3 Crucial Steps for Preparing to Apply for an Auto Loan

Last updated 10 months ago

Buying a car is an exciting but sometimes complicated process. Savvy car buyers put plenty of thought and research into their car purchases to ensure they get the best prices and features. Before signing on the dotted line, also put careful thought into auto financing options.

Assess Your Finances

Before heading to dealer showrooms, sit down with a calculator or spreadsheet. It’s reasonable to get an idea of the general pricing for the vehicles you like, but don't set your heart on the convertible or the full-option model until you crunch some numbers on your monthly income and expenses. Your credit union might also ask for proof of income, such as recent pay stubs or tax returns if you're self-employed, when you visit a lender for an auto loan.

Check Your Credit Rating

The lender will check your credit rating, which affects not only your ability to get an auto loan, but also your interest rate. The interest rate will then determine your monthly payment and the amount you pay over the life of the loan. Before applying, check your credit. This is especially important if you haven't checked your credit in some time, have been divorced recently, or experienced some payment problems in the past. If there are any discrepancies on your score, notify the reporting agencies. Credit unions and other lenders pay reputable companies for their reports, but the only place authorized to give free reports directly to consumers is AnnualCreditReport.com.

Get Preapproved Before Shopping

Preapproval gives you a maximum price that helps you set limits on your showroom urges and a rock-solid number for negotiating a price. It also allows you to negotiate purchase price with a dealer instead of monthly payment. In essence, preapproval frees you to shop like a cash customer, because you will buy the car with the money approved by your credit union, not by financing it from the dealer.

GCS Federal Credit Union offers preapproval for members and a list of GCS Indirect Auto Dealers in the O'Fallon area that you can shop with online after receiving your preapproval. Contact us today at (618) 219-8600 to learn more about preapproval and our competitive rates on auto loans.