Buying a new car is a big deal. It’s one of the biggest purchases you’ll ever make (next to your home and maybe your education). Most people finance this purchase with an auto loan.

An auto loan is a fixed term loan (usually for five years) that’s used to fund the purchase of a new or used car. Interest rates and repayment schedules are set in the beginning stages of the loan process and remain the same for the duration of the loan. The car is held as collateral in case of a default on the loan, but once the loan is paid off— the car is all yours.

If you’re in the market for a new (or used) car— here’s what you need to know about obtaining an auto loan:

  1. Pull Your Credit Score

When you apply for an auto loan, lenders pull your credit score. To avoid any unwanted surprises, check your credit score before visiting your local dealership. This way you’ll have a clear picture of where you stand financially. You’ll also have a better idea of the rate you can expect to receive. If your credit score is only average, don’t expect to receive the absolute best rate. In addition, don’t apply for financing with too many lenders. According to Bankrate, “Every time you apply for a loan your credit score goes down and it makes it slightly more difficult to get a prime-rate loan.”

  1. Shop Around for Auto Loan Rates

Dealers’ interest rates aren’t always the best rates. You can expect more favorable interest rates from credit unions. According to US News, “Rates at a credit union are typically much lower than the average rate at a competitor bank.” In addition to your credit score, lenders require a variety of personal and financial information which may include:

  • Proof of employment
  • Income verification
  • Details of the car purchase agreement
  1. Find a Car That Fits Your Budget

There’s no sense in shopping around for a car out of your price range. The truth is we all have budget limitations. We need to live (and spend) within our limits to stay financially stable. Start by getting pre-approved for your auto loan at your credit union or bank. This will help you determine how much car you can afford.

Once you’re approved you can get in the car and drive off the lot—just don’t forget to purchase insurance.