If you’re in the market for a new car, the number of questions to consider may seem a little mind-boggling. Should I buy a new or used car? Does it come in leather? Is third-row seating necessary? How may miles per gallon does it average? What do you need to buy a car? And perhaps most important of all, how much will it cost?

Take a deep breath – because DCCU is here to help relieve some of your anxieties about buying a car. With these ten car buying tips, you’ll be ready for the process of buying a car in no time!

Tip #1 – Set a budget and stick to it.
One of the most important steps in buying a car takes place before the shopping begins and its to set a budget and stick to it. You’ll want to figure out the maximum amount of money you’re willing to spend, factoring in both the total cost and monthly payment. This is an important consideration as it will help inform your purchasing decisions as you shop for a vehicle. Remember to go with what best suits your needs and makes most sense financially – which may not be the most expensive car on the lot. A few additional considerations to make when factoring in the cost of buying a car are how interest will impact the payment; auto insurance; gas; maintenance and repairs; registration costs; as well as property taxes. Setting a budget before you start shopping will help you determine which vehicles fit in your price range so you can shop accordingly.

Tip #2 – Do your research.
With so much information available online, researching your next car may be the easiest – but perhaps most overwhelming – part of buying a car. First, you’ll need to figure out what type of vehicle best suits your needs. Is fuel efficiency most important for effective travel to and from work, or is your biggest concern making sure there’s enough space to cart your kids from ball practice to ballet? Do you need something new or would a used vehicle be a better fit? Answering these questions early is important, especially if you plan on buying a car from a dealership.

Tip #3 – Be familiar with APR.
Regardless of your knowledge about the auto industry, you’ll want to be familiar with APR, or annual percentage rate. Not to be confused with the overall interest rate, your APR accounts for all interest charges in addition to any fees charged by the dealership and is expressed as a percentage. This rate varies depending on the lender and can make a difference in the amount of your monthly payment.

Tip #4 – Check your credit report and know your credit score.
It’s also a good idea to make sure you are familiar with the contents of your credit report and your credit score as you plan your purchase. By accessing this information, you’ll have a better idea of what interest rate and loan terms you may qualify for, and it can even help you avoid being blindsided by the rate and payment you are presented at the dealership.

Tip #5 – Apply for pre-approval.
Another tip to consider when buying a car is to apply for pre-approval. Getting pre-approved can help you know what interest rate and total dollar amount you’ve been approved for and can shop accordingly. It may also be beneficial to shop rates at a few different lenders to ensure the most competitive rate and payment. Being equipped with this information can also help streamline the process of buying a car from the dealership.

Tip #6 – Determine what extras and add-ons you need beforehand.
When buying a car it’s important to consider the additional costs associated with purchasing a car, like insurance or guaranteed asset protection (GAP). GAP protects you if your car is damaged beyond repair, stolen, or declared a total loss, by paying off the remainder of your loan that insurance may not cover. You should also consider the cost of repairs and ongoing maintenance for your car, which a mechanical repair coverage (MRC) program may cover. It’s difficult to anticipate the cost of vehicle repairs and maintenance, and MRC is a product that helps pay for repairs on your vehicle to help keep your car on the road. No matter which product you choose, if any, being prepared ahead of time will help prevent you from choosing unnecessary add-ons.

Tip #7 – Know the value of your trade-in.
If you have a current vehicle that you’ll be trading in, it can be helpful to know its value before visiting a dealership. That way, you can have a realistic estimate of your vehicle’s value before the dealership performs their professional appraisal. We recommend utilizing Kelley Blue Book or the NADA to determine the current value of your trade.

Tip #8 – Pay in cash or make a down payment.
The best way to save money in financing is to pay cash for your vehicle outright. This way, you avoid all interest charges. For most people, however, buying a car with cash simply isn’t an option. Making a down payment is another potential option to shorten the length of your loan term while also lowering your monthly payment.

Tip #9 – Consider paying your taxes, tags, and fees in cash.
Another way to save yourself money when purchasing a vehicle is to consider paying cash for your taxes, tags, and fees. Depending on the cost of the car, this could amount to hundreds to thousands of dollars more than what you’re already paying.

Tip #10 – If you already have a car, consider refinancing.
Refinancing – which is the process of taking on a new loan to pay off the balance of an existing one – has the potential to both lower your monthly payment and APR. When weighing the benefits of refinancing, keep local financial institutions and credit unions like DCCU in mind.

Buying or refinancing a car may be a big financial decision, but it doesn’t have to be a source of anxiety. Here at DCCU, now is a great time to finance or refinance a vehicle – not only can you enjoy no payments for 90 days*, but auto loans are also Rebate Program eligible! Learn more on our Auto page.

This article is for general information only and not intended to provide specific advice or recommendations for any individual.

* 90-day payment deferral is not valid for auto loans currently financed by DCCU and cannot be deferred for more than 90 days from the day of loan closing. Commercial loans are not eligible for payment deferral. Terms, restrictions, and fees may apply. Offers of credit subject to creditworthiness. Membership required.