Published:

10/31/2011 10:33pm

Smart Car Buying

Whether looking to buy a new or used vehicle, it is important to get pre-approved for a loan before going to a dealership. The whole car buying process will be made easier for you and for the sales agent helping you. You will feel more assured throughout the process knowing the bottom line number and financial parameters that meet your budget. And, your sales agent will be able to focus on helping you find the vehicle that matches your specifications rather than having to spend time working to get you financed once you arrive at the dealership. Getting pre-approved also eliminates the possibility of frustration and embarrassment should you find a car you really want but fail to qualify for financing. A gentleman once came to me from out of town to buy a car. He had spoken to someone at a credit union about a loan before traveling to meet with me. However, he did not have everything confirmed for his credit union membership, nor was he pre-approved before he arrived at the dealership. The vehicle he was interested in had been chosen and serviced before he ever left his home. What should have only taken about 30 minutes to complete, instead took an entire day as we waited for confirmation of loan approval. You will save yourself wasted time and frustration by checking with your credit union or bank to receive pre-approval before visiting a dealership. And, just as you would determine the cost of construction before building a home, it is wise to know what your payment and terms are before searching for your new or used vehicle. It is also important to consider the terms and interest rates that the credit union is willing to offer you. For example: On models two years old or less, the credit union may be willing to give you the same interest rate that they would give for a brand new vehicle. For our illustration here, let's say that they offer a rate of 4.95% for a term of 60 months. However, on models older than two years, they may be willing to give you their used car rate of 6.95% for only a 48 month term. Now you must consider whether it would be in your best interest to buy a newer model vehicle or one that is older. This decision made before-hand will save you time at the dealership. You can tell your sales agent which age models you want to look at in order to take advantage of your credit union's best rate. If you do not take the time to check with your credit union before shopping, you may find a model that you love, but be unable to get the loan and terms that fit your monthly payment limit. Then you will have wasted time and may be forced to start the process all over again.

*Note: The rates and terms listed are only for illustration. Please contact your credit union for their current rates and terms.

Tywone Thomas
Auto Advisor and Author
10 Mistakes to Avoid When Buying Your Next Car
www.carbuyingbook.com