5 Tips to Maximize Your Auto Buying Budget

​​Buying a new car is an exciting experience, but it can also be a stressful one. When most people set out to shop for their new ride, they usually focus on the type of car, truck or SUV they want and sometimes overlook the cost of financing. Whether you’re a first time car buyer or just looking to make the most of your money, we’ve put together some tips to help you maximize your auto buying budget.

1. Evaluate the Total Cost. Before you start shopping, do some research to make sure you understand all the costs associated with car ownership. You’ll need to look beyond the sticker price and factor in other costs like taxes, fees, insurance, repairs, and maintenance. Then, add them into your estimated budget so you can zero in on cars at that price point.
2. Improve Your Credit Scores. When making a large purchase like a car, your credit score is a crucial piece of the puzzle. Your credit score determines the loan amount you’ll qualify for and how much interest you’ll have to pay. If you need to improve your credit score, you may want to hold off on a new car purchase for a few months. In the meantime, you can work on building better credit by paying down debt, paying all your bills on time, and limiting the amount of new credit you seek.
3. Shop Financing Options. Just as you’ll shop around to find the best car, truck or SUV, you should also shop around to get the best deal on your auto loan. While a car dealer might offer the easiest way to finance your new ride, it may not be the best option. You may hear and see great offers being advertised but if you don’t have excellent credit, you may not qualify. Before you go shopping, do your homework and check out where you can get the best financing deal. By having a better understanding of the rates and terms available at your credit level, it’ll be easier to spot a good deal when you see one.
4. Save up for Your Down Payment. Generally, when it comes to auto buying, experts recommend putting at least 20% down on a new car and 10% down on a used car. Starting with a substantial amount up front lowers the amount you need to finance and helps ensure you won’t end up owing more than your car is worth. Even if you don’t have enough to put 10-20% down, putting down whatever you can will help offset the total cost of your loan. Keep in mind, the more can put down, the more likely lenders will view you as a lower-risk borrower and offer better rates on your loan. Plus, when you buy a new car, most experts estimate it’ll depreciate by about 20% in the first year. That 20% down payment can help cover the loss from depreciation and make it so you likely won’t owe more than the car is worth.
5. Get Pre-Approved. Getting pre-approved for a loan makes the auto buying process easier, saves you money, and improves your negotiating power. A pre-approval signals to a dealer you’re a serious buyer who won’t likely feel pressured to take any offer they give you. Being pre-approved also helps you negotiate the out-the-door price of the car instead of the monthly payment. These perks help give you the upper hand and, in the end, get you the best deal.

Ready to ride?
Whenever you take out a loan, make sure you can afford it and understand the terms you’re agreeing to before you sign on that dotted line. At Frontwave Credit Union, we’re here to help you make the best financial decisions for your lifestyle and budget. We offer pre-approved auto loans with competitive rates, up to 115% financing,* no payments for 90 days** and flexible terms that work for you. Apply online, swing by a branch or give us a buzz today and let us help you hit the road in no time.

*On model years 2020 or newer **Available only for qualified borrowers. Finance charges begin to accrue immediately and are repaid over the life of the auto loan. As a result, you may pay higher total finance charges on the loan than if payments began earlier. Restrictions apply.