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Buying a new car can be one of the most important purchases you will make in your life, especially in today’s market.
Sean Tucker, writing for Kelley Blue Book, reports that as of March 2022, the average price of a new car sits at just over $46,000, meaning many buyers will likely finance through a credit union like Chartway Credit Union.
Whether you are buying new or used, there are different types of car loans. It’s important to figure out which one is right for you, because you’ll likely be paying off this loan for a few years.
Here’s what you need to know about auto loans to make sure your loan works for you.
Your deposit counts
Suppose you have saved up for a car and have a few thousand dollars stashed away in the bank. You decide to pull the trigger and buy a new car, the one you’ve been thinking about for months! Being the financially savvy person that you are, you use a loan calculator to figure out what your monthly payment will be.
You must also take this down payment into account. The more you bet, the lower your monthly payment will be, especially if you decide to repay the loan over a longer period.
NerdWallet says you should aim for 20% of your car’s total cost for a down payment if you’re buying new. They recommend 10% for a used car.
How your interest rate is calculated
According to Credit Karma, there are two types of interest rates for a car loan: simple and pre-calculated.
The interest on a simple car loan will change each month, depending on the amount you owe on the day your payment is due. Credit Karma says part of your monthly payment will go towards the principal balance and part will go towards the interest balance.
A pre-calculated interest loan is determined by the amount you borrow. “This amount is added to the principal and divided by the number of months in the loan term to determine your monthly payment,” Credit Karma explains.
With a pre-calculated loan, you won’t save money by paying off your loan balance early, because your interest rate will stay the same.
Allison Martin writes for NextAdvisor says your credit score will influence your interest rate. The higher your credit score, the lower your interest rate. Your down payment will also influence your interest rate. NerdWallet says you can expect a lower interest rate the more money you invest.
Where to get your loan
You’ll want to choose a lender with the proper credentials and a history of integrity and experience. Chartway Credit Union has both of these qualities, in addition to its car loan advantages.
For example, they can get you pre-approved in minutes for your car loan, which is important in today’s car market. If you need help figuring out what you’ll need for pre-approval, you can download their application checklist here.
You will need to prepare a copy of your driver’s license, proof of income, information about your insurance policy, etc. if you want to get a recording in hand ASAP.
Buying a car is big business, and sometimes it’s best to have a little breathing room between when you sign the paperwork and when you start making payments. Chartway Credit Union understands this and will give you up to 60 days to make your first payment.
Know the price of your car in advance
It’s easy to love driving a new car, but few love the sales process that got them behind the wheel of their new car. Well, when you work with Chartway Credit Union, you don’t have to worry about haggling and negotiating – you leave that to the experts, or at least the algorithm.
They can help you get discounted upfront prices before you even set foot in the dealership. This pre-arranged pricing process at Chartway Credit Union has saved new car buyers an average of $1,824 off MSRP in 2021.
No matter what vehicle you’re in the market for, the car buying experience should be exciting and stress-free. That’s why Chartway is the perfect credit union to help you every step of the way.
See how Chartway auto loans are best for you on their website today.