Do you need a new car? Tips to make sure your car loan works for you

Estimated reading time: 4-5 minutes

Buying a new car can be one of the biggest purchases you’ll ever make, especially in today’s market.

Sean Tucker writing for Kelley Blue Book Reports that as of March 2022, the median price of a new car is around $46,000, which means many buyers will likely finance through a credit union like Chartway Credit Union.

Regardless of whether you’re buying a new or used car, there are different types of auto loans available. It’s important to determine which one is best for you, since you’ll likely be paying off that loan for a few years.

Here’s what you need to know about auto loans to make sure your loan works for you.

Your down payment matters

Let’s say you’ve been saving up for a car and have a few thousand sitting in the bank. He decides to pull the trigger and buy a new car, the one he’s been thinking about for months! Being the financially literate person that you are, you use a loan calculator to determine what your monthly payment will be.

You should also consider the down payment money. The more you put in, the lower your monthly payment will be, especially if you decide to pay off the loan over a longer period of time.

NerdWallet says you should aim for 20% of the total cost of your car for a down payment if you’re buying a new one. They recommend 10% for a used car.

How your interest rate is calculated

According to credit karmaThere are two different types of interest rates for a car loan: simple and precalculated.

The interest on a simple car loan will change each month, depending on how much you owe on the day your payment is due. Credit Karma says that part of your monthly payment will go to the principal balance and part will go to the interest balance.

A precalculated interest loan is determined by the amount you are borrowing. “That amount is added to the principal and divided by the number of months in the loan term to determine your monthly payment,” says Credit Karma.

With a precalculated loan, you won’t save money by paying off your loan balance early, since 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 that you can expect a lower interest rate the more money you deposit.

Do you need a new car?  Tips to make sure your car loan works for you
Photo: Prostock-studio/Shutterstock.com

Where to get your loan

You’ll want to choose a lender with the right credentials and a history of integrity and experience. Chartway Credit Union has both qualifications, in addition to its auto loan advantages.

For example, they can get pre-approved in minutes for their 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 app checklist here.

You’ll need to prepare a copy of your driver’s license, income documentation, insurance policy information, and more if you want to get a check in hand as soon as possible.

Buying a car is a big deal, and sometimes it’s better to have a little breathing room from the time you sign the paperwork until you start making payments. Chartway Credit Union understands this and will allow you to take up to 60 days before making your first payment.

Know the price of your car in advance

It’s easy to love driving a new car, but few are in love with the sales process that put them behind the wheel of their new vehicle. Well, when you work with Chartway Credit Union, you don’t need to worry about haggling and negotiating; leave that to the experts or, at least, to the algorithm.

They can help you get discounted prices up front before you even step foot in the dealership. East preset pricing process at Chartway Credit Union helped save new car buyers an average of $1,824 off MSRP in 2021.

Regardless of the vehicle you’re shopping 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 in your website This day.

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