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6 Tips for Buying a Car in Today’s Environment

Regardless of what is happening in the world around you, there are times when you simply need a new car.


However, many are wondering how car buying differs now than before the current pandemic. While automakers and dealerships are offering hefty incentives to stir up business, these offers usually aren’t all they’re cracked up to be once you begin reading the fine print. These tips will help you avoid major missteps in the car-buying process and help you get a better overall deal on the car you do purchase.

1. Avoid Long-Term Loans
Ideally, a new car loan term will not exceed 60 months. In some instances, you may elect to finance your vehicle for 72 months. Going 84 months, though, is rarely advantageous to buyers if you don’t make a significant down payment.

Longer car loan terms increase the risks of you becoming underwater or upside down on your auto loan. Longer repayment terms also significantly increase the loan interest paid. If there are mechanical issues or you’re involved in an accident, you will find yourself owing more than the value of your car, which is detrimental to you and may impede your ability to purchase another vehicle.

Dealerships are pushing 84-month loans because they lower your monthly payments. But long-term loans on vehicles rarely play out well for the consumer, especially if you don’t hold onto the vehicle for the term of the loan.

2. Start your Vehicle Research
We recommend that you use our Auto Buying Center to search for your next new or used vehicle.

  • Expanded dealer network listing more than 4 million new & used vehicles
  • Know exactly what you want? Use the “Find It” tool
  • Vehicle features list, photos & recall history
  • Improved “side-by-side” vehicle comparison tool, (up to 5-comparisons)
  • Create a free account and save your vehicle searches
  • Trade-in and used retail values*
  • “Price Advisor”, are you getting a fair deal?*
  • Free Carfax reports

3. Carefully Review Dealer Incentives
Many of the offers you hear about on the radio or read about online are simply ploys to get you through the door where you will receive a high-pressure push to purchase. Few buyers with excellent credit qualify for the zero-percent APR offers so widely made today.

Plus, in the current low-rate environment, it’s usually a better deal to finance with the credit union and accept dealer cash incentives or rebates versus zero-percent APR offers. Remember, dealerships are in it for the profit – while your credit union is not-for-profit.

If you’re at a dealership and have questions on financing, simply give us a call. We’re happy to run numbers with you and determine which incentives will help you save the most in the long run.

4. Plan Your Finances
Right now, we’re in the midst of a global pandemic. It’s more important than ever to manage your finances wisely. Many people are already feeling the pinch with millions of others facing employment uncertainty as the pandemic continues. You must plan your finances accordingly before making new car purchases.

Remember, it’s not just the auto purchase you have to consider, but also the insurance. Make sure you get an insurance quote BEFORE you buy (for the car you are considering). This will help you get a clear picture of how much the new car purchase will impact your monthly budget and allow you to plan accordingly.

5. Get a Pre-Approval BEFORE You Shop
A pre-approval is one of the most powerful tools when it comes to buying a new car, even more so right now during the current pandemic. It gives you the upper hand during price negotiations at dealerships and prevents you from spending more than you can comfortably afford.

Our credit union staff will review your finances with you and help you make wise, cost-effective buying decisions. Armed with a pre-approval, you will know exactly how much you can afford to spend on your new vehicle and avoid costly add-ons.

You may apply for a loan online at lmfcu.org or by telephone. Sign your loan documents with a secure e-signature. Use our Autodraft check to create the loan at the dealership.  There is no need to visit our office!  Repayment options include convenient payroll deductions.

6. Protect Your Loan!
Guaranteed Auto Protection (GAP) is available for only $349! GAP will cover any amount owed on your loan if your vehicle is lost in an accident or is stolen and your insurance company doesn’t payoff your loan. Insurance companies typically do not pay full retail value.  Protect your vehicle with an Extended Warranty. Our program includes nationwide coverage, has no deductibles, offers factory type bumper-to-bumper on most vehicles. You may use any licensed mechanic for repairs – you don’t have to go to the dealership.

We’re Here to Help!

Buying a new vehicle is a significant financial decision, especially right now. However, with our current low-rates and generous dealer incentives, right now may be the perfect time to land a great deal.

Before you begin shopping, we encourage you to give us a call at 800-410-0501. Our loan specialists will review your current financial situation, provide you with a credit pre-approval, and help you avoid any missteps along the way.

Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.