A car is a huge investment. It’s likely the second largest investment you’ll make,following a home or student loans. Buying a car can be stressful, particularly if you don’t already speak “car” and are going head to head with a salesperson who is armed with knowledge and jargon. While buying a home is definitely its own type of intimidating, there are things we can borrow from the home buying process to give you more control when you’re negotiating with the sales person for your next vehicle purchase. The absolute best thing you can do? Before you even go to the dealership, visit TelComm Credit Union to get pre-approved for an auto loan. This gives you several advantages:
1.TelComm decisions are made locally. We look at credit score, just like a dealership, but we also take into consideration things that might not be considered elsewhere, such as the length of your TCU membership, time on your job, previous loan payment history, and so forth. Because we look at you rather than numbers alone, you might get a lower interest rate than you would elsewhere.
2.Knowing your credit worthiness ahead of time. According to Phil Reed, the senior consumer advice editor at Edmunds.com, most people believe their credit is worse than it is, and not knowing your credit score can hurt you when it comes to negotiating price and loan terms.
3.With a pre-approved auto loan, you determine your monthly payment and interest rate before you set foot on the auto lot. This allows you to focus on the price of the car and the amount you can get on your trade-in. It’s not uncommon for people to shop for new-to-them cars armed specifically with what they know they can afford in terms of monthly payment. However, in the long run, shopping by monthly payment can end up costing you. According to Reed, telling the salesperson what you want your monthly payment to be strips you of any leverage on negotiating final purchase price. Rather than focus on the overall price of the vehicle, a salesperson is likely to focus on the monthly amount you want, which gives them the opportunity to hide additional costs, such as the price of add-ons or interest. In the end, the monthly payment may be what you want, but it could take another year to pay the loan off.
Like with buying a house, the amount for which you are pre-approved for an auto loan might not reflect what you can realistically pay. You might have outstanding credit, but the loan amount you are approved for will likely not take things such as a preexisting car loan, mortgage, student loans, revolving credit card debt, or lifestyle purchases (vacations, hobbies, etc.) into account. At the end of the day, you know better than anyone else what you can afford, and TelComm Credit Union is here to help you make those decisions before buying the car. Our interest is in helping you find a loan that makes sense for you while saving you as much money as possible down the road.In the market fora new or a new-to-you vehicle? Visit TelComm Credit Union to see what amount you’re pre-approved for today!