A car purchase – or refinance – can shape your finances for years. The good news? A little planning can help you avoid costly mistakes and save thousands. If you're buying or refinancing this year, start with these three smart moves...
Move #1: Know What You Can Actually Afford
Before you start looking at vehicles, start with your budget. What can you comfortably contribute to a car payment month over month? And remember, the reality is that owning a vehicle involves much more than the loan itself. Be sure to also consider these costs:
• Insurance
• Fuel
• Maintenance and repairs
• Parking and tolls
• Registration fees
Use an auto loan calculator to estimate whether the cost of a vehicle fits your budget. Remember, a lower payment isn't always a better deal if it means a longer loan term and significantly more interest paid.
Move #2: Get Your Financing Ready Before You Shop
Your credit score and financing have a major impact on the total cost of your car purchase. Before applying for a loan:
• Review your credit report (you can do this for free within BCU’s Digital Banking)
• Pay down credit card balances if possible
• Shop around for financing options
• Consider getting pre-approved before visiting a dealership
Having a pre-approval helps you understand exactly what you can afford and gives you more confidence during negotiations. Sometimes a dealer's low-interest financing offer may require you to give up manufacturer's rebates; while a slightly higher-rate loan combined with available rebates can result in greater overall savings. At the end of the day, compare all financing options before making your decision.
Move #3: Do Your Homework and Negotiate Confidently
Before buying a car, research values on TrueCar.com, read reviews and reliability ratings, and compare prices across dealerships. Be cautious of add-on warranties or maintenance packages, always test drive the vehicle, review its history report, and – if it’s used – have it inspected by a trusted mechanic. If you're trading in your current vehicle, compare the value of a dealership trade-inversus a private sale. A private sale often brings more money, while a trade-in offers convenience and simplicity. When it's time to negotiate, keep each part of the transaction separate:
• Vehicle price
• Trade-in value
• Financing
• Add-ons and warranties
And most importantly, be willing to walk away if the numbers don't work for you. Don't tell a salesperson the maximum amount you're willing to spend. The more informed and confident you are, the stronger your negotiating position becomes – you got this!
Helpful Resources
• Getting started with buying a car
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• Buying or leasing a car
Calculate Now
• Shopping for a car
Watch Now
• Budgeting Tool – Located in your Virtual Library
Visit Now
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