Buying a new car is exciting. Searching for an affordable car loan is not. As a member of Wayne Westland Federal Credit Union, you have an advantage when it comes to finding low rates on car loans.
WWFCU is a not-for-profit institution. This means that we can “give back” to our members by offering you lower interest rates on loans.
Did you know that Credit Union loan rates are, on average, 1% lower than the rates that banks offer? In fact, you could save hundreds of dollars on your new or used vehicle when you finance the purchase through WWFCU.
For many people, a car is the second most expensive purchase they will ever make. Here are some points to consider before making this important financial decision.
How Much Can You Afford to Spend?
Financial experts say that you shouldn’t spend more than 20% of your monthly take-home pay on car loan payments. This figure includes all the vehicles you own, not just your newest acquisition.
The 20% is just a guideline, however. You may have other ongoing expenses that will affect how much you can budget for a new vehicle.
Therefore, you should think about how much you can comfortably afford. The key word is “comfortably.” If you have to juggle your bills to be able to make your car payment each month, you could wind up in trouble.
Keep in mind that when you buy a car, your total expenditure is much more than the sticker price. Taxes and registration fees can increase the upfront cost by as much as 10% or more. If you’re financing the vehicle, interest charges could add thousands of dollars to the total amount you pay.
Obviously, the lower the interest rate on your car loan, the less you will pay in interest charges. Even a difference of 1% can add up to hundreds of dollars in savings.
How to Pay Less for Your Car
Save your money to make a large down payment (20% or more). This reduces the amount of cash you need to borrow. Consequently, your monthly payments and total interest costs will be less, and you’ll save money on the total cost of the car.
Try to obtain a loan for the shortest term possible. You will receive a lower interest rate and pay less interest overall. A 36-month loan is more economical than a 48-month loan. Avoid loans that run for 72 months or longer.
Having a good credit record will ensure that you get the most favorable interest rate on your loan. If you don’t have a good credit rating, you may want to take steps to improve it before buying a car.
Consider Related Expenses
Finding a low rate on a car loan can save you money on your next vehicle purchase. But don’t forget about the cost of operating a vehicle. Insurance, maintenance, and fuel costs can add up to hundreds of dollars per month, on top of the loan payment itself. Make sure to leave some money in your budget for these expenses.
Get Ready to Buy a Car
If you’re ready to buy a new or used vehicle, be sure to inquire about a low rate on a car loan from Wayne Westland Federal Credit Union before you head to the dealership.