing certain options or colors. In addition, your pre-approval letter could be a negotiating tool and act as “cash in hand” when discussing price with the dealer.
5. To Trade or Not to Trade?
Most people purchasing a new car have a car they will no longer need. You can trade your current car in on your new car at the dealership, but you generally will not receive the full retail value of that vehicle; however, there are advantages to a trade-in such as the convenience of taking care of all your car-buying business in one place. Your trade-in could also reduce the amount of your purchase that is subject to sales tax. In addition, this can be a convenient route to take if you have a hard-to-sell, older or damaged car. If it’s important to you to get the maximum value out of your old car, you may want to consider selling the car yourself. Before choosing this route, you may want to consider if the hassle of selling the car yourself is worth the increased price you may receive.
6. Take Your New Car Home
Now that you’ve chosen your vehicle and negotiated your price, it’s time to finalize your loan so you can take your new car home!
- Contact your financial institution with the dealer worksheet and any other pertinent information listed on your pre-approval letter.
- Have the funds deposited to your account or pick up an institution issued check.
- Sign appropriate paperwork and drive your new car home.