Ethan had been dreaming about getting his own car since high school. After graduating from college and landing a full-time job, he was finally ready. Or so he thought.
When Ethan walked into a dealership eight months ago, he quickly realized he wasn’t actually ready. His credit score was too low from missed payments on his first credit cards. He also had zero savings for a down payment. The dealership offered him a loan, but the interest rate was so high it would have cost him thousands more than the car was worth.
Instead of taking a bad deal, Ethan went to First Alliance Credit Union for advice. He worked with a expert who helped him build his credit, save for a down payment, and budget for car payments.
Eight months later, Ethan walked passed the dealership and straight to the Credit Union prepared. He had a good credit score, a $2,000 down payment from his tax return, and he was pre-approved for a low-interest loan. This time, the dealership didn’t control the deal—he did.
Here’s how you can do the same.
Car dealerships love to make things sound like a great deal when they aren’t. They throw in fancy words like “zero down” or “low monthly payments,” but if you aren’t careful, you could end up paying way more than you should.
Here’s how to make sure you’re not getting scammed:
A dealer’s goal is to make as much money off you as possible. Your goal is to pay as little as possible for a great car.
New cars are nice, but are they worth the extra money?
Pros:
Cons:
Pros:
Cons:
Ethan originally wanted a brand-new car, but after looking at his budget, he chose a certified pre-owned car. It still had warranty coverage, cost way less, and let him avoid the huge loss in value that happens with new cars.
Your credit score affects how much you pay in interest on a loan. A good credit score means a lower interest rate, while a bad one means higher monthly payments.
Most lenders want at least a 660 credit score for a decent loan. If your score is lower, you might still get approved, but your interest rate will be higher.
Ethan’s credit was bad when he first applied, so he spent eight months:
By the time he went back to the dealership, his credit was much better, and he qualified for a low-interest loan.
A bigger down payment means lower monthly payments and less interest over time. The recommended down payment is 10-20% of the car’s price.
Ethan used his $2,000 tax refund for his down payment. This helped lower his loan amount and monthly costs.
If you don’t have money for a down payment, try saving up $100 to $200 a month before buying a car.
You have three main options for financing, and where you choose to get your loan can make a huge difference in how much you pay over time.
It’s convenient, but it can come with high interest rates and extra fees. Dealerships often mark up loan rates to make extra profit, meaning you could pay more than if you financed elsewhere. They might also pressure you into extras like extended warranties or unnecessary add-ons.
Banks offer competitive rates, especially if you have an established relationship with them. However, they often require higher credit scores and may have less flexibility in their loan terms.
Credit unions, like First Alliance Credit Union, offer lower interest rates than most banks and dealerships. They also focus on helping their members, not making a profit off them. Because of this, credit unions are more flexible with loan approvals, even if your credit isn’t perfect.
Ethan chose First Alliance Credit Union for his loan because:
If you’re financing a car, gap insurance is one of the smartest decisions you can make.
When you drive a new or used car off the lot, it immediately loses value. But what happens if your car is stolen or totaled before you’ve paid it off? Your insurance company will only pay for what the car is worth at that moment—not what you still owe on your loan.
For example:
Ethan financed his car, so he made sure to get gap insurance. It was a small cost compared to what he could have lost if something happened to his car.
Without gap insurance, you could end up paying thousands of dollars for a car you no longer have.
Ethan didn’t rush into buying a car. He took the time to learn, plan, and prepare, which saved him thousands of dollars.
Here’s what he did right:
Buying a car isn’t just about finding something you like—it’s about making a smart financial decision.
If you want to buy a car the right way, First Alliance Credit Union is here to help. Our experts will listen to your story, give you real advice, and help you get the best deal possible.
Start your car-buying journey today with First Alliance Credit Union—where we help you get the opportunities you deserve.