Thinking about getting a new car? A new car—and even a new-to-you car—is an exciting purchase! But before you dash off to the nearest dealership with your list of vehicle must-haves, learn how getting financing first is the smartest way to find your new ride.

Step 1

Get pre-approved first. Applying at your local credit union before you start car shopping will help you to:

• Learn what size loan you qualify for and what interest rates and loan terms are available. Traditionally, credit unions are able to offer lower interest rates on car loans to their members than other lenders like banks or dealerships. Remember, the higher your credit score is the more likely you are to get a better rate. Consult with a financial representative at your credit union or order a free credit report (The FACT Act amendments of 2003 to the Fair Credit Reporting Act entitle you to a free copy of your credit report from each major credit reporting agency once (1) every twelve (12) months). If your score is not where you want it to be, it may be worth your while to put off your car purchase until you can improve your score. Consult with a financial representative at your credit union for ways to improve your score. 
• Determine what size loan best fits your finances and budget to ensure you don’t over purchase. Want to crunch the numbers yourself? Check out our auto loan calculator. 
• Shop where you want. If you get pre-approved first, you'll come with your own financing, giving you the freedom to choose a vehicle from any dealership.
• Negotiate. With a pre-approved loan amount, you'll be in a better position to negotiate the overall cost of the vehicle, instead of shopping to fit your monthly payment needs. 

Step 2

Learn about the pros and cons of leasing a new car, buying a new car, or buying a previously owned car, especially considering your budget. Leasing a car is like renting it from the dealership. They will take care of maintenance costs under warranty, you get to drive a new car with a low or no down payment, and at the end of the lease you simply drop the car off at the dealership—no hassle of trading it in or selling it.

On the flipside, mile restrictions (with a penalty if you go over that mileage) can be restrictive, leasing is more expensive than an equivalent car loan because you are driving a rapidly depreciating car, if you lease one car after another the monthly payments continue but you never own a car outright without payments (which is when you can get the most value out of a car), ending a lease early could cost you thousands, and you must return the car in good condition or be charged for excess wear and tear. Check out our lease vs. buy caculator to help you determine which is the better value for you. 

Step 3

Start looking at cars! Search new car dealerships, independent dealerships, used car retailers, and private sellers in your area. You can even browse and purchase online at sites like Autotrader, CarMax, TrueCar, AutoTempest, and Cars.com. Or, take advantage of Members First Credit Union of Florida's Car Buying Service Powered by AutoSMART. Throughout the process, be firm about your car loan budget. There are good deals to be found out there, but it’s only a deal if you stay true to your budget and can afford the monthly payments.

Know that dangers lurk in getting financing from used car retailers themselves and not from a financial institution like your credit union. These retailers make lots of promises, but their financial practices are not regulated, and they often sell cars to buyers who can’t afford the payments knowing they will default on payments. The car seller can then repossess the car and re-sell it. They also charge higher interest rates with brutal consequences for late payments. 

The smart car shopper knows what they can afford before touring the car lots. There’s a car out there for you within your budget—know your financing options and then find your new set of wheels!

All loans are subject to credit approval. Rates, terms, and conditions are subject to change and may vary based on credit worthiness, qualifications, collateral age, and conditions.  The APR will be disclosed prior to an advance being made on a loan.

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