My friend Dan recently bought a new car (well new to him) 2010 Nissan Versa Hatchback. Something I recommended to him was that he look at refinancing his used car loan with some local Credit Unions around Baltimore. “You can probably get a much better rate” is what I said when checking the loan rates on websites of some local Credit Unions. Dan glanced at the used car rates on my smartphone and replied, “Nah, I don't believe it! I've have never seen used car rates that low.”
Dan's response really surprised me! First he wasn't really aware of what a credit union was. As well he skepticism about the rates surprised. Well obviously his rate may vary from what was listed on the websites, are people really so skeptical and unaware about the benefits of a credit union?
First let me explain what a Credit Union is for those don't know. Credit Unions are a non-profit banking entities that are owned by members and not shareholders. The object of a Credit Union is to benefit members with better localized personal service, better loan rates and products all with the same services a big bank would offer. All you have to do to become a member is open a Savings Account and fund it with a minimum deposit of $10 (some credit unions will vary). Some credit unions are based around a specific group, such as a postal or police union, or geographic area. Over the years many Credit Unions have opened up membership to a wider array of people though.
Credit Unions typically offer better car loan financing when compared to traditional banks. Dan told me his loan rate from the dealership was just above 6%, which I thought that was pretty good. Dan has a good credit score and a good driving record. Checking the used car loan rates at various Credit Unions around Baltimore seem to be around 2.8%-4% depending on your credit score. I was pretty sure Dan could have gone into any credit union and bee quoted a refinance rate of around 3%, which for what he paid would have been a lot of money.
If Credit Unions sound to good to be true, they aren't. They just offer better rates with better service. In my opinion they are the best car shopping secret out there!
So next time you are in the market for a new or used car, I highly recommend you look into joining a local credit union for a better loan rate. I am sure you will be pleasantly surprised.
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Car buying is on a new upswing. Reuters recently reported that overall car buying (new and used) has risen drastically in the past 4 years. Car sales rose 13 percent to 1,188,865 cars and light trucks sold during the month of September at U.S. auto dealerships. That was the best month since March 2008, just after the start of the recession and this shows promise for the auto industry.
The upswing is mainly due to rising consumer confidence, making people feel safer to open their wallets on car purchases. However, many Americans are still feeling the tight with their money in this economy as it is still moving at a snail's pace. That's why more people are considering used cars over new cars these days. If you are one of these people here are “5 Tips for Buying a Used Car.”
Preparation is Key
Preparation is crucial in a used car buying search. Spending time researching different models and trims can help you get a better price and know what car fits your needs. The internet offers a wealth of information about used cars – learn about the different models, options, reliability, prices, etc. The more you know the better, the better prepared you are to find the car you want and get a good deal.
Check Your Credit
If you're a used car buyer with potential credit issues who might find it difficult in getting approved for a loan, again turn to the internet to better educate yourself. Better yet, you should probably know your credit rating in advance, so the entire discussion about financing and credit isn't a surprise to you.
I recommend you look for a reputable credit union that will offer great financing for pre-owned and used vehicles at reasonable rates. Credit unions offer much better financing than what you will find at a bank all with personalized service. Credit unions actually offer the same loan rates on new cars as used cars, making them straightforward and easy to understand. They can also help you improve your credit and some even offer classes on financial literary.
Do the Numbers
When seeking a used car, know what your budget is and where it will be a year from now. Don’t shop for a cool luxury convertible car if you’re living on a shoestring budget, try to find a reasonable and sensible small car that will be easy and not expensive to maintain and insure.
Most used car buyers try to manage a down payment of about 20 percent, while financing the rest. But don't let that get away from you either. I don't recommending financing a car for more than four years (48 months), and it is a good idea to keep your monthly payment lower than 10 percent of your total income.
You can find great tools online to figure out what a reasonable monthly car payment is for you. It's best to pay for the car as much upfront as you can but most will need to borrow a little money.
Get the Car Checked
You NEED to get any used car you are considering buying checked and inspected by a reputable independent mechanic BEFORE you buy it. Unless you are a gearhead, like me, and know what to look for in used cars it's not a good idea to just take a dealership or individuals word on the history of a car.
Did you know that there is no law requiring body shops to report work they have done on vehicles they work on? A friend's dad is master painter and bodyman and he can make any vehicle that has been in a serious accident look new again. Meaning Carfax reports can be completely clean, but not tell the whole story about the car.
Eyes that know what to look for will be able to see if a car has been in an accident or if it needs any mechanical fixed to be road-worthy. Having a used car checked out before you buy it is very important.
Watch for Trade Ins
Most used car dealers will ask if you're trading in a car for the new/used car you've got your eye on. You want to be careful about talking with the dealership about this. Trade-in talk shouldn't enter into the negotiation process in my opinion. Smart used car buyers consider trade-in cars as a separate transaction, and as such don't mention a trade-in factor into the conversation until the end. Also you will likely get more for your used car if you sold it online via Craigslist or other local ad listing service or website. Did you know that dealerships typically make a killing on used car trade-ins and not much on selling new cars? One of dealerships dirty little secrets! To be sure you are getting a good deal utilize sites like ClearBook.com which assess the value of your used car for the approximate trade-in value. You will find you typically won't get a good deal.
So don't fret if you are a first-time used car buyer or don't have the best credit rating in the world. There are plenty of great tools to help you and you should always be looking for opportunities to buy if you are in the market for a new car. Ask friends, family, and neighbors if they know of any good used cars for sale. If you have any questions about buying a used car please leave a comment below.