Benefits of Short Term Auto Loans vs. Long Term Auto Loans

Benefits of Short Term Auto Loans vs. Long Term Auto Loans

When it comes to car loans, one of the most important factors affecting the decision-making process is the length of the loan. Some like to have their loan paid relatively fast, while others want to extend the loan terms. Regardless of your choice, both options actually offer a number of perks. It’s all a matter of being familiar with how each one works so you can determine the one that suits you best. Take a look at the benefits of long term and short term auto loans.

Benefits of Short Term Auto Loans

Pay off your balance fast

One of the best things about short term car loans is that you can pay it off fast. A typical auto loan length is 5 years long. Choosing a short term car loan means that you can get out of debt quicker. You won’t have to deal with paying the loan for long and you can move on to your next financial goals.

Lower interest rates

In a short term car loan, you won’t have to pay as much interest as you would in a long term loan. Generally, the shorter the loan term, the better interest rates you will get from the lender. Short term loan borrowers are usually rewarded by lenders with a reduced interest rate. This results in an overall lower cost of the vehicle compared to when you’re signing up for a long term loan.

Higher vehicle resale value

For whatever reason, some people decide to resell their car after having the loan paid off. If you opt to go the same route, your vehicle is more likely going to have higher resale value if you choose to go with the short term loan. By the time your auto loan is paid up, the vehicle would still be considered relatively new. If it is given proper care and is well-maintained, there’s a good chance you can have it sold at a good price.

You won’t end up paying more than the car is worth

What people fail to realize are the consequences that go along with a long term loan. In a long term loan, borrowers usually end up paying more than their vehicle is worth because of the high-interest rates. Sure, the monthly dues are reasonable but think about the car’s overall price with the fees and interest rates considered.

Benefits of Long term auto loans

Your money doesn’t have to be tied up

Choosing a short term auto loan means that you are committing to a high monthly payment. Making this decision requires careful thought and planning. If you are someone who is living from paycheck to paycheck, a long term loan might be a more plausible option. This way, your auto loan won’t eat up a huge chunk of your monthly budget. This means that you won’t be tight on funds and still be able to save a part of your income for emergency expenses.

You may choose a more expensive car

Long term auto loans usually require lower monthly payments. If car payments are affordable, you may even choose a more expensive vehicle.

Lower down payment required

If you are planning to buy a car soon but can’t afford a bigger down payment, a long term auto loan is the way to go. Long term car loans usually require more affordable down payments than short term loans. You can also establish lower monthly payments with this option.

While both long term and short terms auto loans offer advantages, short term loans are still generally better for borrowers. In terms of the overall cost of the vehicle, short term loans are way cheaper and a smarter choice because of the lower interest rates. If you think the monthly payments associated with the 5-year loan term isn’t affordable, you might want to consider shopping for vehicles under a lower price range. Remember to call Calcite Credit Union when you choose the kind of auto loan for you.

Tips to Make the Most of your Auto Loan

Tips to Make the Most of your Auto Loan

If you are planning to buy a car with an auto loan, familiarizing yourself with rates and financing companies is the first step. Doing this will maximize your options. An auto loan is a form of financial assistance, though the process may take quite some time. Here are some tips you can follow to make the most out of that auto loan.

A good credit history is a must

Credit Unions and other lenders will always look at a borrower’s credit score. If a borrower has credit balances, it would be good for the borrower to settle these before applying for a car loan. Get rid of the debts and avoid taking on more credit that will affect your score. By paying off your debts, your credit rating will be restored. Showing lenders and banks that you are responsible enough to make payments.

Find a good lender

Picking the right lender will give you better rates. Banks are a popular choice when looking for an auto loan but borrowers may want to consider credit unions to have lower rates, fees, and charges. If you have decided to get a car loan from a bank, make sure to gather enough information on their offers. Having a good relationship with the bank you’re getting a loan at will also be really helpful. The better your relationship with them, the higher the chance of you getting approved for the loan.

Plan your auto loan

People spend the time researching the cars they are going to buy. They do research on what kind of car will fit their needs and will also fit in with their budget. Being prepared before applying for a loan will give you better rates. Shop around for car loans and plan for the loan ahead of time.

Understand how car loan works

When it’s your first time to have an auto loan, make sure you read the fine print before signing. Read the terms and understand the conditions of the loan. Don’t leave it all in the lender’s hand, the borrower also has the responsibility of reading the fine print.

Apply for a realistic loan

Have a budget and stay within your budget. Know how much you can afford and know what your debt-to-income ratio is. To determine this, divide your monthly debt by your gross monthly income. Basically, monthly payments for loans shouldn’t be above 40% of a person’s income every month. Some dealers will require a down payment. The more you can put down, the lower the monthly installments. All in all, be mindful of the amount of loan you are going to take because you will be responsible for paying it off.

Make sure the total cost is right

You should not only look at the low monthly rates but check the total cost. Consider the whole amount of the loan. Higher rates for a shorter period of time will save you more money than the vice versa. It still all boils down to what you can afford. This is something that you need to look at when getting an auto loan.

Auto loans are great for those who are planning to buy a new car. It can help people afford the car they want to have. Make sure that you know what you’re going into and understand how it all works. Take heed of the tips mentioned above to help you make the most out of your auto loan. For more information about auto loans or any other types of loans, please feel free to visit Calcite Credit Union. 

5 Benefits of Getting a Credit Union Auto Loan

5 Benefits of Getting a Credit Union Auto Loan

A car is more than a luxury to most Americans. It is a necessity. Having a vehicle of your own makes traveling a lot easier. It is more convenient to travel to and from work, drop kids off, run errands around town and so on. If you’re considering buying a new or old car, financing it through a credit union would be a smart decision. One of the reasons is that credit unions offer better deals compared to banks and other financial institutions. Read on to learn more about the benefits of getting an auto loan from a credit union.

Lower interest rates

One of the best reasons why credit unions are a great choice for auto loans is lower interest rates. Compared with most banks, the interest rates at credit unions are at least one percent lower. For a five-year car loan, the average rate at a credit union is at 2.97 percent while it is 4.5 percent at most banks. This is all because of the nature of credit unions as financial institutions. Credit unions are non-profit organizations. It means that they only have their members to give their earnings back to. They don’t have shareholders who benefit from the profit they earn. Whatever the credit union earns as profit goes back to their members. Members enjoy lower interest rates for loans and higher interest for savings.

Personalized service

Credit unions are smaller than most banks. They have close ties to the communities they are serving. It also means that they can provide more personalized services. They are willing to work with you when you face difficult situations and rough patches. At credit unions, you can expect more consideration when it comes to your financial needs. To them, personalized service means they take time to listen and understand your unique story. It’s more than just doing business. It goes beyond sitting down and talking to a financial officer. It’s about having a real conversation and getting the level of customer service you deserve.

Shorter loans

At credit unions, you have the option to choose the terms of your auto loan. You have the liberty to decide how long you want it to last. This is something that should work in your favor because choosing shorter loan terms means lower interest. On the other hand, the longer the term means more interest to pay.  Credit unions give you the option to pay back the loan as quickly as you can.

Customer-friendly loan process

Gone are the days when the only way to apply for a loan was through a face-to-face conversation with an officer. A lot of members still visit the credit union branch to apply for a car loan. Do you know that this is something you can already do online, at an auto dealership or over the phone? This means that even if you go straight to an auto dealership for car financing, you can still have it processed by a credit union. All you have to do is join as a member.

Easy membership process

People think that credit unions are only exclusive to those who are part of a particular organization, community or working for the same company. This is no longer the case because today, most credit unions welcome anybody who wants to join. So if you want to apply for an auto loan, mortgage or start a savings account in a credit union, feel free to do so. The process is very easy and they offer more favorable pricing on loans and products.

There are several advantages to taking out a loan from a credit union. For more information about auto loans, please visit Calcite Credit Union.

6 Auto Financing Mistakes that could be Costing You Money

6 Auto Financing Mistakes that could be Costing You Money

A car is a major purchase. Buying one is like investing in a house or property. Because it isn’t as simple as selecting a model and driving it home, people explore several options to pay for it. And for most car buyers, it means applying for an auto loan. Getting an auto loan is a good option to consider if you need to buy a vehicle of your own and you can’t pay for it with cash. It’s equally important to do your own research and avoid mistakes that could cost you thousands of dollars. If you’re planning to buy a car soon, here some of the most common auto financing mistakes you need to avoid.

Not doing your research on cars

When thinking about buying a car, it’s crucial that you take time to do your homework on vehicle value. Don’t settle for something because you think it’s already affordable. Look around and compare prices of both new and used cars. Getting tempted to say yes to an auto financing deal that sounds affordable is easy. It would be better to still check out the prices of other dealerships nearby.

Focusing on the monthly payment instead of the purchase price

Many first-time car buyers fall into the trap of buying a car based on a cheap monthly rate. It’s important to determine how much you can afford for the monthly car payment.  Make sure to consider the purchase price of the vehicle. Before you agree to any auto financing, look at how much the car would cost in total. Don’t get lured into buying one because the monthly payment fits your budget right. Chances are the interest rate is higher and the duration of the loan is longer.

Allowing the dealer to define your credit worthiness

Your credit worthiness is determined by your credit score from the major credit bureaus. Don’t let the dealership define your credit worthiness. Know your credit score before you approach any dealership. When you don’t have any idea about your credit rating, it would be easy to believe and say yes to anything your dealer says.

Taking out a lengthy loan

Another danger of focusing too much on the monthly payment is the tendency to take out on a loan that is too long. For auto financing, five to six years are common and are reasonable. If a dealer tries to extend it to seven or eight years, it is going to be more costly on your part. A longer term for an auto loan may be more affordable when you look at the monthly payment. But it would cost you thousands of dollars more! You will more likely owe more than the vehicle is worth because of the interest rate. It will also give the dealer more opportunities to charge other hidden fees.

Not considering a credit union

Auto loans are being offered by many sources. These include banks, credit unions and auto manufacturers. Explore other options instead of focusing on one lender. Make sure that you don’t forget about approaching a credit union. Credit unions are financial institutions that often offer lower auto loan rates. To qualify for an auto loan, you will need to sign up for membership by opening a savings account. But don’t worry. Credit unions don’t usually require sizable savings to qualify as a member.

Not making a down payment

To get a lower monthly payment, it would help to make a sizable down payment. It will not only reduce the amount of monthly fees. It will also help you get a shorter loan term and lower interest rate. By paying a down payment, it will reduce the total price that you have to finance.

Buying a car is a huge milestone. Know as much information as you can before you even start with auto financing. Because credit unions are one of the places where you can get the lowest rate possible for an auto loan, please don’t hesitate to reach out to Calcite Credit Union.

Reasons to Get an Auto Loan from a Credit Union

Reasons to Get an Auto Loan from a Credit Union

When people look around to buy a new car, some of the first places they go to are either banks or the dealerships. But, what many people are not aware of is that credit unions are an excellent option for an auto loan. Large banks have certain advantages over credit unions. But, the deals offered by the latter are something you shouldn’t miss. Here are a few good reasons why you should explore what a credit union has to offer when it comes to a car loan.

You are an owner in a credit union

When you open an account in a bank, whether it is a checking or a savings account, it makes you a customer of that bank. And it’s not a bad position to be in at all. You will get the services you need. You have to follow the standard protocols when managing your accounts and finances. But, things are different with a credit union. Signing up for a credit union makes you a shareholder in the institution. It means that you are not a customer but a co-owner. And what does it mean for you? As a customer-owned institution, a credit union does not have to pay to any third party investors. It is a non-profit organization. So they don’t take advantage of every chance they get to nickel-and-dime their members. Credit unions make sure to provide their members the best financial benefits available.

Credit unions offer lower interest rates

One of the main reasons to choose a credit union, interest rates are lower by 1 percent compared to banks. This financial institution is very competitive compared to other lenders. And it is not limited to car loans. Even the interest rates for mortgages and the fees for other services are lower than banks.

Credit unions offer a more personalized service

There isn’t much of a difference when processing an auto loan with a bank or credit union. You will be asked to speak to their loan specialist. You’ll submit certain documents and everything else is pretty much the same. Yet what’s nice about a credit union is that they are more flexible and more willing to work with you. They are not very strict with credit issues especially when you have a unique scenario. Your story is more likely going to be heard in a credit union. And it’s something that doesn’t usually happen at larger financial institutions.

The loan process is more user-friendly

Gone are the days when members have to go to the credit union office to process their car loan. Today, loan applications can be done on the phone, online or through an auto dealership. The process is now much easier and user-friendly.

Credit unions offer several other benefits

Because credit unions are owned by their members, they enjoy the profit earned. Members get to enjoy these benefits in the form of lower costs and interest rates. You also receive member education. This will guide you to the best financial options for your situation.

It’s easy to become a member

Often you can only become a member of a credit union if you  are a part of a certain group, organization or industry. Most credit unions today will allow anyone to join.

Car loans are one of their primary products

A lot of auto dealerships will refer customers to a credit union for an auto loan before they refer them to a bank. It’s because car loans are a huge part of what credit unions do. They have better and more favorable pricing when it comes to car loans. It is one of their core services.

To get an auto loan with a personalized touch and better interest rates, a credit union is your best bet. For more information, you can contact Calcite Credit Union and request to speak to a loan officer.