9 Smart Steps to Finance Your Next Car

Happy Couple Searching looking at each other when looking for a car buying option

Are you thinking about buying a car but unsure how auto loans work? Financing a vehicle is one of the biggest financial decisions many people make. Whether you need a reliable way to get to work, a larger vehicle for your growing family, or your current car’s repair costs are just too high, it’s important to understand your options.

At Members Credit Union, we’re here to guide you every step of the way. Whether you're a first-time buyer or upgrading your ride, this step-by-step guide will help you navigate the car financing process with clarity and confidence.

1. Set Your Car Buying Budget

Start by reviewing your income and monthly expenses to determine how much you can realistically afford to spend on a car. Don’t just focus on the purchase price, make sure to factor in the full cost of ownership, including:

Car insurance
Fuel and routine maintenance
Registration and taxes

Tip: Use an auto loan calculator to estimate what your monthly payments could look like based on your budget.

2. Check and Improve Your Credit Score

Your credit score plays a major role in determining the interest rate you’ll receive on your auto loan. Along with your income, the loan term, and the age of the vehicle, your credit score helps lenders decide how much you qualify for—and at what rate. Take these steps to boost your credit before applying:

Get your free credit report from the three major credit bureaus: Experian, Equifax, and TransUnion
Dispute any errors you find
Pay down outstanding debts

A higher credit score means a better interest rate and lower monthly payments.

3. Learn the Language of Car Buying

Understanding common car financing terms helps you make informed decisions:

• APR – the annual cost of your loan

• Down Payment – upfront cash to reduce your loan amount

• MSRP – Manufacturer’s Suggested Retail Price

• Trade-In Value – what your current car is worth

• Loan Term – length of repayment period

Knowledge is your best tool at the dealership

4. Understand Additional Costs

Beyond the sticker price, consider these extra expenses:

Taxes and DMV registration
Car insurance premiums
Routine maintenance and repairs
Optional warranties or GAP insurance

Plan ahead to avoid surprise costs.

5. Decide Between a New or Used Car

New cars offer warranties and newer features
Used cars offer lower prices and slower depreciation

Be sure to research reliability, history reports, and resale value.

6. Get Pre-Approved for an Auto Loan

Make your car shopping experience smoother and more stress-free with a pre-approved auto loan from Members Credit Union. When you're pre-approved, you can:

Know your interest rate ahead of time
Set a realistic budget
Shop confidently, knowing what you can afford

A car loan pre-approval provides an estimate of the interest rate and loan amount you may qualify for, based on a review of your credit and financial information. Connect with one of our friendly loan officers today to get started.

7. Shop Smart and Compare Prices

Take your time to explore both trusted online marketplaces and local dealerships. Compare different makes, models, and features to find the best value for your budget.

If you're buying a used vehicle, have it inspected by a trusted mechanic
Don’t be afraid to negotiate the price and financing terms

Smart shopping can save you thousands over the life of your loan.

8. Finalize Your Auto Loan

Once you’ve found the right car, it’s time to secure your financing. Be prepared and take these final steps:

Bring all required documents, such as proof of income, a valid ID, and proof of insurance
Carefully review the loan terms, including the interest rate, monthly payment, and total cost
Only sign the agreement once you fully understand all fees, conditions, and responsibilities

A clear understanding now prevents costly surprises later.

9. Make On-Time Payments & Maintain Your Car

Protect your investment and your credit by:

Paying your loan on time
Budgeting for regular service

Keeping detailed maintenance records

Tip: A well-maintained car lasts longer

Let Members Credit Union Help You Hit the Road

Our friendly loan officers are ready to guide you through the car financing process. From pre-approval to payment planning, we’ll help you get the vehicle you need without stress.