Here’s what you need to know before applying for a vehicle loan.
Of all the iconic and memorable moments throughout your life, there’s nothing like the first time you get your own set of wheels. Whether it happened when you were a teenager or later into your formative years, experiencing the sense of freedom and exploration that comes with owning your very own car is unmatched – except, perhaps, getting behind the wheel of your second or third (and hopefully, considerably more impressive and reliable) vehicles.

Upgrading your ride is a major endeavor that requires a lot of research, test drives, and finding the right fit and feel for your style of driving. But in these economic times, there’s one factor that seems to compete above all else: securing the financing to purchase the vehicle itself.

As with any loan, line of credit, or financing agreement, you’ll need to qualify in the eyes of a lender before you can take the keys and roll your new car off the lot. In order to put your best foot forward, here are some tips to consider before you head to a dealership:

1. Set Some Boundaries
This is one of the most obvious steps, but one that can easily get away from car buyers in a hurry. With persistent advertising that suggests zero or little obligation incentives to sell cars, unwary car buyers can get swept up into a sales pitch and walk away with a staggering monthly payment. By taking your finances into consideration, doing your research on fair pricing for your vehicles of choice, and setting a monthly payment limit will go a long way to helping you get into your next car without winding up hurting your financial situation in the long term.

2. Check Your Credit – and Make Improvements
Having a solid credit score will go a long way toward any form of financing, but there’s always room to improve. As long as you’re paying your bills on time, settling any debts, and avoiding penalties, you should be in solid shape to apply for a vehicle loan. But if you’ve had trouble with your credit history in the past, you should take steps to improve your credit before applying for a vehicle loan or line of credit.

3. Research Your Financing Options
There are two primary choices commonly used to secure financing toward a new vehicle: direct lender financing or dealership financing.

Direct lender financing involves securing a loan directly from a bank, financing company, or a credit union. This is considered the best option for most car buyers, as it allows you the option to compare interest rates between lenders, not just the typically ironclad rates offered by a dealership. It’ll also arm you with the ability to shop around without worrying how you’ll afford the purchase, as your interest rate and the loan itself will be locked in while you’re making your decision.

Dealership financing is offered through the dealership itself without the help of an outside financier. This is a convenient option, as you’ll be working with the same company throughout the process, but it keeps you from shopping around for the best available rates. This can cost you inflated interest payments over the lifetime of your car loan.

4. Save for a Healthy Down Payment
Many dealers offer no down payment options for those with excellent credit, but no matter your credit score or history, it’s in your best interest to put as much money down upfront as possible. Not only will this decrease your monthly payments over the life of the loan, it’ll help you avoid settling the overall cost of the loan should you need to sell it before it’s paid off.

5. Get Pre Approved
Before you ever set foot on a car lot, you should research and compare the terms of various loans and get approved before you go shopping. While this won’t be an option if you’re considering financing through a dealership, getting pre approved for a vehicle loan before you go shopping will help expedite the process should you find the right vehicle for the right price and don’t want to delay the purchase.

If you’re interested in stepping up to a new car, truck, or SUV in 2018, consider a vehicle loan from your trusted, local lender — Bank of Bozeman. Our staff has the expertise necessary to ensure you get the right loan for your budget. Come by the bank or contact us today to make an appointment with one of our lenders.