Posts Tagged ‘Car Loans’

Fuel Efficient Cars Pay For Themselves … And Then Some!

 

There are now many fuel-efficient cars on the market to save you money.

Even though gas has dropped below $4 per gallon, if you have a long commute to work, run errands on the weekend and/or take trips out of town, fuel takes a big chunk out of your monthly budget. If you drive an SUV, large pickup truck or an old gas guzzling sedan, the hit to your wallet is even greater.

Wouldn’t it be nice if you could reduce your fuel bill AND drive a new car? You can! In fact, a brand new fuel efficient car could pay for itself in the first month … and then some!

According to the gas mileage savings calculator on auto website edmunds.com, if you trade in a 2007 Chevrolet Suburban, Cadillac Escalade or Dodge Ram 2500 Quad Cab for a 2011 Toyota Yaris sedan, Chevrolet Aveo sedan, or even a Volkswagen Jetta, you would save from $271 to $372 per month on gas: easily covering a monthly loan payment after your trade-in, and then some*.  In some cases, the value on your SUV may actually be worth more than your new car!

Let’s look at some specific numbers.

Say you own a 2007 Chevy Suburban LT 2500, and trade it in for a 2011 Volkswagen Jetta four-door sedan.  The Suburban is still worth $17,265, and the new Jetta with typical options sells for only $15,450.  Now, let’s assume you financed the Suburban over six years and still owe $15,000.  If you sell it for $15,000 and pay off your loan, you’d have to finance the entire Jetta.

A deal breaker?  Nope!  You’d still come out ahead.  Way ahead.

Let’s assume you have average credit and don’t qualify for the lowest available rate; we’ll assume you have an interest rate of 6.99% APR. Your Suburban monthly payment was $681.77, and the SUV only gets 14 miles to the gallon.  Your new Jetta, financed over five years, would have a monthly payment of $305.86; and, gets 29 miles to the gallon.

So, you’d save $271 per month on gas alone … PLUS, another $375.91 on your monthly car loan payment … AND, you’d be driving a brand new car!

That’s almost $650 added to your monthly budget, a better choice for the environment, and a brand new car that’s covered by a dealer’s warranty!  You’d save even more if you purchased a smaller vehicle that has even better gas mileage than the Jetta.

How much is your used vehicle worth?  Edmunds.com is a good resource, but you might also want to try Clearbook.com, a popular new website that uses used car listings to determine the current market value of your vehicle. Simply enter your zip code, make, model, options, mileage and condition to receive a low, average and high price.

Loan rates still at historic lows, making the cost of financing a new vehicle very affordable. At PFCU, our loan rates for new and used cars are currently as low as 2.99% APR for terms up to 5 years.  You can apply online or print an application to complete and return to us by mail, fax, or in a branch.

*Gas savings based on 2,000 miles per month at $3.80/gallon gas.  Loan payments assume an interest rate of 6.99% APR.

Is 0% Dealer Financing Really a Good Deal?

Car-buying CAN be a pleasant experience if you do your homework and get pre-approved

Automobile sales are on the rise as the economy improves.  With fuel prices also going up, many people are switching to more efficient vehicles.  

Are you among those Americans in the market for a new vehicle?  Are you being lured to the dealer by 0% financing ads on TV?  Before you hit the showroom floor, you’ll want to consider whether dealer financing is as good in the long run as a loan from your Credit Union.  There are certainly many fine dealerships in existence, but they are well-versed in ways to manipulate a deal, and you should be, too.

One of the biggest complaints consumers have about dealer financing is it puts the dealer in control of the transaction.  When you already have an approved loan from your credit union, it’s the same to the dealer as cash in your hand, which you can take away if you don’t like the way negotiations are going.  You’re in control of negotiating, and can often negotiate a lower price and/or extra options.

If you’re dependent upon dealer financing, the dealer can choose to stand firm on the car’s sticker price rather than negotiate, withhold cash back offers, ignore trade-in credits or add on extras you don’t want, like credit insurance.

And, if your credit history is less than perfect, you won’t qualify for those 0% finance deals.  Additionally, most 0% offers only apply to some makes and models, and are only good for 24 months … after that ‘teaser’ period, the rate increases to far more that you would pay at the credit union, and often come with a penalty if you attempt to refinance elsewhere.

When you finance a car short-term, the payment is often unmanageable. While you may optimistically agree to these terms thinking you can “find a way to make it work,” oftentimes you’ll end up damaging your credit rating with late payments, or suffer an inability to meet other financial obligations.

An old trick in the dealer book is to take your driver’s license from you while you’re testing driving the car. This isn’t for liability reasons, as the salesman will claim; rather, it’s so the credit department can run your credit. If you’re already pre-approved from your credit union, simply show the salesman you have a valid driver’s license … if he insists upon confiscating it for the duration of the test drive, walk away.  (Chances are, he won’t let you walk away and will agree to your terms!)

If you have less than perfect credit, you can be assured your experience will be positive and confidential.  Our loan officers aren’t predatory like car salesmen, and they won’t discuss your credit history out in an open showroom in front of strangers.

PFCU’s current auto loan rates are still historically low.  At those rates, you’re better off taking the cash rebate, or negotiating yourself a better sticker price.  

For more information on PFCU’s auto loans and pre-approval process, visit the Credit Union or call (626)799-0882.  You can also just click the APPLY NOW button on our website at www.pfcu.org