Budget Before You Buy
What’s the first step when buying a car? Create a budget! It will pay off to determine how much you can afford to spend upfront and for regular payments such as insurance and maintenance. Click here to watch helpful financial education videos made specifically for CVA Program participants.
Why should I get pre-approved for a loan?
- When you go to the dealership already pre-approved for a loan you are well prepared to bargain for a vehicle within your price range and are less likely to find yourself in an unaffordable payment arrangement.
- Securing an auto loan ahead of time will get you ready for your clean vehicle purchase and make the process less stressful.
How to get an auto loan
1. Fill out an application for an auto loan, either online or in person at a bank
For example, you can apply for an auto loan at Beneficial State Bank’s website. Loan pre-approvals will expire so we recommend you wait to begin your loan application until you are approved for the grant.
2. Receive a decision about your loan application
The lender will either approve your loan request, give you a counter offer, or deny it.
3. Compare your options
You can submit multiple loan pre-approval applications and see which lender provides you the best loan option. Every time you apply for credit, it may impact your credit history or score, so it is recommended to only apply for credit that you are seriously interested in.
4. Choose the best loan option for you
Remember to consider the total cost of the loan over its lifetime, not just the monthly payment.
Choosing a Lender
We recommend Beneficial State Bank because they have the strongest consumer protection practices we’ve seen, especially for folks who have low credit scores. It can be difficult to find an affordable auto loan if you have a credit score below 700 or no credit, but Beneficial State Bank has committed to providing qualifying grant recipients an 8% interest rate loan or lower.
When choosing a lender, one important factor to consider besides cost is their commitment to fair lending and consumer protection. Ask these questions to see if a lender is looking out for your best interest:
- Is the interest rate the same as the annual percentage rate (APR)? If not, what added fees are being charged and why?
- What Loan to Value ratio will the lender accept from the dealership? Anything above 120% puts you at risk of paying too much for the value of the car.