Car Buying 101 – Building a Budget

By Abbey Ramsay, Consumer Lending Manager at UCU

It’s inevitable that at some point we will need to navigate the winding road of purchasing a new vehicle. Not to fear! Hop on into the passenger seat while we take a quick ride through the process.


Of the many questions you will face while finding your next dream car, and most important, will be your budget. As with most everything in life our budget plays a huge part in our options for purchasing a vehicle. While you may be able to pay cash for your next vehicle and own it outright, it’s much more likely that you will need some sort of financing for this purchase.

If you are in the majority of people who need to finance your auto don’t sweat it, we can help! Take some time to think about your monthly expenses verses your monthly income. Once you know a comfortable payment you should reach out to your local lending institution, like UCU. Your local lender can be a wealth of knowledge during this process and can help you determine what your comfortable payment is for your vehicle.

Monthly Payment

There’s a few things that can go into a payment each month, payment will always include principal and interest.

  • The principal portion of your payment is the deduction each month that helps you pay off your loan in the term period of your loan.
  • The interest portion of your payment is the price you pay for credit.

The interest amount is determined by the interest rate you qualify for.  Interest rate is generally determined by your credit score and how long you would like to pay the loan for.  This may sound confusing but, generally speaking the better your credit score; the less it will cost you to buy your next auto.

Get Pre-approved

Once you work with your lender, you can become pre-approved.  You can be pre-approved for a specific vehicle if you already have one picked out, or for a dollar amount.  If you haven’t picked a vehicle out yet then, it’s now TIME TO SHOP.

Click here to learn more about Auto Loans at UCU.