This article was sponsored by Navy Federal Credit Union.
For many Navy Federal Credit Union members, buying a car at a dealership can feel like a big process. But today’s dealerships are evolving. Modern sales teams are focused on making the experience smoother, more transparent, and centered on the customer. Per several auto studies, including Allied Market Research and Motor Finance Online, the trend of e-buying for automobiles has only increased since the pandemic-era. However, that doesn’t mean dealerships have gone the way of the dodo. The ease of in-person service, maintenance facilities, test drives, and much more are hard to place in comparison to an e-commerce platform.
Additionally, a quick glance online shows that many dealers are facing large 2023 and 2024 inventory backlogs, likely due to market conditions and tariff-related supply chain issues. That could mean a potential opportunity for a savvy car purchaser. The longer a vehicle sits on the lot, the less valuable it is to the dealership, which means they’re incentivized to let them go for a lower price.
So if you’re ready to begin your auto-shopping journey, use these handy recommendations from Navy Federal Credit Union to get the most out of your local dealership this fall.
Know how much you can spend
The first step before any dealership visit is to know just how much you can spend. That means having a realistic picture of your monthly finances and an idea of what your perfect ride should cost. An advantage of being under either the military or VA retirement/disability payroll system is that you will always know exactly how much income you’re looking at during the period you’ll be paying off an auto loan. This works for you in two ways. First, finance departments will (typically) view this more favorably when calculating a loan rate, since the odds of you consistently having the income required to pay it off are higher. Second, you’ll be able to plan for an exact amount you can spend on a car. Factor in your monthly budget, excess savings, and anything else that may influence your purchasing and payoff abilities. Once you know that number, don’t exceed it, no matter how much you’re tempted to upgrade to the latest model of a new truck for “just a few thousand more.” You learned discipline in the military, now use it when it comes to making a major life purchase.
Don’t forget to take a hard look at exactly what you do and do not need in a vehicle purchase. Armed with that knowledge, come up with a financial plan and stick to it. You 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.
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. If you’re paying your kids a weekly allowance, even if it’s just a few bucks, it still needs to be tracked. Every single planned expenditure should be in a solid budget plan. The more accurate you make it, the more accurate your auto spending strategy will be!
Know your 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. The higher your score, the better chance they’ll make money from the interest payments on your loan. This reliability may be rewarded with a more favorable interest rate, which means less money paid overall through the lifetime of the loan.
Once you have your score to a place that you’re happy with, it’s time to shop around for loans. Remember, the higher your score, the better your terms. Luckily, if you’re already a Navy Federal member, you’ll have access to some of the lowest rates in the industry, like a 3.89 percent annual percentage rate1 for new vehicles.
Get a Navy Federal loan pre-approval
A pre-approval is essentially a conditional maximum amount you’ll be able to spend on a new vehicle through an auto loan from the bank.
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 preapproval2, which can be a great negotiating tool once you’ve started talking about a specific vehicle.
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 pre-approval 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 pre-approvals are only accepted by certified dealerships and are not able to be used for private purchases. Unfortunately, if you’re a service member stationed overseas, some foreign dealers also may not accept a US loan pre-approval.
Once you’ve submitted your application and it’s been processed by Navy Federal, you’ll receive a text message and/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.
It’s basically a piece of paper telling you exactly how much you can spend, so you can confidently spar with the dealership, knowing that every dollar you knock off the sale below that price is money back in your pocket you would have spent.
Do your research beforehand
Most dealer sales consultants earn both a salary and commission, which motivates them to find the right vehicle fit for each customer. Sometimes this leads them to highlighting higher-trim models with more features or value. Like the preapproval, arming yourself with the make and model you already want helps you avoid the temptation to upsize. Know which features and accessories are dealbreakers and which ones are extras you can live without.
The Navy Federal team knows this part of the process is critical, which is why they partnered with TrueCar, an online service that lets you search options, pick the make and model of vehicle you are looking for and ultimately see how your price stacks up against the rest of the market. Diesel, electric, trucks, and SUVs, a wide selection of vehicles are included.
Select the features and accessories you want, and TrueCar will show you what others have paid for similar options so you can feel confident you’re getting the absolute best value for your hard-earned money when it’s time to negotiate.
Once you’re ready, hit that dealership with confidence to take advantage of the end-of-year savings using the Navy Federal Car Buying Service, powered by TrueCar.
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.
This content is intended to provide general information and shouldn’t be considered legal, tax, or financial advice. It is 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.
1 Credit and collateral subject to approval. Advertised “as low as” annual percentage rates (APR) assume excellent borrower credit history. Your actual APR may differ and will be based upon several factors, including credit history, loan type, model year, mileage, term, and loan amount. Rates subject to change.
New Vehicles: 2024 and newer model years with (a) under 7,500 miles, or (b) between 7,500 and 30,000 miles (late model used vehicles). NOTE: Vehicles with 7,500 or more miles are not eligible for loan terms greater than 72 months and may incur rates that differ from vehicles with fewer than 7,500 miles.
Used Vehicles: 2023 and older model years or any model year with over 30,000 miles. Vehicles 20 years or older (based on model year) are considered classic or antique and subject to Other Eligible Vehicle rates.
2 Credit and collateral subject to approval.