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How to Get a Car Loan

Buying a car can be both exciting and stressful. There are important steps you need to take before shopping for a new set of wheels, like learning how to get a car loan. The best way to mitigate stressing about a big purchase like this one is to equip yourself with knowledge. This way, the big day you bring your new ride home is filled with more happiness and less anxiety.

If you talk to friends or family about what the car-buying process is like, you’ll probably get various responses ranging from “painful” to “super exciting.” Buying a car, truck or SUV is a major milestone in a person’s life and it should bring you feelings of joy, not worry. Keep things positive by going into the purchase knowing your credit situation, your budget and how to get a car loan. Then, when it comes time to sign on the dotted line, you’ll do it with confidence.

Check Your Credit Score

Your credit score is a major factor in determining the interest rate you can get on an auto loan. The higher your credit, the better the rate. Getting a favorable rate means paying less in interest — and ultimately paying less overall.

Here’s a guide to help you understand credit score ranges (from a dealer’s perspective) and average interest rates on auto loans.


(Source: Experian)1

Next, you need to find out your credit score. Here are a few options to consider:

  1. Check with your financial institution or your credit card provider. Often, these companies will provide customers with complimentary access to their credit score.
  2. Reach out to one of the three major credit bureaus (Experian, Equifax, or TransUnion) and request your credit score.
  3. Look for a reputable company online offering free or low-fee credit scores. There are also credit monitoring services available by subscription that will provide your scores on a regular basis and help safeguard your credit by notifying you of any potential fraud on your credit report.

Get Your Credit Report

While you’re at it, get a copy of your credit report before you apply for an auto loan. Reviewing your credit report will alert you of any errors or fraudulent activity. You can request a free credit report online (once per year from each credit bureau) at annualcreditreport.com.

Figure Out Your Budget

Just like with any other major purchase, you need to figure out what monthly car payment is comfortable. The last thing you want is a new (or new-to-you) car sitting in the driveway with no funds for gas. Need help with the math? Use our auto purchase monthly payment calculator to figure out a monthly amount that’s comfortable for you.

Look at the money you have coming in each month, then deduct your current expenses. Don’t forget to factor in the extra costs that come with owning a car, like gas, auto insurance and registration fees. To be extra smart, open a savings account and put money aside for any unexpected expenses that may come with car ownership.

Shop Around and Get Pre-Approved

Once you’ve done all the leg work to figure out your credit situation and budget, it’s time to shop for a car loan. Getting financing through your car dealership can seem convenient because it’s one-stop shopping, but it may not be the best option for you.

A plus to getting your auto loan with a bank or credit union is that you can get a pre-approval letter before you go car shopping. Being pre-approved by a lender can remove some stress from car shopping since you’ll know where you stand before you interact with the dealer.


Time to Get Your New Ride

Credit information? Check. Budget calculated? Check. Auto loan pre-approved? Check. Now it’s time to move to the best part — shopping for your new car! Here are a few final words of wisdom.

Don’t forget to research the market price of the car you want before you visit a dealership. You want to go in knowing how much it’s worth, and Kelley Blue Book® is a great place to start. But don’t stop there. Check out what other dealerships or private parties are selling it for.

When you’re at the dealer, keep your primary focus on the price of the car rather than the monthly payment. While it’s critical to get a payment amount you can comfortably afford, ultimately you don’t want to overpay for the vehicle.

Lastly, try to think of buying a car like it’s a business decision, not an emotional one. The car might be amazing and you’re TOTALLY in love with it, but it’s in your best interest to not let everyone see that level of excitement before you make a deal. If you’ve done your research and you’re well prepared (hopefully with a pre-approval letter in hand), you’re in a great position to get the car you want at a price you’re happy with. Now, that’s exciting!

Get the car you want with an auto loan from Desert Financial!


3First payment may be deferred for up to 90 days from loan date. Your loan will accrue interest during that time. Some restrictions apply. Ask a representative for details.

The material presented here is for educational purposes only and is not intended to be used as financial, investment, or legal advice.