How to Buy a Car: 3 Simple Steps to a Competitive Car Loan
Wondering how to buy a car? Whether you’re thinking about getting a sports car for yourself or a van for the family, odds are you’ll probably need to secure a loan to pay for some of the cost. In fact, 86% of new cars are financed and 55% of used cars are financed in the U.S.1
Regardless of what type of car buyer you are, you can use this 3-step cheat sheet to prepare for how to buy a car and secure new car loan. Not quite confident with car loans? Take a look at our article that answers the question: "What is an auto loan?"
And if these three steps on how to buy a car aren't enough, you're welcome to hop over to our free comprehensive eBook Guide: Happy Car Buying: Your Ultimate Guide For Getting the Best Deal.
How to Buy a Car Step 1: Investigate your own credit score and report before you apply.
Half the battle of figuring out how to buy a car comes in the preparation stage. A big factor in the type of loan you can get and how much you’ll pay in interest depends on your credit score. That’s why it makes sense to see your credit report as soon as you can.
Did you know you can get a free copy of your credit report once a year from the three major credit reporting agencies by going to www.annualcreditreport.com? You can check your credit report for mistakes and ask for them to be corrected (it's not uncommon for there to be a few). Errors can lower your credit score and bump up your interest rates— so definitely don't overlook this step.
Once you've glanced over your credit report, you'll want to get your score. If you're a member with Copper State Credit Union, we offer Free Credit Score through online banking (and it does NOT hurt your credit to check it)!
How to Buy a Car Step 2: Figure out how much of a loan you can really afford.
As potential car buyer, it's easy to focus only on how much we can afford to pay each month for a loan. However, Americans also need to consider insurance, extended car warranty, registration fees, repairs, gas, and any other unexpected costs that love to pop up. It’s a great idea to get your own free budgeting template and then try out the calculator below to figure out what a realistic auto loan payment might be for you.
How to Buy a Car Step 3: Get your paperwork together.
Before applying for a loan, or even getting an auto loan pre-approval, you should gather the right paperwork so you can get approved faster. A lender, such as a credit union, wants to see if you can pay back the car loan and that you’re a good risk. Here’s a checklist of items you’ll have to show a lender:
- Proof of your income. Find recent paycheck stubs showing how much you’ve made so far this year. If you’re self-employed, you can show your latest tax returns for proof of your income. If you have other income, such as a rental, alimony, or a legal settlement, you may want to grab that documentation as well.
- Information about the vehicle. Bring a buyer’s order or a dealer sheet if you’re getting a new car. Or, if you’re buying a used car, have information such as the vehicle identification number (VIN), year, make, mileage, purchase price, and the title. Finding an affordable car you can rely on might take a bit of time. Fortunately, our car experts created a few free resources that might help you on your
- Proof of residence. If you aren't already a member of the credit union, you'll also need documentation showing where you live, such as a mortgage statement or a utility bill.
- Proof of auto insurance. Unsurprisingly, you need to show that you have the required coverage with an insurer for the car. Need insurance? Check out our article on the different types of auto insurance you may or may not need.
By following these preparation tips for how to buy a car, you’ll be in the driver’s seat of your new vehicle in no time. Then, it'll be up to you to customize your car and stock it with necessities to stay safe out there.
Feeling more confident on how to buy a car? Feel free to conveniently start an online application for an auto loan today. And you can always give us a call or shoot us an email, we'd love to help you score a new car!
1 Fortunly: Car Loan Statistics That Will Make You Want a Bicycle
Rates, terms, and conditions are subject to change and may vary based on creditworthiness, qualifications, and collateral conditions. All loans subject to approval.