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If you’re in the market for a car – whether it’s new or used – chances are you’ll finance at least some of the purchase. Recent data shows that over 85% of new cars and 55% of used car purchases are financed.* Before you visit a dealership or contact a seller, take some time to consider where to get your auto loan. It can make a real difference in how much you wind up paying for your car over time.
There are four types of lending organizations that can help you finance your car, including:
Once you know the car you want, search online to compare between banks, credit unions, and online lenders. Make sure to compare the same term, or length, of the loan as well as fees and other factors that may affect your monthly payments or total amount owed. Remember that there may also be lending restrictions depending on the vehicle’s age and mileage.
When you’ve figured out the best rate you can secure from a lender, you can compare that to offers from the dealer, if you’re working with one. Sometimes car dealers offer extremely low introductory rates or 0% financing. Be sure to find out if you qualify for these deals before signing anything – and if it is an introductory offer, how much the interest rate will be at the end of the introductory term. Compare the amount you will pay over the life of your loan with the other quotes you’ve gathered.
The one advantage of getting a car loan through a dealership is convenience – you can finance on the spot. That’s why, if you go with a credit union or bank, you may want to consider securing financing ahead of time. Having an approved loan can help you negotiate with the dealer because you know exactly how much you can afford. DCU even offers a feature called an Auto Loan Check which allows you to negotiate with a dealer as if you have cash in hand, and forgo a lengthy paperwork and financing session at the dealership. An Auto Loan Check can be requested when you apply for your loan. Upon approval, a check is made out to you that's good for up to your approved loan amount.
Whatever loan you choose, ensure that the monthly payments are within your budget and that the car will likely last as long as the term of the loan. And of course, buckle up, drive safely, and enjoy your new ride.
* Source: Experian, Auto Loan Debt Sets Record Highs.
Please note, membership is required to accept a DCU vehicle loan.
This article is for informational purposes only. It is not intended to serve as legal, financial, investment or tax advice or indicate that a specific DCU product or service is right for you. For specific advice about your unique circumstances, you may wish to consult a financial professional.
Buying a new or used car is a big financial decision, so it pays to take your time and do some research before you commit. Check out our 10 tips to make sure you’re getting a car you can afford, as well as one that will meet your needs.