If you polled the entire population of American servicemembers and their families about car-buying experiences, it’s likely that very few would describe the activity in a good way: easy, streamlined, quick, stress-free. These words are not typically associated with buying a new automobile.
To be fair, it’s a large purchase, and unless you’re a multi-millionaire car collecting enthusiast, it’s not something that happens more than a few times throughout the lifespan of a normal military career — though some Marine lance corporals may beg to differ. Whether you’re purchasing a new ride with your post-deployment pay, a minivan or SUV to make room for the new baby on the way, or you’re a veteran looking for a sporty or functional car to cruise the backroads of your home state, or get you to and from your new job, the process can be convoluted at best.
Before you begin that journey, Navy Federal Credit Union recommends asking yourself a few key questions to help narrow your focus.
How much can I spend?
The first step to any auto shopping adventure, whether online or in person, is to figure out just how much ‘car’ you can actually afford. That means having a realistic picture of your monthly finances and an idea of what your dream vehicle should cost. One advantage of the military pay scale is that you know exactly how much income to expect over the life cycle of your loan.
Take the time before searching to figure out exactly what you do and do not need in a new or used vehicle. Armed with that knowledge, come up with a financial plan and stick to it. You can do this by creating an honest spending budget.
There’s nothing worse than finally closing on your dream car, only to realize a few months later that you’re spending more on payments than your income can support. Suddenly that 27.5% APR loan from Honest Eddy’s Discount Auto Emporium doesn’t seem like such a great deal.
The simplest (not always easiest) way to avoid this is to be realistic with your finances. However, as anyone who’s ever tried to plan out their finances knows, the difference between making a budget and sticking to it can be enormous. The daily expenses we never bother to track can quickly pile up. If you’re getting a $6 smoothie after your workouts, that’s $120 a month if you’re hitting the gym Monday through Friday. We’re not saying you must give up your daily indulgence, just that you need to realize it’s a recurring expense and track it accordingly.
One of the biggest mistakes people make when creating a budget is not being honest about where their money is going. Anything you’re buying or paying off regularly should be tracked and accounted for, no matter how small.
What’s my credit score?
A credit score is a report card for your ability to pay back funds you’ve borrowed. It tells lenders how likely they are to get the money back that they’ve lent you. A higher score may be rewarded with a more favorable interest rate, which can mean you pay less money to the bank over the term of the loan.
If your score isn’t the greatest, no worries. Navy Federal has plenty of resources to help you increase your score. Like consolidating your debts into a single monthly payment, which can help get your bills under control and rebuild that rating. While a few percentage points one way or another may not seem like much, over the lifetime of a 30-year loan, that could mean saving hundreds of thousands in interest payments.
Do I have a loan preapproval?
A preapproval is essentially a maximum amount you’ll be able to spend on a new vehicle through an auto loan from the bank. Having a preapproval in hand will give you a great head start on the entire process, and possibly save some money when it’s all over, since you know exactly how much you’re able to spend, and what your monthly payments will look like once you’ve driven off the lot in your new vehicle.
Once you’ve decided to take the plunge and begin shopping for your next car, Navy Federal Credit Union is here to help with your own competitive auto loan preapproval.
The process is simple. Once you’ve decided on a realistic maximum that you’re willing (and able) to spend on a new vehicle you’ll send your application to a friendly Navy Federal loan preapproval agent. The application will cover your current employment, income status, as well as any vehicle trade-in information, and the length of the loan you’re looking for.
Don’t forget that preapprovals are only accepted by certified dealerships and are not able to be used for private purchases. Unfortunately, if you’re a servicemember stationed overseas some foreign dealers also may not accept a U.S. loan preapproval.1
Once you’ve submitted your application and it’s been processed by Navy Federal, you’ll receive a text message or email letting you know if you’ve been pre-approved for the amount requested.
Next, they’ll issue a check with the funds ready to go, available to be picked up at the nearest Navy Federal Credit Union branch or simply mailed to your home. Whichever is most convenient for you. The amount on the check will be for the maximum approval requested, but that doesn’t mean you have to use it all, so feel secure in negotiating the best price possible before you buy.
What kind of car do I want?
The Navy Federal team is also aware that when shopping for a car, timing can be important. The ideal vehicle may not be around next week while you’re impatiently waiting for that loan preapproval. That’s why Navy Federal typically provides decisions on auto loans in seconds, allowing you to jump directly into the car search as soon as you’re ready using the Navy Federal Car Buying Service, powered by TrueCar™2, an online tool that lets you search options, pick the make and model of vehicle you are looking for. Diesel, electric, trucks, and SUVs—are all included. The prices are clearly displayed, so you can see in real time exactly how much you’ll be paying.
Select the features and accessories you want, and TrueCar will show you what others have paid for similar options3 so you can feel confident you’re getting the absolute best value for your hard-earned money.
Armed with answers to all these questions, now it’s time to start shopping for your next vehicle. Let Navy Federal Credit Union help you through the process. It’s simple and may keep some significant cash in your account when it’s all over.
This article was sponsored by Navy Federal Credit Union. This content is intended to provide general information and shouldn’t be considered legal, tax or financial advice. It’s always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.
This article was sponsored by Navy Federal Credit Union. For more than 90 years, their members have enjoyed so many membership perks, including great rates, discounts, cashback and helpful guides that explain a variety of financial topics in simple terms.
1 Credit and collateral subject to approval.
2 TrueCar operates the Navy Federal Car Buying Service. Navy Federal is not responsible for any offer, purchase, lease or service provided by or through the Navy Federal Car Buying Service.3 TrueCar provides a market average for cars like the one you want, based on actual recent transactions by other buyers. Additional information regarding the calculation of TrueCar’s Market Averages is available at navyfederal.truecar.com.