Category: Auto

Why You Should Finance Your Next Car Loan At Your Credit Union

On By mutualcuIn Auto, Financial Lessons, Financial Security, UncategorizedLeave a comment

new car loan

When shopping for a new set of wheels, your first stop should be right here, at Mutual Credit Union. Though many people start their process on the dealer’s lot, you’ll enjoy a lower rate, a simpler loan application and other benefits by choosing to finance your car with your credit union.

This is why people are increasingly choosing to finance their cars directly through credit unions. In fact, auto loans comprise more than a third of all the active loans across the 5,600 credit unions in the U.S.

Let’s take a look at the differences in the auto loan process at a car dealership versus Mutual Credit Union.

Financing an auto purchase at a car dealership

When you visit a dealer’s lot with the intention of purchasing a car, the dealer will likely ask you how much you’re willing to spend on your vehicle of choice. You may have already worked out your numbers, or, you may just have a vague idea of how much you can realistically afford. Either way, the dealer will probably try persuading you to push your self-imposed limits to the max or even to go over your ceiling price.

But, if you’re financing your car through the dealer, that’s only the beginning. Once you’ve chosen the car you’d like to buy, you’ll need to submit a complicated auto loan application form, which the dealer will send to the finance companies it partners with. This can include lenders and financial institutions – even Mutual Credit Union! The dealer will then share the lenders’ offers with you and ask you to make your choice.

However, in most cases, the dealer is only the middleman. This means they are going to present your options in a way that most benefits them – and not you. Thanks to this practice, even a fantastic offer from Mutual Credit Union will be presented as higher than it actually is, or may not be presented at all.

For example, say your dealer contacts three lenders: Lender A, Lender B and Lender C. Lender A agrees to offer you a 5% Annual Percentage Rate (APR), Lender B offers a 6% APR, and Lender C offers a 7% APR. But the lender will not automatically present you with Lender A’s offer. Instead, they will first determine which lender would afford them the greatest profit.

The rates presented by the above lenders are known as the “buy rates,” or the lowest possible rate the lenders will grant the borrower.  Lender A might offer the dealer a flat fee for each new loan the dealer nets them at the buy rate, with more profit granted for each new tier of a car price, such as $10,000. Lender B, on the other hand, allows the dealer to increase the buy rate by 3% to a new “contract rate.” The dealer then pockets the difference as his own profit. Lender C allows the dealer to offer a contract rate at 2% higher than the buy rate.

In the above scenario, it isn’t hard to picture the dealer pushing you to accept an offer from Lender B or Lender C at the new contract rate of 9%. If you complain that this rate is too high, the dealer may then suddenly “remember” that Lender B is willing to finance the loan at a 7% APR. In either case, there’s very little chance you’ll end up being presented with the offer that is truly in your best interest. And you’ll never even know you’ve been duped!

Financing an auto purchase at a credit union

Getting an auto loan with your credit union is a completely different experience. Why? Because we exist to serve your best interest.

When you walk into Mutual Credit Union with the intention of taking out an auto loan, you’ll be dealing with people who know who you are and what your financial reality is like. No one will try to push you into a loan you can’t afford.

The process of applying for a Mutual Credit Union Auto Loan is simple, quick, and easy. You can even apply for a loan online. Also, as a member of Mutual Credit Union,you already have a headstart on getting that pre-approval.

One of the biggest advantages you’ll have when financing an auto loan through your credit union, though, is a lower APR. Because you’re working directly with the lender, you’ll only hear the actual rate we offer instead of a marked-up rate the car dealer presents to you.

Also, as member-owned and operated institutions, credit unions famously offer loan rates that are consistently lower than those offered by large lenders and banks. In fact, according to Bankrate, the average APR on a credit union auto loan in the beginning of 2019 was a full point lower than the rates offered by banks.

Another key advantage you’ll enjoy from a credit union-financed auto loan is a more relaxed setting when determining how much you can afford to pay each month toward your new car. There’s no rush and no pressure when you’re sitting at Mutual Credit Union and working out your budget. In contrast, when you’re standing in the dealer’s lot surrounded by cars you wish you could afford, you’re far more likely to make a decision you’ll later come to regret.

If you’re in the market for an auto loan, make your credit union your first stop. You’ll enjoy a lower rate and the friendly, professional service you’ve come to expect at Mutual Credit Union.

Your Turn: Have you financed a car purchase through your credit union? Tell us about it in the comments.

What Features Should I Look for in a New Car

On By mutualcuIn Auto, Just for Fun, UncategorizedLeave a comment

Keys to a new car

Q: How do I decide which features to look for in a new car, and which to skip? 

A: Shopping for a car doesn’t have to be complicated. To help you out, we’ve created a list of key features to consider in your new car, and a list of features you can skip. 

Must-have safety features 

  • 360-degree camera: This camera gives drivers a bird’s-eye view of the area around the car.
  • Evasive steering: This feature provides additional steering support when you’re in danger of colliding with another vehicle, and your own steering efforts are insufficient.
  • Forward collision warning: Drivers get a visual and/or audible alert when their vehicle is heading toward a forward collision.
  • Blind spot alert: This feature alerts the driver when there is an object or pedestrian in direct line of their blind spot.
  • Automatic emergency braking: Stay safe with this feature, which automatically applies the brakes when it senses a vehicle in your car’s way. Some systems include pedestrian detection as well.

Convenient features 

  • Automatic key-less entry: This feature automatically unlocks a car’s doors when it senses a nearby fob.
  • Power tailgate: This feature for pickup trucks and SUVs lets you lower and raise your tailgate with the push of a button.
  • Multi-zone climate system: Family road trips are peaceful again with this feature, which allows for different climate controls throughout the car.
  • Speedy USB-charging outlets: No more unbearable waits for your gadgets to power up with this super-speedy USB port.  
  • Heated steering wheel and driver’s seat: This one is for those frosty mornings when your car can’t get warm fast enough.
  • Wireless charging pad: Just place your phone on one of these pads and it will start powering up.

Fun-to-have features 

  • Home assist device connectivity: Some new cars allow you to use remote voice control with home assist technologies, like Alexa, for your car.
  • Rear entertainment systems: This feature gives the rear seat of your car a completely separate entertainment system.
  • Android Auto and Apple CarPlay: These features sync your smartphone’s interface with your car’s infotainment system for easier phone control.

Features you can skip 

  • Bigger wheels and thinner tires: The ride will be less comfortable and your wheels will be more prone to damage from potholes.
  • Built-in navigation systems: You know you’re going to use Waze or another Maps app on your phone most of the time anyway. Also, most built-in navigation systems require constant updates.
  • Lane keeping assist: This feature automatically steers or brakes your car when you cross a lane marking without turning on a blinker. In real life, though, it can be annoying as you’ll often need to cross a lane marker for good reason, like moving over for an emergency vehicle.

Before you start shopping, call, click, or stop by Mutual Credit Union to hear all about our new auto loans.

Mutual Auto Loans

Your Turn: Did you buy a new car recently? Tell us about the features you chose in the comments below.

 

SOURCES:

https://www.consumerreports.org/automotive-technology/must-have-features-to-get-in-next-new-car/

https://www.hotcars.com/must-have-car-features-for-2019/

https://cars.usnews.com/cars-trucks/cars-with-the-most-high-tech-features-for-the-money

9 Steps to Buying Your First Car

On By mutualcuIn Auto, College Tips, Financial Lessons, Just for Fun, Saving Money, UncategorizedLeave a comment

CC_July_GettyImages-183212513-768x576

Congrats—you’re ready to purchase your first real car! 

The process can be daunting, but our certified financial counselors and loan officers here at Mutual Credit Union will walk you through it. Follow our guidelines for a stress-free ride! 

1. Determine if you really need a car 

OK, you weren’t expecting this, but it’s important to take a step back to review your actual transportation needs. Lots of college towns have a great bus system in place, which can save you loads on car costs. If you have a car-owning good friend you’ll be riding into town with each weekend, it may not pay for you to have your own set of wheels. Also, if your campus has everything you need within walking distance, it can be cheaper to rent a car when you need it instead of buying one now. 

2. Know your budget

If you’ve determined that a car purchase is necessary at this point in your life, don’t start hunting for your dream car until you’ve worked out a realistic budget. Take a hard look at your other monthly expenses to see how much you can spare for a new set of wheels. Don’t forget to include some cash for auto insurance, gas and maintenance. 

3. Create a tentative wish list 

This is your first car, so it doesn’t need to have all the bells and whistles it does in your dreams. Sit down and make a list of all the “must haves” and “wants” you’re looking for in a vehicle. Determine how much each feature would cost you in a car and decide which are really important. 

4. Obtain financing 

If you’ve been saving up cash for your first car all through high school, you’re set! Otherwise, visit any Mutual Branch location or visit our web-page at  mutualcu.org to learn about your auto loan options and to get your pre-approval. 

5. Research your options 

You’re ready to start looking for a vehicle that will satisfy your needs and wants. You can research ratings and user reviews on sites like Cars.com and create another list that contains your top three choices of car makes and models. 

6.    Look up listings 

Start scavenging for listings of your car choices online and in your neighborhood. Once you’ve found several that might work, research their histories on Carfax.com and then contact the seller to set up a test drive. 

7.    Take it for a spin 

If a car checks out and everything looks good, you’re going to want to take it for a test drive. Pay attention to details like legroom, acceleration, brake functionality and more while you drive. 

8. Have it inspected 

If you’re purchasing a used vehicle, it’s best to have it inspected by a mechanic before signing on the deal. 

9. Make it official 

If your car has passed the test drive and inspection, you’re ready to make it official! Be sure to read all documents before signing and obtain insurance before your first joyride. 

Enjoy your new set of wheels and drive safely! 

Your Turn: Have you recently purchased your first set of wheels? Share your tips with us in the comments!

 

SOURCES:

https://www.carbuyingtips.com/first-time-buyer.htm

https://www.edmunds.com/car-buying/10-steps-to-buying-a-used-car.html

https://www.carbuyingtips.com/used.htm 

New Cars vs. Used Cars

On By mutualcuIn Auto, UncategorizedLeave a comment

new vs used

Q: I need a new set of wheels and I’m wondering if it’s better to spring for a new vehicle or to go the cheaper route and buy a used vehicle. What do I need to know about each kind of purchase? 

A: Any decision surrounding a purchase as large as a car needs to be made with careful research and consideration. There are pros and cons on both sides of the fence here. Your final decision, though, will depend on your budget, personal preferences and particular needs. 

To make your job a little easier, we’ve outlined the pros and cons of each purchase type below. 

Pros of new cars 

  • Status symbol. The strongest allure of owning a new vehicle is obviously its attractiveness. You don’t hear many people bragging about their just-purchased used car or posting pictures of it all over their social media pages.
  • Fewer repairs. With a new vehicle, you can assume you won’t be dealing with major repairs or maintenance issues for a while.
  • Easier shopping. When everything is completely new, there’s no need to drag your prospective new car to the mechanic. It’s also easier to determine a fair price for the car.
  • More financing options. If you’re considering a new car, you’ll be offered attractive incentives like cash rebates from the carmaker and better interest rates from the lender.
  • Improved technology. Cars are getting more updates, and recent models have incredibly convenient technology, such as programmable settings, autonomous emergency braking, adaptive cruise control, blind spot monitoring, built-in Wi-Fi hotspots or lane-departure warnings.
  • Automaker’s guarantee. All new cars come with warranty coverage for their first three years or 36,000 miles, whichever comes first.

Cons of new cars

  • Price. Of course, a new car is going to be more expensive. But it’s not just the price that puts you at a disadvantage – it’s the fact that you can get a perfectly comparable vehicle for much less.
  • Depreciation. New cars go down in value as soon as they leave the lot. In fact, a new car can lose 20% of its value once it’s owned. At the end of the first year of ownership, your new car can drop another 10% thanks to the mileage you’ve clocked and the wear and tear.  You’ll feel this loss if you try to sell your car a few years down the line.
  • Higher premiums. Insurance companies charge more for newer vehicles. You’re also more likely to want the maximum coverage and protection when every dent in your new car is enough to bring you to tears.

Pros of used cars

  • Price tag. Let’s be honest here: No one would think of buying a used car if it weren’t for the savings. And those savings can be enormous! Consider this: according to the National Automobile Dealers Association (NADA), the average American own 13 cars in their lifetime. A typical new car costs $30,000.  If each car that a person owns throughout their life is just 3 years old and costs $20,000, the driver can save $130,000 on car costs throughout their life!
  • Less depreciation. The savings on a used car don’t end at the dealer’s lot. With the previous owner absorbing the initial depreciation on the car during its first few years of ownership, your vehicle will only experience a minimal drop in price. You can save yourself thousands of dollars in loss if you want to sell your car a few years down the line.  
  • Lower insurance premiums. With your car weighing in at a lower value, your monthly insurance premiums will be more manageable. You can also opt out of full protection when your car isn’t a new model anyway.
  • Lower interest. If you choose to finance a used car instead of a new one, you’ll likely have a higher interest rate. However, since the loan amount is lower, you’ll save in total interest payments over the life of the loan.
  • Predictability. When purchasing a just-released car, you never know what issues might crop up in the future. But, when you’re buying a model that’s been around for a few years, you’ll have a wealth of research and ratings available on your car so you’ll know what to expect.

Cons of used cars 

  • Complicated purchase. You won’t be able to walk into a lot and walk out with your new car an hour later. With a used vehicle, you’ll want to get a vehicle history report, ask to see the vehicle’s service records and bring it to a mechanic for a professional inspection.
  • Fewer choices. When buying pre-owned, you don’t get to be picky about things like colors, upgrades and features. If you find something in your price range that meets most of your specifications, you grab it!
  • Risk. Even if you do your homework well, you still run the risk of walking out with a lemon when you buy a used car.

It’s a multi-faceted decision, but by carefully weighing your options and personal preferences, you’ll drive off of the dealer’s lot with a real winner! 

Whether you choose to go new or previously-owned, don’t forget to call, click, or stop by and any of our five Mutual Credit Union locations to hear all about our new and used auto loans.

Your Turn: Did you buy your car new or pre-owned? Are you happy with your decision? Tell us all about it in the comments below.

 

SOURCES:

https://www.nerdwallet.com/blog/loans/compare-costs-buying-new-car-vs-used/

https://www.autotrader.com/car-shopping/4-questions-help-you-decide-new-or-used-car-167808

https://cars.usnews.com/cars-trucks/new-cars-vs-used-cars

https://www.iwillteachyoutoberich.com/blog/cost-vs-value-should-you-buy-a-new-or-used-car/

Don’t Get Dealed! 6 Ways To Avoid Getting ‘Taken In’ By A Car Dealer

On By mutualcuIn Auto, Financial LessonsLeave a comment

 

  1. Do your research before visiting the dealer. Find out which kind of vehicle you want, determine your budget, and read up on customers’ reviews of your chosen car. If you walk in knowing nothing, the dealer will quickly take advantage of your naivety.
  2. Be ambiguous. Don’t give the impression that you’re definitely buying through this dealer or they won’t be trying their hardest to give you the best deal. You can even drop hints that you’ve already found several vehicles that you are seriously considering.
  3. Don’t agree to any “extras” for protection. Etching, rustproofing and paint-and-fabric protection aren’t worth much – and they definitely aren’t worth what they charge you for it!
  4. If you have good credit, expect an interest rate between 1.49% and 3.49%. Don’t fall for anything higher or it means the dealer is just hiking up the rate at your expense.
  5. Don’t automatically agree to all damage waivers you’re offered. Many are unnecessary and provide insufficient coverage. Do careful research on each service before signing up for it.
  6. Visit Mutual CU for financing, no matter how great a deal may sound.

Your Turn: Did you ever get taken for a ride by a car salesman or put a stop to their attempts? Share your story with us in the comments!

Auto Loans: Credit Unions Vs. Banks

On By mutualcuIn Auto, Financial LessonsLeave a comment

Need a car but can’t pay cash? You have three choices: Borrow from the dealer or manufacturer’s financing company, borrow from a bank, or borrow from a credit union (unless Uncle Bob is willing to finance you, but who wants the “strings” that go along with that?). Each method has advantages and disadvantages – but if you can qualify, the way to go is usually with a credit union.

Interest rates are still near historic lows. If you are going to borrow money for a car, there’s never been a better time.

 Structural advantages of credit unions

Credit unions are known for having lower fees and interest rates than banks and other finance companies. The advantage is in the ownership structure: The owners of banks and the majority of consumer finance companies are stockholders – not you. That means every product or service they provide has but one real objective: to make money for their shareholders, while not alienating you so much that you take your deposits and future business somewhere else.

The owners of credit unions, on the other hand, are members, not shareholders. That means profits are distributed among its members in the form of dividends and in the form of lower fees. Every dime that would have gone to Wall Street, in the case of a credit union car loan, stays with credit union members. And you, as the borrower, get to keep a chunk of it in the form of lower interest rates and fees.

 Advantage to the consumer

With traditional stock ownership, there is always an adversarial relationship between the bank and the customer. Banks serve the stockholders. The credit union exists, however, to serve members. Think of it: If the credit union didn’t serve member interests, the members could simply replace the management team until they found managers who are more responsive to the needs of the membership.

 Advantages of banks

Credit unions tend to be smaller than banks, with a limited membership. You have to meet the criteria for membership to be able to join and get a loan. Luckily, it’s easy to become a member of Mutual CU. (If you live, work, worship, attend school or volunteer in one of our seven covered counties, you’re already qualified!) sometimes, banks have more up to date ways to access loans and banking products. Luckily, Mutual CU has a full suite of digital products like online banking and a mobile app so Mutual CU goes wherever you do!

 Disadvantages of banks

As mentioned, banks have a substantial cost of overhead, in the form of their many branches, expansive operations and, of course, investor profits. Some very large banks have good economies of scale and can minimize the impact of their overhead on consumer fees. But no bank is going to want to cut into shareholder profits if they can help it.

 Dealer financing

The last option is, of course, dealer financing. These deals can be excellent on new cars (0% or 1%  financing is tough to beat), but the picture isn’t as rosy for older cars, or for those who have less-than-stellar credit.

If you go the dealer financing route, take a look at the fine print: You need a car loan with no prepayment penalty. This means you are free to pay off the loan balance at any time, without any added fees or interest tacked on. The higher the interest rate, the more important this is.

Also be on the lookout for dealer add-ons that cost more there than at the credit union where you can get the same types of warranties, gap and other insurance for substantially less.

 The lease option

The final option, of course, is leasing rather than buying. A lease is essentially a contract to rent the car for a period of time and to turn the car back in at the end of that contract (the lease). Lease payments tend to be lower than loan payments because when a loan is paid, you keep the car! The loan is buying the whole car, and not just the depreciation it has during the first few years.

In the long run, the consumer is almost always better off buying a car outright, rather than leasing. With a car loan, the pain of payments is over in one to four years, but you can be driving the car for 10 years or more! With a car lease, though, your payments never stop, and you never own the car.

Still not sure what to do? Contact us to request your free car buying guide; and when you’re ready, we can get you pre-approved to shop for your new set of wheels!

Buying a Car?

On By mutualcuIn AutoLeave a comment

An automobile is a major investment. Just think about it: In the last 10 years, have you bought anything that costs more than a car? A house or your kid’s education, maybe. Yet, unlike a house, a car is not going to appreciate in value; and unlike an education, an SUV is not going to increase your offspring’s earning potential.

A car isn’t an investment after all, because you’re not going to receive a return on it. It’s an expense, and the best you can do is to get the maximum use and pleasure from the money you spend. Getting the most out of your car is a matter of careful maintenance. Getting the most out of your money is a matter of getting a good price on the car and a good deal on the related financing.

Negotiating a good price on your car can be stressful, but arranging for a good deal on your loan might not have to be. When they think of car loans, most people think of banks and dealer financing – but your credit union may offer the best, most flexible terms and the fastest loan process that’s available to you:

• Before you go shopping, come to your credit union to get pre-approved for a loan. Preapproval will mean you have one less thing to worry about when you find the vehicle you want.

• The rates that your credit union offers on auto loans are probably lower than those that are offered by most banks and car dealerships in your area. An additional discount on the rate is available if you set up a direct loan payment.

• Refinancing an existing loan on the car you currently drive could lower your rate and monthly payment, putting more money in your pocket – a good thing at any time, but especially in a troubled economy.