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Buying a Vehicle
Financing Options
There was a time when the only way you could purchase a car, truck, or van was
if you had pre-arranged the financing with your financial institution.
But times have changed. Car dealers now will offer to finance your vehicle purchase with them.
But do your homework because the convenience of having the dealer handle the
financing may actually cost you more.
Dealer Financing
To help you prepare for a dealer financing sales pitch, here are some of the
things that you should watch for: |
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- When a dealer quotes you a lower annual percentage rate (APR) than "your credit union offers,"
make sure its not also tied to a shorter loan term. You may have to pay it off in 24 or 36 months, which may mean making hefty monthly payments. (For rates and terms, click here.)
- The reduced APR is almost always offered on a limited selection of models. The car you want may not be available at the low rate advertised. Read the fine print in the ads.
- You may lose some ability to negotiate the best price. You may see statements such as "subject to dealer restrictions on selling price" or "dealer financial participation may affect final negotiated price of the vehicle."
- Very low monthly payments probably mean a lengthy loan term, which means you'll pay a higher finance charge in the long haul.
- Watch out for early payoff penalties with some dealer financing. This is an important consideration if you don't plan to keep the
vehicle for the full term of the loan, or if you accelerate the amount of your payments. There is no penalty for early loan repayment at
CoVantage Credit Union.
- You may forfeit other benefits, such as a cash discount, rebate, or a free scheduled maintenance program offered by the dealer in place of the low-rate financing.
CoVantage Credit Union Financing
CoVantage works with many dealers to offer our credit union financing right
at the dealership. The dealer's financing department handles the paperwork and
submits it to the credit union. Just ask for a CoVantage Credit Union vehicle loan
when the subject of financing comes up with the salesperson.
If you prefer to apply for a credit union loan directly from us, CoVantage offers a secure online
application for speedy loan approvals and access
anytime. You can also come in and see a loan officer before you pick out your
vehicle or after you have made your choice. We also offer loans by phone and
most are approved the same day.
- New or used vehicle loan -- When you take the traditional
vehicle loan route, keep in mind that
CoVantage Credit Union charges no prepayment penalties, application fees, and offers financing up to 100% of collateral value.
We also offer weekly and bi-weekly payments. You are also eligible for a
loan interest rebate.
- Refinance your vehicle loan -- Bring us your loan from a dealer or other financial institution and we'll refinance it at our current rate and terms.
- Home equity loan -- Some members use a CoVantage home equity loan or line of credit to finance their purchase and save on taxes. In most instances, you'll be able to deduct the interest you pay on the equity loan from your income taxes, which could result in additional savings to you. (See your tax advisor for more information about tax deductibility.)
If you want to determine what your monthly car payment would be, simply try our
loan calculator right now. Just put in the amount you want to borrow and the repayment term you'd like, the calculator will do the rest.
Shop as wisely for your financing as you do for your vehicle. Consider all your options, then choose the
option that saves you money and offers a convenient monthly payment and loan term you can live with.
Next: Going for a used
vehicle |
