Are you considering purchasing a new or used car this year? You’ve come to the right place! Check out all the resources we offer members, including a percentage off our best rates with PridePoint Member Rewards, preapproval services and free access to the TrueCar buying service. Plus, here are some helpful tips on getting preapproved for your car loan from NerdWallet.
Why You Should Get Preapproved for a Car Loan
When shopping for a new car, many people overlook one important step: getting preapproved for an auto loan. It's a simple process that can make car-buying go more smoothly and save you money.
Preapproval is a quick assessment of your ability to pay off a loan based on your credit history and current financial state. This is how it works: You visit a bank or credit union, in person or online, and provide proof of your identity — such as your driver's license or Social Security number — your household income, and perhaps your housing costs. The lender will likely run a credit check. Then you'll find out how much it would be willing to lend you and at what rate — sometimes on the spot.
Here's why you should get preapproved.
You can get a better interest rate
If you haven't done your homework, your dealership might try to talk you into a loan at a not-so-great rate. But getting preapproved at a bank or credit union — or several of them — means you can assess the dealership's offer, and you don't have to accept it. Bringing your interest rate down just one or two percentage points can save you hundreds, maybe thousands, of dollars over the life of your loan.
You can set a true budget
Once you're preapproved for a loan, you can plan your purchase. Use an auto loan calculator to factor in a down payment, the value of your trade-in — which you can find online — and your desired monthly payment. Add about 10% for sales tax and other fees. And don't forget about insurance and the other costs that come with owning a car.
Adjust your dreams — and budget — accordingly. Then go shopping.
You can better negotiate with the dealer
Letting your dealer know that you're preapproved shows that you're a ready-to-buy customer who can walk away at any time. That curtails a lot of the early verbal dancing. Just announce you have your preapproval and will only talk price. Try something like this: “I'm looking for this model, in a deep blue with black leather interior and rear parking sensors. I just stopped in quickly to find out the price I would pay after you take my car as a trade-in.” If the salesman doesn't listen, say, "I just want to hear that one number." It's not rude to be assertive in this situation.
And as you're signing all the papers in the finance office, if a salesperson tries tempting you with an extended warranty or other last-minute add-ons, you can use your preapproval to stick to your price.
When you're preapproved for a loan, you have the competitive edge in car-buying. You can say no until they say yes.
© Copyright 2016 NerdWallet, Inc. All Rights Reserved
Simple tips to follow to maintain spending during the holiday season.
Now, more than ever, it is very important to protect your identity. Follow these 8 tips to help prevent ID Theft.
Credit doesn't have to be complicated. Here are 6 tips to follow for an almost perfect credit score.
There is a lot to think about when it comes to buying a home. Here are 5 secrets that first-time homebuyers need to know.
Planning for college isn't easy, so we've come up with 8 tips to help parents and teens stay within their budget.
The best strategy for back-to-school shopping is to start with a plan. Make a list of supplies you will need before you start shopping. Here are tips that will help cut down on expenses.
How to plan a close-to-home vacation on a budget.
It’s hard to cut back on your wasteful expenses when you don’t even know what they are. How can you figure out new ways to save? Start by setting and monitoring a budget that works with your lifestyle. Check out these budgeting tips and start saving now!
Improve your finances with six simple steps. Everything from understanding your credit score to creating monthly budgets are easy ways to get your finances in check.
After graduation, you don’t want to be drowning in student loan debt on top of all the new expenses of starting out. It is important to find a loan that is best suited for your needs, so start your research now! We put together a student loan survival guide to help you get started.
Setting a budget is important, but making sure you’ve included all of your expenses is crucial. Want to be sure you don’t go over budget? Include costs that cover all aspects of like, not sure monthly bills and weekly grocery trips. Check out these elements that are usually forgotten when setting a budget to ensure you don’t make the same mistake.
As summer approaches it’s time to start planning that summer vacation. Whether you are driving or flying there are always ways to save. Check out these tips to make your summer travel a breeze.
Your financial health cannot be measured by a single factor, instead it’s determined by a number of elements. How financially healthy are you? Look at these questions to get a feel of your current financial health. If your answers are unclear, it might be time to develop a new financial plan.
Wouldn’t it be nice if you could easily get rid of debt? Well, it might be easier than you think! Check out the Snowball Effect approach and learn how to melt away your debt.