Very few service members would describe the typical car-buying experience in a positive way. Words like easy, streamlined, quick, or stress-free are rarely used. A new (or used) automobile is a large purchase, and buying one isn’t something that happens more than a few times throughout the lifespan of a standard military career.
Whether you’re purchasing a new sports car while flush with post-deployment pay, or upgrading to a minivan or SUV to make room for that new baby on the way, the process can be convoluted.
That’s where Navy Federal comes in. Before beginning your car-buying journey, consider these tips to help the entire process.
Know how much you can spend
The first step is always 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 just what your dream vehicle should cost. One advantage of military pay 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. If you want all the bells and whistles that’s fine but make sure you can swing the price. Once armed with that knowledge, make 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. Suddenly that 30.2% APR loan from Fast Phil’s Budget Truck Fiesta doesn’t sound like such a great deal, and you’ll be paying for that oversight with every payment deduction.
The simplest, but 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 expenses knows, the difference between making a budget and sticking to it can be huge.
The daily expenses we never bother to track can quickly pile up. If you’re getting a $4 protein bar after your run every day, that’s still almost $120 a month. We’re not saying you must avoid buying the little stuff. That’s what makes life fun, just be honest about where your money is going. Anything you’re buying or paying on regularly should be tracked and accounted for, no matter how small.
Understand and improve your credit score
A credit score functions as a snapshot of how reliable you are with borrowed money. It helps lenders assess the likelihood that you’ll repay what you owe. A higher score can signal lower risk, which may lead to lower interest rates. This can reduce the total cost you pay over the life of a loan.
If your score needs improvement, there are practical ways to strengthen it. Navy Federal Credit Union offers debt consolidation loans, which can combine multiple payments into one and make managing balances easier. Even small improvements in your rate can have a major impact. Over the course of any long-term loan, even a modest reduction can translate into significant savings in total interest paid.
Apply for a loan pre-approval
A preapproval lets you know how much you can finance, your estimated interest rate, how long you’ll have to pay back the loan and an estimate of your monthly payment before you step onto the lot. Having one in hand gives you a clear starting point for the buying process, and can help you stay within budget, since you’ll already know your price range.
Once you’re ready to begin shopping, Navy Federal Credit Union offers fast auto loan pre-approvals designed to streamline the process and give you confidence as you search for your next vehicle.
The process itself is straightforward. After determining a price you’re comfortable with, you’ll submit an application that includes details like your employment, income, any trade-in vehicle information, and your preferred loan term length. This information allows the lender to evaluate your eligibility and determine an approval amount.
Keep in mind that pre-approvals are typically accepted at authorized dealerships and generally cannot be used for private-party purchases. Additionally, some overseas dealerships may not accept U.S.-based loan pre-approvals, which is worth considering if you’re stationed abroad.
After your application is reviewed, you’ll receive a notification, usually by text1 or email, letting you know whether you’ve been approved and for how much. If approved, you’ll be issued a check for the maximum amount, which can be picked up at a branch or mailed directly to you. You’re not obligated to use the whole thing, so you still have flexibility to negotiate and secure the best possible deal before finalizing your purchase.
What kind of car do I want?
The Navy Federal team also understands that timing matters when shopping for a car. The right vehicle may not still be available if you’re waiting on a loan decision. That’s why Navy Federal Credit Union delivers most auto loan2 decisions in seconds, allowing you to move straight into your search when you’re ready using the Navy Federal Car Buying Service, powered by TrueCar3®, an online car-buying tool that helps you explore options and select the make and model you’re looking for. Diesel, electric, trucks, and SUVs, all are included. Pricing is clearly displayed, so you can see in real time the price you’ll pay.
Select the features and accessories you want, and TrueCar will show what others have paid4 for similar configurations, helping you feel confident that you’re getting the best value for your money.
Once you’re confident with your budget and the style of target vehicle, you’re ready, and can confidently dive into the buying process knowing Navy Federal Credit Union has your back.
This article was sponsored by Navy Federal Credit Union. This content is intended to provide general information and should not 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.
1Message and data rates may apply. Visit navyfederal.org for more information.
2 Credit and collateral subject to approval.
3TrueCar 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.
4TrueCar 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.