Auto Loans: First Time or 10th Time

The first time you shop for an auto loan can be time-consuming and a little confusing. But, once you know the formula, you'll be set to save money on car financing for life.


  1. Evaluate your financial situation: As a first-time borrower, you can't rely on a credit history to speak for you yet. Still, a record of paying rent and utility bills on time can help demonstrate your reliability.

  2. If you have a good credit history, you have plenty of affordable borrowing options: If you made payments late or didn't fully pay on past loans, you may be required to have a co-signer who would agree to be responsible for the loan should you fail to pay.

  3. Compare annual percentage rates (APR's): The APR is the amount lenders charge expressed as a percentage. The lower the APR, the less you will pay in loan interest.

  4. Consider buying used: The average cost of a used car is less than half of a new one.

  5. Look at insurance: Most lenders will require collision and comprehensive insurance on new and used vehicles.

  6. Realize the less you borrow, the more you save in loan interest: In most cases, applying a manufacturer's rebate to reduce the amount you need to borrow will be cheaper than taking the dealer loan.

  7. Pay off the loan as quickly as you can afford to: Paying a loan off early can save hundreds of dollars in interest charges.

  8. Ask your credit union to preapprove your loan: This way, you can bargain for a dealer discount based on a cash sale.

  9. Understand the loan contract: Reading through all that legalese is a chore and takes time, but it's worth it to ensure you're getting a fair deal.

  10. Keep transactions separate: Your auto buying experience will be much smoother and you'll get the best deal if you make purchasing the vehicle, financing the vehicle and trading the vehicle three separate transactions.


Information provided by CUNA

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