7 Car Loan Stages and 7 Reasons Why Dane County Credit Union Is the Perfect Auto Loan Partner

A reliable car is an important part of modern life. From work and school to medical appointments and shopping, a car offers a greater quality of life and freedom of movement. Purchasing a car can be expensive, however, with most people taking out loans from financial institutions. At Dane County Credit Union (DCCU), we offer competitive car loans to the residents of Madison, WI, and surrounding counties. Whether you want a brand-new car loan or a refinanced loan agreement, we are here to help.

If you’re thinking about taking out a car loan, it’s important to consider your options. Most car loans take a few years to pay back, so it’s important to get clear advice and make smart decisions from the outset. While repayments and interest charges are an unavoidable part of life, lending agreements can differ widely between providers. From interest rates and deposits to loan terms and conditions, DCCU offers accessible and affordable car loans to people from all walks of life.

7 stages to getting a new car loan

Before you get a car loan, it’s important to understand the steps involved. This process doesn’t have to be difficult, but there are some essential steps that need to be taken. Let’s review these steps in detail and show you why DCCU is the perfect partner for your next car loan.

1. Review vehicles and finances

Before you get a new car loan, it’s essential to review your financial situation. While you don’t need all the details during this early stage, you should have a basic idea of how much you can afford. Whether you’re buying your first car, upgrading a family car, or buying your dream car, the overall cost of the vehicle needs to align with your income and liability limits. Everyone has different financial resources and obligations, and a detailed review is needed for each person based on their stage of life.

When reviewing your finances, it’s important to consider your existing income and debts in relation to the cost of potential vehicles. What kind of car do you want? What kind of car can you afford? What is the difference, and how are you prepared to compromise? While this fact often gets ignored, it’s also important to think about the desired length of your loan. While everyone wants to buy the car of their dreams, you should be aiming to purchase a good car that you can afford for the entire term of the loan.

2. Check your credit score

Wherever you live in the United States, your ability to borrow money is based on your credit score. This number is reviewed by lenders during the loan application to check whether or not you’re a good candidate. There are three consumer credit reporting bureaus operating in America, with each one providing information used in the generation of your score. Equifax, Experian, and TransUnion provide the data. Another organization, Fair Isaac Corporation (FICO), has developed a proprietary algorithm that measures this data and scores borrowers numerically from 300 to 850.

Credit scores include the following categories:

  • 781-850: Super prime
  • 661-780: Prime
  • 601-660: Near prime
  • 500-600: Subprime
  • 300-499: Deep subprime


Credit scores are pretty easy to understand. The higher your score, the more likely you are to be approved for a car loan. It’s not just approval, however, with higher scores sometimes leading to lower interest rates and better lending conditions. When analyzing your credit score, the credit bureaus look at your outstanding debt, payment history, length of credit history, account age, and types of credit used. DCCU proudly works with the entire community, with our car loans available to people with healthy credit or compromised credit scores.

3. Estimate your repayments

Once you have a basic idea of what you want and what lenders are looking for, it’s important to dig down into the details. In order to estimate your ongoing costs, you need to have the purchase price, the intended loan term, and the interest rate available to you, among other variables. Loan repayments and potential savings can be calculated fairly easily with the following information:

  • Vehicle purchase price
  • Car loan amount
  • Initial deposit or trade-in amount
  • Loan term
  • Interest rate
  • Balloon repayment
  • Repayment frequency

All lenders use this data to identify good opportunities, and you can use it also to estimate your costs. There are many car loan calculators available on the internet, but the best advice is to speak directly with lenders. While the value of the car, the amount of the deposit, and the intended loan term may stay constant between providers, interest rates and loan conditions can vary widely.

4. Compare potential lenders

Once you have calculated monthly repayments, it’s fairly easy to compare loans based on costs alone. Comparing repayment amounts is not enough in isolation, however, with other factors also relevant to your decision. For example, some lenders have more stringent lending criteria, and they may not be open to people with low credit scores. Other lenders may have lots of additional costs, hidden fees and charges, or fixed loan terms that lack flexibility over time.

It’s also important to note the difference between loans and lenders. Comparing dry data and isolated car loans is not the same as comparing financial institutions, with some lenders offering a very different quality of service. At DCCU, we operate an inclusive lending service that caters to a diverse range of people from broad socioeconomic backgrounds. We offer competitive interest rates, flexible lending conditions, simple refinance loans, and friendly customer service from a team that really cares.

5. Obtain pre-qualification

Before you start shopping for a new car or applying for a loan, pre-qualification is advised. This process offers theoretical loan approval and a working loan sum limit. In order to become pre-qualified, the lender will look at your credit score, your financial information, and the type and cost of the vehicle. While pre-qualification is not a guarantee of approval, it provides you with a rough idea of what you can achieve.


With car loan pre-approval from DCCU, you’ll know exactly how much you have to spend before you go car shopping. Not only will this help you to avoid making poor decisions, but it can also be a great bargaining tool at the dealership. There is little downside to pre-approval, with this process treated as a soft inquiry that does not impact your credit score. While pre-approval does not require comprehensive paperwork, it is a good excuse to get your documents in order early in the process.

6. Balance short-term and long-term gains

Before you make a final decision about your car loan, it’s important to think long and hard about all the financial implications. As one of your biggest assets and most significant ongoing expenses, your car loan is likely to represent a major factor in your monthly budget. The key to making good borrowing decisions is to be aware of the trade-off between short-term gains with long-term financial health.

The following factors need to be considered with every loan:

  • Interest rates: This is the cost of borrowing money, with lower rates associated with lower interest payments over time. There are two basic rate structures: fixed interest rates and variable interest rates. Most car loans are fixed, which means the rate amount is locked in for the term of the loan.
  • Loan term: This is the agreed time period needed to pay back the loan. The loan term is dependent on the purchase price of the car, the deposit amount, the interest rate, and the repayment amount. The shorter the term of the loan, the less money is paid back in interest. The longer the term of the loan, the smaller your repayments will be.
  • Loan fees: Additional costs may include repayment penalties, late payment penalties, application fees, and annual fees. If you are refinancing an existing loan, there may also be a designated refinance fee. Some car loan fees are hidden in the fine print, so you should always do your homework.
  • Loan conditions: Along with interest rates, the loan term, and the lending fees and costs, there may be other conditions associated with a car loan. Examples vary widely between loans, and they may include things like balloon payments, personal guarantees, and co-signer agreements.

Once you understand the basic components of a car loan, you can find a loan that meets your immediate and long-term needs. As mentioned, there is often a pay-off between short-term gains and long-term pain. For example, if you want to improve your weekly cash flow by lowering your monthly repayments, you will lengthen your loan term and end up paying more in interest payments over time. The opposite situation also exists, with shorter loan spans leading to more expensive monthly repayments.

7. Apply for a new car loan

When you’re ready to apply for a car loan, it’s best to be prepared. You will need documents to prove your identification, social security number, personal address, proof of income, and auto insurance. In addition, tax documents, payslips, income statements, and bank transaction details can also play a role. If you are applying for a refinanced loan, detailed information on the car and current loan agreement will also be required, including the vehicle identification number and current loan balance.

7 Reasons Why DCCU Is the Perfect Car Loan Partner

At DCCU, we make it easy to apply for a new car loan. We offer friendly, honest advice during the application process and reliable customer support throughout the loan period. A credit union car loan offers numerous advantages over a bank loan, including better rates, improved conditions, and community-based support. If you’re looking for the best place to get a car loan, you’ve come to the right place.

Here are seven reasons why Dane County Credit Union is the perfect car loan partner:

  1. Friendly, honest advice: We love helping local people find valuable financial solutions. We offer car loans at great rates, including low credit score options and competitive refinancing opportunities.
  2. Save money every month: Credit union car loan rates are highly competitive, especially for people with a low deposit or compromised credit score. When you pay less in interest, you save lots of money over the term of your loan.

  1. Tailored and flexible loan terms: Rather than a one-size-fits-all approach, we offer tailored loan terms based on your financial situation. You can change your term over time as your financial situation changes.
  2. Extended warranty protection: Our lending process helps you secure your vehicle with an extended warranty. If you want extra protection and reliable customer support, DCCU is a good place to get a car loan.
  3. Up to 100% finance: We try to make the car loan process as simple as possible. You don’t even need to save for a deposit, with our car loans providing up to 100% finance in many situations.
  4. Vehicle refinance loans: If you have an existing car loan and want to make changes, we are here to help. Car loan refinancing can be a great way to access better interest rates and improved loan conditions.
  5. Owned and operated by the community: As a member-owned financial institution, we are not driven by greed or profit. At DCCU, our services are based around your needs.

About DCCU

At DCCU, we offer car loans and other financial services to the residents of Madison, WI and surrounding counties. We are committed to improving the economic and social well-being of our members, and we are happy to help people from a range of socioeconomic backgrounds. We are proud to provide low and moderate-income members with car loan opportunities. Having a reliable car is an essential aspect of modern life, with our financial products helping people just like you to access a better quality of life.

At DCCU, our member-owned financial cooperative helps “build lifetime relationships through personalized financial service.” As a not-for-profit credit union owned and operated by its members, we are here for you. If you would like to refinance your car loan or learn more about our services, please contact DCCU today.


How Do Car Loans Work? Four Things You Need to Know

Man Driving Car

If you are in the fortunate position of having enough cash on hand to pay for a car outright, this is not the “how-to” guide you need. However, that would also mean your financial good fortune places you in a relatively small group, as approximately 85% of new passenger vehicles are financed.

Car loans are a reality for most Americans at some point in their lives, and have quickly become as common as a student loan or personal loan. Whether it means the purchase of a first car, an upgrade to a larger vehicle when starting a family, or even buying a car for a teenage driver, auto financing has become a part of everyday life.

Because car loans are as likely for most of us as paying rent or a mortgage, filing a tax return, and buying groceries to feed our families, we should all know the basics before entering into such a loan.

A little bit of car loan education goes a long way, preparing us for what lies ahead when we set out on four wheels of our own.

Black Super Car

The Four Things You Need to Know About Car Loans

Understanding how auto loans work means understanding these four components and how they work:

  • Down payments
  • Interest Rates
  • Loan Terms
  • Titles

We will familiarize you with these terms so you know the lingo well before you walk through the dealership doors and also so you can prepare yourself to make the best decision about a car loan.

Car Loan Down Payments

A car loan is an agreement between you (the borrower) and a lending institution/financial institution (the lender) to give you the funds needed to purchase a new auto.

Once you find a financing option that works for you, you’ll settle upon an agreement you will pay the loan back in monthly installments, by a specific date, with interest added.

An influencing factor from the lender’s perspective in the amount of the loan and the required payments and interest rates is how much you may be able to offer in a down payment. In other words, if you have only $500 as a down payment, your loan will be less attractive than if you had $5,000 to put down.

Many people rush into car financing and go in with very little for a down payment. If you are in a position to wait and save more money, that down payment can really help you in the long run, allowing you to pay more upfront and rack up less interest on your auto loan and a smaller car payment over time.

For a long time, the number most associated with down payments was 20%, meaning consumers were advised to put down 20% of the car’s overall price as a down payment.

However, as auto prices have increased, this number has become an impossibility for many. Still, putting down 10 or 15% if possible will help you reduce the monthly payments and secure a better interest rate.


Car Loan Interest Rates

If you have ever heard anyone say in a warmer climate “it’s not the heat that will get you, it’s the humidity,” the same concept could be applied to car loan interest rates.

It’s not the sale price of the car that will get you, it’s the interest rate.

To be fair, if the sale price of the car is six figures and you are a college student with a part-time job at a frozen yogurt café, then the sale price will get you, too!

However, the main point here is that a high interest loan over time can really hurt you financially, especially if unexpected circumstances make it difficult for you to make your monthly payments.

Walking into a car dealership as a car buyer means you need to be aware of what you’re getting into when it comes to dealer financing.

Interest rates are how lenders make money, and it is down to the consumer to understand what factors go into determining this rate so that the lenders are not making windfall profits off of your inexperience.

The interest rate on your car loan will be set by the lender after reviewing

  •  Your credit score and history
  • The term of your loan
  • Your down payment
  • The value of vehicle you are purchasing

If you know going into a car loan that at least one of these areas will reflect poorly on you, it helps to bump up your efforts in another. For example, if your credit score was dinged by some financial hardships, you should consider how this will affect your rate.

Bad credit sometimes can’t be helped- it’s best to get a credit report to look at your credit history to get an idea of where you stand. With a lack of excellent credit, perhaps try to save until you can make a down payment of more than 20%.

Car Loan Terms

The loan term of the loan refers to an agreed period of time for you to make your loan payment each month to repay the debt in full. In the case of car loans, the term is usually between 36 and 72 months to pay off your principal balance.

Simple math will tell you the shorter the team, the higher the monthly payment, and vice versa. One thing to bear in mind is while a lower monthly payment probably seems tempting, a longer-term also means you are paying more in interest.

When entering a loan application, car buyers should choose the shortest possible term they can afford in order to avoid overpaying with a higher interest rate.

Women Relaxing in Car

Car Loans and Titles

A final piece of the car loan puzzle borrowers should consider is how the auto title works in conjunction with the money you borrowed. Even though you are the “owner” (as in primary driver) of the vehicle, the lender retains the title until your debt is paid in full. This means the lender can take the car back if you default on the loan.

Once a car loan is paid in full, the title will be transferred to you.

Final Thoughts on Car Loans

By going into the car buying process with a clear idea of the down payment you can afford as well as understanding the terms and interest rates offered, you will be in a better position to negotiate a fair and favorable loan.