Everybody loves a new car, but very few people like haggling over the price or terms of an auto deal. Getting the car you want is only part of the struggle. It’s also critical to drive away with financing terms that won’t break your budget. No pressure. 

Buying a new car is a major decision with long-term implications for your financial wellbeing. That’s why we’ve put together this list of our top 10 car buying tips. Read on to find out how to get the ride you want at a cost you can afford.

1. Know Your Credit Score

The first step to finding a great car deal is to know your credit score. All the financing terms and deals you see quoted are based on a theoretical buyer with impeccable credit. When you find out your credit score, you can get an idea of:

• Whether you’re likely to qualify for the loan
• What annual percentage rate (APR) you might get
• What terms and fees you might be able to negotiate

2. Shop Around for Financing

Everyone knows you should shop around for a great price on a car, but the same goes for car financing. While it may be convenient to get your financing through a dealership, this gives the dealer the advantage of knowing what you can afford so they can adjust the APR, fees, and add-ons to match your monthly budget. 

Instead, our number two car buying tip is to compare auto loans from:

• Your local credit union
• Banks
• Online and specialty lenders

Note that credit unions are often better positioned to offer lower rates to their members and can tailor financing to meet your individual needs. For example, Pacific NW Federal Credit Union offers some of the most competitive loan rates in the area as well as half-off CARFAX reports.

3. Get Pre-Approved

Pre-approved financing is one of the most powerful tools in your car buying toolkit. Getting auto loan pre-approval from your credit union or bank lets you find out:

• The loan amount you can afford
• The APR you’ll likely get for your credit score
• The best loan term for your monthly budget 

Many lenders offer easy online application processes and pre-approval within hours or just a few days. Heading to the dealership with financing in place saves you time, money, and stress.

4. Decide to Sell or Trade In Your Existing Car

If you have a car to sell or trade in, the first step is to find out its fair market value by checking with Edmunds or Kelley Blue Book. Used cars that are in good condition with relatively low mileage are often in high demand. You need to decide if you would rather put in the effort to get the best price possible, or simply get rid of your car quickly. 

• Trading in your car at the dealership might seem easy because it’s a one-stop shop. 
• You may get a better price if you sell it separately to a used car dealership. 
• You can also sell the car privately, although this may take more work. 

5. Understand Loan Terms and Interest Rates

You may be tempted to choose a longer loan term of 72 to 84 months because they offer lower monthly payments than short loan terms. But be aware that:

• Longer terms come with a higher APR and you end up paying more total interest over the life of the loan.
• Shorter loan terms bring lower rates and you pay off your loan sooner, so your total cost of borrowing is lower, too. 

Try to find a loan term in the middle of the range that offers an affordable payment while saving you interest.

6. Time Your Purchase

You may be able to negotiate a good deal on a particular type of car if you know a new model is imminent or has already been released. If you’re happy to drive a slightly older model car, you might find a dealer with stock they want to get rid of. This is more likely later in the calendar year or early in the new year.

7. Look for Deals

Keep an eye out for seasonal deals and special sales events. It is also worth looking carefully at the cash-back offers, rebates, or special financing deals offered by dealerships. Keep in mind that you may need great credit to qualify for these offers.

Look for vocational deals, too. These are temporary offers for veterans, military, first responders, or even teachers and healthcare workers. In many cases, the definitions of these groups can be quite broad, so it’s worth checking if you meet the criteria.

It’s easy to research, compare prices and financing options, by using a shopping site such as AutoSmart.

8. Carefully Consider Costly Extras

Dealers want to sell a vehicle close to its sticker price but they’re often free to sell it for much less. They may try to maximize profits by offering you a discount and then finding other ways to pad out the price, whether through fees, rates, or add-ons.  

Make sure you need the extras before you sign on at the dealership, and consider getting warranties and loan protection from your auto loan lender instead, which can often be cheaper than through the dealer itself. 

• Debt Protection Coverage and GAP Waiver — While these can protect you in some cases, they will cost you more. Be cautious if a dealer insists on including these.
• Freight fees — Your vehicle price already includes a destination charge for having it delivered to the dealership. Beware of additional freight or shipping charges.
• Vehicle upgrades — If you include extra features or add-ons in your vehicle financing, it will cost more in interest charges over time. It’s better to pay for add-ons out of pocket.
• Extended warranties and service plans — Signing up for these services can protect the value of your vehicle, but you’ll pay more if these are included as part of your vehicle financing at the dealership.

And remember, check with your auto loan lender because they may provide some of these at a lower cost.

9. Negotiate Price, Not Payments

Having pre-approved financing allows you to focus on the price of the vehicle, rather than settling for a monthly payment that seems like a good deal but will cost you more in interest and fees over the life of the loan. 

Find out exactly what extras are included in your APR and try to pay for any of your chosen add-ons up front to keep your borrowing costs down.

10. Be Prepared to Walk Away

The smart car buyer’s secret weapon is being willing to walk away from a deal that doesn’t seem right. Being prepared to abandon a negotiation puts pressure on the salesperson rather than you. Once again, having financing in place makes it easier to step back from an imperfect deal.

Pre-Approval Car Buying Tips 

New cars come with a mountain of paperwork, often when you are tired or under pressure. To avoid unexpected costs, it is important to understand the terms of the agreements you are entering into, both for your financing and for the vehicle purchase itself. 

You can take pressure off yourself and make a better decision by getting pre-approved before going car shopping. At Pacific NW Federal Credit Union we know how important a new vehicle is to get you where you want to go in life. We can help get you on the road with:

• Low APR auto loans
• Discounted rates for first-time car buyers
• Affordable mechanical repair coverage and loan protection
• Half-off CARFAX vehicle reports

Our simple auto loan pre-approval process puts you in the driver’s seat so you can secure a great deal. Feel the power when you step into a dealership with financing in your pocket!

Get Pre-Approved