Car dealerships will usually arrange financing for you, but the convenience may come at the expense of your interest rate and other fees. Taking the time to line up an auto loan through your local credit union will often get you a better deal, though it does take some preparation. The steps below will help you get ready to apply for an auto loan.

1. Check Your Credit Report

Your credit history will have a major impact on the interest rate you’re offered, so order a free copy of your report from each of the major agencies. Check it over carefully for mistakes, such as accounts you’ve paid off reported as active or debts that aren’t yours, and report any errors immediately.

2. Pay Down Debt

Financial institutions also base lending terms on your credit score, which is heavily influenced by your credit utilization ratio. Lenders prefer borrowers with unused credit available, so pay down the balance on your credit cards before applying for a loan.

3. Get Pre-Qualified for a Loan

Most credit unions will issue auto loan pre-qualification letters based on some preliminary information about your finances. Knowing what your payments might be can help you set a budget and avoid overspending on your new car.

4. Collect Your Financial Information

Once you’ve found the right vehicle, the lender will need to see verification of your income. In addition to your previous years’ tax returns, you should collect W-2s and pay stubs covering the past three months.

5. Choose a Lender

Your monthly payment is an important factor when choosing a lender, but it shouldn’t be the decisive element. You should also pay close attention to the interest rate, fees added to the balance, and your total cost over the life of the loan to determine which lender will offer you the best deal.

If you’re looking for an auto loan, turn to Hawaiian Financial Federal Credit Union. With hundreds of millions of dollars in assets and over 60,000 members across Hawaii, Hawaiian Financial FCU is one of the leading financial institutions in the state, with a reputation for combining personalized service with technologically advanced personal banking solutions. Learn more about our broad array of services, follow us on Facebook, Twitter, and Instagram for news and updates, or call (808) 832-3700 on Oahu or toll-free at (800) 272-5255 with any questions.