If you’re thinking about buying a new car and you’re not sure where to start, you’ve come to the right place. Your first instinct might be to head straight to the dealership, but a little bit of financial planning and preparation can go a long way. Here are 4 steps to guide you on your way to getting a great deal on your new car.

Couple Buying a New Car

Step 1. Get pre-approved by your financial institution.

Just like you compare prices of clothes at the mall or food at the grocery store, you should compare loan rates and terms from your financial institution and from the dealership.

Applying for an auto loan at your credit union before you head to the dealership isn’t a commitment. It does, however, allow you to pick the better deal once you get an estimate from the dealer. Click here to learn more about auto loans with Seattle Credit Union and how you can get up to a $250 rebate* through June 20, 2018.

Step 2. Figure out how much you want to spend.

The amount you get approved for isn’t necessarily how much you can afford. You can use an online calculator tool to estimate the maximum amount you should spend on a car, determined by your down payment, trade-in value, and how much you can afford to spend on monthly payments.

To determine how much monthly payment you can afford, you’ll need to play around with your budget a bit. If you don’t have a budget, now would be a great time to start one. Learn more about what a budget is and how to build one here.

If you’d like to cut back in certain areas of your budget to accommodate a larger car payment, there are several ways you could make it work. You could always cut back on variable expenses such as dining out and entertainment, but long-term lifestyle changes can be a hard way to save money. Saving on your larger, fixed expenses can be easier and can also lead to bigger savings than cutting out your morning latte. For example, refinancing your mortgage with Seattle Credit Union could save you thousands of dollars a year.

Step 3. The fun part: Find your car!

Once you’ve determined how much you want to spend, it’s time for the fun part: picking out your new car! The quickest way to see what’s available within your price range is to do your research online.

Tips for at the Dealership
If you decide to brave the dealership, here are a few tips that you should keep in mind:

  • Negotiate an overall price, not a monthly payment. A low monthly payment sounds nice. Think of all the extra money you’d have each month! But sometimes those low payments come at the expense of an extended term, which can mean you pay a lot more interest than you need to. If you stay focused on the overall price, interest rate, and loan term, the monthly payment will work itself out.
  • According to J.D. Power & Associates, you might be able to get a better deal if you go towards the end of the month.
  • Review the paperwork thoroughly before and after you sign to make sure all numbers are accurate.
  • Remember that it’s okay to walk out if you’re not getting the offer you want. You don’t have to feel pressured to buy a car right then and there.
  • Don’t stray from the numbers you decided on, no matter how tempted you are to get the really cool car just outside of your budget. If you’re seriously considering straying from the plan, take a few days to think about it. A purchase this large shouldn’t be impulsive.
  • Don’t forget to compare the dealership’s financing to the pre-approved amount you received from your credit union. In the moment it can seem easier to sign off on the dealership’s financing so you can leave right away with your new car, but you might wish you did things differently a few weeks down the road when you have a large loan with a high interest rate. If you do find yourself saddled with a loan you don’t think is in your best interest, you can talk to Seattle Credit Union about refinancing it with more favorable terms.

Step 4. Protect Yourself and Your Loan

Seattle Credit Union has several auto loan add-ons to help you in the event of an accident or emergency:

  • Protect your new car beyond the manufacturer’s factory warranty with Mechanical Breakdown Protection (MBP).
  • Let Seattle Credit Union cover the difference between the value of your car and the balance of your auto loan with Guaranteed Asset Protection (GAP).
  • Seattle Credit Union will cancel your loan obligation upon the occurrence of a specified life event with MemberSafe Debt Protection.

Learn more about these Debt Protection products here.

If you have questions regarding car-buying or auto loans, feel free to stop by any Seattle Credit Union branch location or call us at 206.398.5500. We’re happy to help.