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Buying a vehicle is one of the biggest purchases many people make. Whether you're shopping for a new car, a used truck, or your first vehicle, understanding the auto loan process can help you feel more confident and avoid surprises along the way. The good news? Getting an auto loan is often much simpler than people expect. By understanding a few key steps, including getting preapproved before you start shopping, you can save time, set a realistic budget, and make the car-buying process smoother from start to finish.

Step 1: Determine Your Budget

Before applying for an auto loan, it's important to understand how much vehicle you can comfortably afford. Many buyers focus solely on the monthly payment, but vehicle ownership involves more than the loan itself.

Consider:

• Your monthly income and expenses
• Your desired monthly payment
• Insurance costs
• Fuel expenses
• Maintenance and repairs
• Registration and licensing fees
• Any down payment you plan to make

Remember, just because you may qualify to borrow a certain amount doesn't necessarily mean you should spend that amount. Choosing a vehicle that fits comfortably within your budget can help you avoid financial stress down the road.

Tip: Use an auto loan calculator to estimate monthly payments and figure out how much car you can afford before you begin shopping.

Step 2: Check Your Credit

Lenders are likely to review your credit score and debt-to-income ratio when evaluating an auto loan application. It’s helpful to know where your credit stands so you can set realistic expectations. If you're unsure about your credit score or want to improve it before applying, consider using SavvyMoney: a free tool within the United app that shows your estimated credit score and personalized recommendations on how to improve it.

In general, your credit score can affect:

• Whether you're approved
• The interest rate you're offered
• Available loan terms

Learn more about monitoring and improving your credit score in our article: Monitor Your Credit Score From Your Phone

Step 3: Get Preapproved Before You Shop

One of the smartest steps you can take when buying a vehicle is getting preapproved for an auto loan before shopping online or visiting a dealership. Getting preapproved allows you to compare offers and choose the financing solution that best fits your needs.

What Is Auto Loan Preapproval?

Preapproval is a process where a lender reviews your financial information and determines how much you may qualify to borrow. Rather than shop for a vehicle first and worry about financing later, preapproval helps you understand your options upfront.

Depending on the lender, preapproval may provide an estimate of:

• Your borrowing amount
• Potential loan terms
• Available interest rates
• A list of dealers they work directly with

Benefits of Getting Preapproved

Getting preapproved before shopping can help you:

• Establish a realistic vehicle budget
• Understand your financing options
• Shop with greater confidence
• Narrow your search to vehicles within your price range
• Move more quickly when you find a vehicle you want

Why Consider a Credit Union for Preapproval?

Getting preapproved through a credit union can help you understand your budget, estimate your monthly payment, and shop with confidence before visiting a dealership. To get an auto loan with United Federal Credit Union, you must first become a Member, which just requires opening a savings account for $5.

Potential benefits include:

• Understanding your financing options before negotiating
• Comparing offers more easily
• Knowing your budget ahead of time
• Working with a trusted financial institution throughout the process

Step 4: Gather the Documents You'll Need

Having your documents ready can help make the application and approval process more efficient. Vehicle information isn’t required for preapproval, and the process is the same whether you’re buying a new or used car.

Requirements vary by lender and situation, but common documents may include:

Personal Information

• Government-issued photo ID
• Social Security number or taxpayer identification number
• Current contact information

Income Verification

• Recent pay stubs
• W-2 forms or tax returns (if requested)
• Other proof of income

Proof of Residence

• Utility bill
• Lease agreement
• Other documentation showing your current address

Vehicle Information

If you've already selected a vehicle, you may also need:

• Vehicle identification number (VIN)
• Mileage
• Purchase agreement or buyer's order

Insurance Information

Some lenders may require proof of insurance before finalizing the loan. Auto loan requirements may also include information related to insurance coverage and vehicle ownership documentation. Because documentation requirements can vary, it's always a good idea to ask your lender what specific information they'll need. United Members can submit proof of insurance after loan closing, but the date the insurance begins must match the loan closing date.

Step 5: Shop for Your Vehicle

Once you're preapproved, you're ready to start shopping. This is where preapproval can make a significant difference. Because you already have a clear understanding of your budget, you can focus your search on vehicles that fit your financial goals. Whether you're purchasing new or used, compare prices, features, mileage, warranties, and overall ownership costs before making a decision.

You may choose to shop:

• Online marketplaces
• New vehicle dealerships
• Used vehicle dealerships
• Private-party sellers

Buying From a Dealership vs. a Private Seller

Both dealerships and private sellers can be good options, but the financing process may look slightly different.

Buying From a Dealership

Dealerships may also offer financing options through their lending partners. A dealership purchase often offers:

• A larger inventory of vehicles
• One-stop shopping convenience
• Assistance with paperwork and vehicle registration

Buying From a Private Seller

Private-party purchases can sometimes provide additional flexibility or pricing opportunities. If you're considering a private party purchase, check with your lender to understand any additional requirements before moving forward.

However, the process may require:

• Additional documentation
• Verification of vehicle ownership
• Review of the vehicle title
• Coordination between the buyer, seller, and lender

Step 6: Research Financing Options: Should You Finance Through the Dealer or a Credit Union?

The answer depends on your individual situation, but understanding both options can help you make an informed decision.

Dealer Financing

Potential advantages include:

• Convenience
• Ability to complete much of the transaction in one location
• Multiple financing options available through the dealership

Credit Union Financing

Potential advantages include:

• The opportunity to get preapproved before shopping
• Financing up to 84 months
• No application fees
• A 0.25% interest rate discount is available when automatic payments are established from a United Checking account[1]
• A clearer understanding of your budget
• Personalized guidance during the lending process

Check United’s current auto rates by state here

Step 7: Complete the Loan and Finalize Your Purchase

Once you've selected a vehicle and accepted financing terms, the final steps typically include:

• Reviewing loan documents
• Signing required paperwork
• Providing any remaining documentation
• Finalizing the purchase agreement
• Completing any lender requirements

After everything is finalized, your lender will coordinate payment according to the terms of the transaction and you'll be ready to take ownership of your vehicle.

Frequently Asked Questions About Auto Loans

How long does it take to get an auto loan?

The timeline varies depending on the lender, application details, and documentation requirements. In many cases, decisions can be made relatively quickly when all required information is provided.

Can I get preapproved for an auto loan before choosing a vehicle?

Yes. Preapproval allows you to begin the financing process before selecting a specific vehicle.

Do I need a down payment?

Not always. Sometimes a down payment is required when a certain loan to value needs to be met. 

Can I finance a used vehicle?

Yes. Many lenders offer financing for both new and used vehicles, and the process is the same.

What credit score do I need for an auto loan?

Requirements vary by lender. Credit score is only one factor considered during the approval process. A credit score of 640 or greater often makes it easier to approve an auto loan, with no guarantee.

Does preapproval guarantee final approval?

Not necessarily. Final approval may depend on factors such as the vehicle selected and verification of application information.

Should I get preapproved before going to the dealership?

Many buyers find preapproval helpful because it establishes a budget and allows them to compare financing options before shopping.

Can I get an auto loan from a credit union?

Yes. Many credit unions offer financing for both new and used vehicles, including United Federal Credit Union.

What documents do I need to apply?

Common requirements may include identification, proof of income, proof of address, vehicle information, and insurance documentation, depending on your situation.

Auto Loan Checklist

Before buying your next vehicle, use this checklist to stay on track. Our Member Service Advisors can walk you through it, every step of the way.

✅ Determine your budget

✅ Review your credit

✅ Get preapproved

✅ Gather required documents

✅ Shop for a vehicle

✅ Compare financing options

✅ Complete loan paperwork

✅ Drive away with confidence

What you need to know

Getting an auto loan doesn't have to be complicated. By understanding the process ahead of time, gathering your documents, and getting preapproved before shopping, you can make the experience more straightforward and less stressful.

Whether you're purchasing a new vehicle, a used vehicle, or your very first car, preparation can help you make confident decisions and stay focused on finding the right vehicle for your budget and goals.

Ready to get preapproved through United? 

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