Finding your dream car is only half of the battle. The other, and quite possibly harder, half is finding the best auto loan rate. If you’re going to borrow money for your purchase, the loan you choose is extremely important.
If you borrow wisely, you can enjoy two important benefits. You’ll spend less on your vehicle, and you’ll have the flexibility to change vehicles and fund other goals within a few short years. Properly planning for a loan before you shop for a car can improve your chances of receiving the loan and car that fits your budget and your style. Here’s how to get the best deal for your auto loan.
Shop the Loan Separate
Before starting to negotiate on the exact car and price you want, you should begin your loan application process. You can prequalify for a loan which will enable you to set a budget for yourself and have leverage at the dealership.
Shop the Total Loan
The only time you should consider the monthly payment is when you have privately calculated how much you want to spend for your car. After that, monthly payments are out of the discussion. Some lenders may focus on the payments to persuade you to borrow more money by extending the number of months in your term. This way, they make more in interest and you have to keep your car longer.
Utilize a Credit Union
A credit union is a nonprofit organization that returns profits to its members through higher savings rates as well as lower fees and loan rates. Membership comes with benefits. Credit unions generally offer lower interest rates than banks do. If you have poor credit, a credit union may be more flexible than a bank. Credit unions build relationships with their members that allow them to offer a more personalized experience. RMLEFCU is Colorado’s only law enforcement credit union and our service to our members is unparalleled. Be sure to check with us before settling on an auto loan with a higher rate!
Your financial situation and the type of vehicle you’re purchasing are key factors in determining the type of lender that’s best for you. If you can’t qualify for a car loan or are being offered high-interest rates, consider getting a cosigner, saving up for a larger down payment, or taking some time to build your credit. Contact us now at lending@rmlefcu.org or give us a call at (303) 458-6660.