It’s a tough time to be buying a car. If you’re a Baltimore resident hunting for a set of wheels, taking the time to secure auto financing at favorable terms before you hit the dealerships can save you hours of frustration and thousands of dollars over the life of your loan.

As an established local credit union, JHCU has a lot of experience with the challenges involved in accessing affordable auto financing in our area. Below, we explain how to get an auto loan and offer tips on how to secure some of the best financing rates in town.

Ready to kick your car-buying experience into gear? Read on to learn more.

On the Money: How to Get a Car Loan in 7 Easy Steps

Whether you’re already scoping out windshield stickers on East 25th Street or just checking out prices online, you probably already know you’re going to need some help with financing to get rolling on the road. Here’s how to do it.

1.  Determine Your Budget

Take a hard look at your money situation, including your income and existing obligations to determine how much you can afford to spend each month on a car loan. Know this number and stick to it so you don’t overextend yourself financially.

2. Check Your Credit Score

Your credit score will play a major role in determining the interest rates you will have to pay. You can access your score and a free credit report from any of the three big credit bureaus here.

According to credit bureau Experian, a FICO® score above 740 should allow you to qualify for a competitive loan from most lenders. Scores below 670 may still qualify for financing, but your options will be limited and loans may come with higher rates and more restrictions.

3. Get Pre-Approved Online

One of the smartest things you can do as a car buyer is to get pre-approved for financing from a lender before you start visiting dealerships. You’ll be able to negotiate on the actual price of any vehicle you are interested in, rather than haggling on the sales floor over financing terms.

Reputable lenders allow you to apply online for financing, and pre-approval is typically very quick — so you’ll know upfront how much you can borrow and your likely rate and terms.

4. Research Local Lenders in Baltimore

There’s a lot to be said for going with a local lender for auto financing. Community-based lenders like JHCU have a good understanding of the Baltimore auto market and are better able to tailor funding to your particular financial needs.

Be sure to compare interest rates, down payments, and other loan terms at several lenders, whether they are local credit unions, online lenders, or large commercial banks. The more you know about your options, the better your final decision will be.

5. Head to the Dealership

Now it’s time to pound the pavement either virtually or in person to find vehicles you may be interested in. If you’re set on a new car, you’ll likely want to head to the big-name dealerships throughout the Baltimore area.

If you’re on the hunt for a particular used model, it’s worth spending some time visiting several dealerships to check out what they have to offer. The cluster of dealerships along 25th Street in East Baltimore Midland is usually a good place to start.

Wherever you’re going, be prepared. Take proof of identity, address, and insurance as well as your pre-approval documents.

6. Finalize the Auto Loan

Once you’ve identified a vehicle you’ll need to finalize the loan with your lender, including your down payment, interest rate, and repayment schedule. In most cases, these differ somewhat from your pre-approved terms.

However, be sure that your monthly payment matches the amount you identified in Step 1. While you may have to put more money down or extend your loan (and interest payments) over a longer period, it is your monthly obligation that will determine whether you can actually afford your car.

7. Automate Your Payments

Consistent, on-time payments help boost your credit score and bring predictability to your finances. Arrange for installments to be transferred automatically from your checking or savings account to make sure you never miss a payment.

Locals Only: 7 Tips for Getting the Best Rate in Town

Many factors go into determining the rate you end up paying on your car loan including your income, creditworthiness, and down payment. It also helps to work with a lender who has a long-term commitment to helping local residents get ahead.

Here are seven ways to pay less on your auto loan.

1. Improve Your Credit Score

It may take a little time, but working to improve your credit score before applying for financing can help you secure a better rate.

• Check your credit report and correct or dispute any inaccuracy
• Pay down revolving debt to boost your credit utilization and debt-to-income ratios
• Always make payments on your bills and credit cards on time

2. Make a Larger Down Payment

A larger down payment gives you more skin in the game, allowing lenders to lower your interest rate or shorten your loan term. While you may have to dip deeply into your savings, you will save more in interest payments over the life of your loan.

3. Opt for a Shorter Loan Term

If you are really serious about locking in the lowest rate, you can also opt for a shorter loan term. However, this typically results in a higher monthly payment, which means this option may not be affordable—but a lower rate will save you a significant amount in interest over the loan term.

4. Tap Your Home Equity

If you are a homeowner, you may be sitting on valuable home equity that you could use to make your vehicle purchase more affordable. By borrowing against your existing equity, you could fund a much larger down payment on your auto loan—or even buy a vehicle outright!

JHCU offers convenient home equity loans & HELOCs with low rates and no closing costs, allowing you to access ready cash for a car purchase or other major expenses.

5. Take Advantage of Seasonal Promotions

Car dealers often run seasonal promotions with lower prices on cars and better deals on financing. That means a better rate on your loan, even if you finance your car independently.

In Baltimore, dealers may offer short-term promotions during the peak summer months. Many new car dealers also offer lower prices in the spring to entice buyers out of hibernation, and in the fall to help move inventory before the next year’s models arrive.

Keep an eye on local ads and dealership websites. The Maryland Auto Show, held each year in Baltimore, is also a good opportunity to check out new vehicles and get to know local dealers and lenders.

6. Shop Around

Don’t settle for the first financing offer you receive. Ask around about reputable local lenders who may offer better rates and get offers from several places. Remember that rates and terms are negotiable, therefore knowing what other lenders offer can provide you with valuable leverage.

7. Consider Credit Unions

Credit unions like JHCU are popular sources of auto financing for a reason. As not-for-profit co-operatives, our success depends on extending quality, affordable loans that allow our members to thrive financially.

And, with no shareholders to satisfy other than our owner-members, we’re often able to keep fees low and return more of our earned income directly to our members in the form of higher yields on deposits and lower rates on car financing and other loans.

Let JHCU Put You in the Driver's Seat

A true community-based credit union, JHCU has been helping families throughout the Baltimore area build better lives for more than 50 years. We understand that owning and driving your own car can help open up new opportunities for you and your loved ones.

That’s why we remain committed to providing our members with quality, affordable loans and expert support to make sure your car purchase meets your personal and financial needs.

We offer:

• Competitive rates and flexible financing terms for new and used vehicles
• Our Blank Check “good as cash” pre-approved loans
• GAP and Debt Protection services
• No prepayment penalties

Contact us today about your auto financing needs or click below to learn more.