Buying a car is an important investment. Whether you’re shopping for a new or used model, you want to make sure you get the best deal. If you plan to apply for an auto loan, that means you’ll want to shop for loan options the same way you’ll soon be shopping for your vehicle.

The right auto loan for you will depend on your needs and your lifestyle, including:

• Your financial situation
• The car you want to buy
• The loan terms and payment options you need
• Your goals for the future

Keep reading to learn more about what you should know before you begin the loan application process.

Assess Your Budget and Goals

Before you apply for an auto loan, it’s good to take a look at your current and future financial situation:

• Check your monthly income and credit score. US consumers are legally entitled to a free credit report each year. If you’re getting ready to apply for an auto loan, now is a great time to read through yours and make sure there are no errors that could be lowering your score.
• Make a budget. How much are you willing to spend in total? Take into account your down payment and monthly payments including interest.

Gather Auto Loan Information from Different Lenders

Banks aren’t your only option. Credit unions, car dealerships, and online lenders often offer auto loans. Most people don’t know about the many benefits of getting an auto loan from a credit union. On average, they can give you lower rates than banks with more flexible payment options.

When deciding where to apply for a loan, you want make sure your lender:

• Doesn’t charge early payoff penalties
• Offers the loan term options you want
• Has competitive interest rates
• Provides the best payment option for you

Let’s look more closely at each of these factors and how they affect your loan.

Understand Your Auto Financing Options

Early Payoff Penalties

There are many reasons you may want to or need to pay your loan off earlier than expected. For example, people who have recently added to their family often want to trade in a car for a larger model. An early payoff results in less interest income for lenders, which is why some of them charge a fee when you do this. It’s always preferable to work with a lender with no early payoff penalties

Auto Loan Terms

Longer auto loan terms mean lower monthly payments but a higher total amount paid, due to more interest. The right term length for you will depend on your lifestyle and financial situation. If you need a longer term loan, make sure you work with someone who provides that option. At Valley Credit Union, we offer terms up to 84 months.

Interest Rates

Unlike banks, credit unions are nonprofit organizations without an obligation to pay dividends to shareholders. According to national averages, credit unions offer lower interest rates than banks

Loan Payment Options

At Valley Credit Union, we’ll talk to you about your needs and lifestyle to develop an auto financing plan that works for you. Our flexible payment options include: automatic payments, cash payments, military allotment, payroll deductions, and more.

Valley Credit Union Can Help You Navigate the Auto Loan Process

At Valley Credit Union in Salem, OR, we love to help our members get the cars they want by offering a wide variety of auto loan options. We put your needs first and help you set up a payment plan that fits your lifestyle and financial situation.

Contact us today to ask us your questions and learn more about auto loan options.

About the Author

 Justin Roberts, Vice President of Lending

Justin Roberts is our Vice President of Lending and has been in the financial industry for over 18 years. He is an Oregon State University Graduate and has just completed Western CUNA Management School. When he is not focused on helping the members at Valley, you will find him coaching his two sons and volunteering his time to help develop the youth in our communities through sports.