Financing a car can feel overwhelming, but it doesn’t have to be!
Whether buying your first vehicle or upgrading to a new model, understanding the process can make all the difference. People Driven Credit Union is here to guide you every step of the way with affordable auto loan options, expert advice, and a commitment to helping you drive off in your dream car. Here’s a complete guide to financing your next vehicle.
1. Check Your Credit Score
Your credit score plays a significant role in determining your auto loan interest rate and approval. Lenders use your credit score to assess how likely you are to repay the loan. A higher score means better rates and terms, which can save you thousands over the life of your loan.
How to Check Your Credit Score:
- You can check your score for free through various online services or your credit card company.
- If your score needs improvement, consider paying down debt and addressing any errors on your credit report before applying for a loan.
People Driven Credit Union members can access their credit score and report anytime through the MyPDCU app. Additionally, members enjoy free credit and debt counseling services from GreenPath Financial Wellness, a trusted national nonprofit.
2. Set Your Budget
Before heading to the dealership, it’s important to set a realistic budget. Consider how much you can afford for both the down payment and monthly payments, as well as ongoing expenses like insurance, gas, and maintenance.
Key Tips for Budgeting:
- Your monthly car payment should ideally be no more than 15% of your monthly income.
- Use People Driven Credit Union’s Auto Loan Calculator to estimate your monthly payments based on different loan amounts, terms, and interest rates.
Setting a clear budget will help you stay on track and prevent overspending when shopping for a vehicle.
3. Get Pre-Approved for an Auto Loan
One of the best ways to streamline your car-buying process is to get pre-approved for an auto loan. Pre-approval gives you a clear picture of how much you can borrow and your interest rate, making it easier to negotiate at the dealership.
Benefits of Pre-Approval:
- Strengthens your bargaining power by showing sellers you’re a serious buyer.
- It saves you time at the dealership by speeding up the financing process.
- It helps you avoid unnecessary hard credit checks from multiple lenders.
At People Driven Credit Union, the pre-approval process is as simple and fast as possible. Apply online, and you’ll receive a decision quickly, giving you confidence before shopping.
4. Choose the Right Loan Term
Auto loan terms typically range from 36 to 96 months. While longer terms may offer lower monthly payments, they often come with higher interest costs over time. Choosing the right loan term for you depends on your budget and financial goals.
Shorter vs. Longer Loan Terms:
- Shorter terms (36 or 48 months) come with higher monthly payments but lower total interest costs.
- Longer terms (60 or 96 months) reduce your monthly payment but may result in paying more interest over the life of the loan.
At People Driven Credit Union, we offer flexible terms to fit your budget, ensuring you find a loan that works best for you.
5. Find the Right Car
Now that you have a budget and pre-approval, it’s time for the fun part—finding your perfect car! Whether you’re buying new or used, research vehicles that fit your lifestyle and budget.
Things to Consider When Choosing a Vehicle:
- Fuel efficiency and maintenance costs
- Vehicle safety ratings
- Resale value
- Whether you’re buying from a dealership or a private seller
6. Finalize Your Loan
Once you’ve chosen your vehicle, it’s time to finalize the loan. You’ll sign your loan agreement and confirm the loan amount, interest rate, and repayment terms at this stage. This step will be quick if you’ve already been pre-approved.
Documents You’ll Need to Finalize the Loan:
- Proof of identity (driver’s license or ID)
- Proof of income (pay stubs or tax returns)
- Vehicle information (make, model, VIN)
- Insurance details
People Driven Credit Union will walk you through the paperwork.
7. Make Your Payments and Stay on Track
Once you’ve driven off the lot, staying on top of your monthly payments is important. Setting up automatic payments ensures you never miss a due date and may even qualify you for a discount!
At People Driven Credit Union, we offer an AutoPay Discount. Enrolling in AutoPay with Direct Deposit from your PDCU checking or savings account can lower your interest rate by 0.25%.
Drive Away in Your New (or Used) Car.
Financing a car doesn’t have to be complicated, and with People Driven Credit Union, it isn’t. From flexible loan terms to competitive interest rates, we’re committed to making auto financing affordable and straightforward. Start by checking your credit score, setting a budget, and applying for pre-approval. With our help, you’ll be in the driver’s seat of your new car in no time.
Ready to get started? Apply for your auto loan with People Driven Credit Union today to finance your next car!
