How to Get a Car Loan

Written by Credit Union of Texas
Published February 6, 2019
How to get a car loan, broken down into easy steps How to get a car loan, broken down into easy steps

Purchasing a new car can be intimidating, but it should be more exciting than scary. Securing a car loan can take some of the financial pressure off consumers making a major purchase and will help you get the vehicle that best suits your needs and budget. Car loans can greatly improve your purchasing power and are a very common form of financing. Learn how to get a car loan and take one step closer to owning the car of your dreams!

First, Determine the Car that is Right for You

Just like you’d make a list before heading to a grocery store, it’s helpful to know what you’re looking for before heading to the dealership. If you don’t have a brand or model in mind, think about what you need out of your next vehicle.

New or used? Two-seater, sedan or minivan? Flashy or under-the-radar? Once you have a handle on the essential features you’re after, you’ll be able to narrow the field of options. That means less time shopping around and more time behind the wheel of your new vehicle.

Budget, Budget, Budget!

Now that you’ve identified some good matches, it’s time to figure out how much of a monthly payment you can afford. You can use our handy Auto Loan Payment Calculator on our Auto Loans page to help. Next, review your overall financial standing. If you’re a great saver, maybe you can allocate a portion of your monthly savings to cover additional vehicle expenses. Or, perhaps your budget is tight based on the car models you’re looking at purchasing. If so, take a step back and reevaluate your list of vehicle options.

Don’t fixate entirely on the down payment or purchase price of the vehicle. Make sure that you’re accounting for additional expenses like gas, maintenance and insurance costs. You can approximate gas expenses based on your typical commute and call insurance companies for quotes on coverage for the vehicle you have in mind. There are a lot of variables associated with vehicle ownership, and budgeting for an unfixed expense is not an exact science. So, leave some wiggle room for the unexpected. You never know when the price of gas or insurance rates may suddenly change.

Finally, make sure you’re not relying on hypothetical financial windfalls or savings to meet your budget. Use only what you’ve got!

Figure Out Your Financing

With your ideal car and a suitable budget in mind, you’re almost ready to hit the dealership. Before you go, Credit Union of Texas recommends putting some thought into how you want to finance your new vehicle. Sure, you could just go to the dealer and accept whatever financing they offer you, but without doing prior research you may not know if you’re getting the best deal. Instead, you may benefit from shopping around for the best auto loan rates in your area and getting pre-approved with that lender. Getting pre-approved ahead of time will help you shop with confidence and clarity because you’ll already know:

  • how much you’re approved for
  • your potential monthly payment
  • your interest rate and term

Heading to the dealership with this information makes it easier to make informed decisions about the extra add-ons and features they will upsell to you.

If you should happen to get pre-approved for your vehicle loan with Credit Union of Texas, we will want to see:

  • Proof of income – most recent two paystubs, tax returns, letter from employer
  • Proof of residence – like an electric bill
  • Proof of vehicle insurance
  • Driver’s license
  • Credit Report

Your interest rate will be determined based on the perceived risk assumed by the lender making your loan. That means the interest rate you’ll pay on your loan is tied to your credit history.

Get Pre-Approved, Then Head To The Dealership

Ready to get pre-approved for your new vehicle loan? Credit Union of Texas is standing by and ready to help you get into your new ride. All you need to do is apply online through our Auto Loans page, then head to the dealership to start test-driving!

Ready to Get Pre-Approved For A Car Loan?

Credit Union of Texas offers competitive interest rates on auto loans for both new and used cars. Applying for your car loan is easy and takes only a few minutes. Or if you have questions first, fill out this form and we'll give you call!