Why Shop Your Auto Loan Before You Shop for a Vehicle?
By Remar Sutton, Consumer Spokesperson
Shopping for an auto loan before your shop for your next vehicle, new or used, seems like a backward approach, doesn’t it? Actually, shopping for the best loan and getting pre-approved before you shop for a vehicle can save you big bucks. And the place to start is with University Federal Credit Union. Here’s how you can save.
Shop Your Loan First to Know How Much Vehicle You Can Afford
Getting pre-approved for an auto loan helps you set a budget for an auto purchase. When you know the pre-approved loan amount and the value of your trade-in and/ or any other down payment you have, you know the total sum you have to spend on a vehicle and stay in budget. Our Wheels 101 Buyer’s Guide shows you how to do this. You can also talk to a Wheels 101 Advisor.
Get the Best Interest Rate and Loan Terms You Qualify For
Your goal is to find the best interest rate for a monthly payment and loan term you can afford comfortably. Many lenders’ goal is to get highest interest rate and longest term a car buyer will agree to. That way they make more profit. Many lenders also have different interest rates for new and used vehicles. At UFCU, however, you will always be offered the lowest interest rate for which you qualify. UFCU also offers the same interest rates on new and used vehicles.
Avoid Subprime Loan Tactics and Overpriced Add-on Financial Products
Higher cost loans made to consumers with less than prime credit (called “subprime” loans) have been growing recently. During the last quarter of 2014, almost 39% of outstanding vehicle loans in the U.S. were subprime loans, according to a report by the Center for Responsible Lending. Many subprime lenders hype a low monthly payment, while actually raising the interest rate as high as possible and greatly extending the months financed. In addition such lenders will charge inflated prices for financial add-ons such as extended warranties and credit insurance. Even if your credit score is lower than prime, UFCU will offer you the lowest interest rate for which you qualify. Should you want an extended warranty, GAP insurance or debt protection (credit insurance that covers your auto loan payments in case of disability or death), UFCU offers excellent products at reasonable prices.
Already Have an Auto Loan You Think You Are Paying Too High A Rate For? Check into Refinancing with UFCU
If you recently bought a vehicle and financed with a lender other than your credit union, you may be paying too much for your loan. If you are, refinancing with your credit union may save you lots of money. On average, members refinancing auto loans with UFCU have saved an average of $1,950 in interest and lowered monthly payments as much as $50. All you need to check it out is your original loan contract or payment booklet and a call to 512-498-CARS(2277).
Putting Members First
You may think that I’ve been pretty strong in my support of credit unions, particularly UFCU, in this report. And you’d be right. As a member, you are a partner of the credit union. That’s one of the reasons they make working for your financial well-being a priority. To do that, they offer very competitive automotive loans (and other products). But you don’t have to take only my word for it, just read some of these stories from other members about their auto loan experiences at UFCU.
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