Smart Car Buying

Tips for Getting the Best Deal on a New or Used Car at Your NC Community Credit Union

Buying a car may seem as simple as showing up to a dealership, picking out a vehicle and signing paperwork. It can be, but being an educated consumer is to your benefit. After all, it is YOUR money and once you purchase a vehicle the responsibility to make the payment is all yours.

Below, we list several steps to help you get the best deal on your next auto purchase.

You can also sign up to attend one of our in-house seminars about Smart Car Buying. Click here to view upcoming seminars.

  1. Determine The Payment You can Safely Afford.

We recommend utilizing a standard monthly budget calculation that involves subtracting your known fixed expenses and variable expenses from your after tax income.

Total NET (after taxes) income – (Fixed Expenses + Variable Expenses) = leftover income

Your “leftover income” is what can potentially be used towards a car payment.

Don’t forget to factor in estimates for other costs associated with owning a vehicle, including:

  • Auto insurance (Get quotes to compare costs; especially if you are going to be on your own policy for the first time).
  • State Inspection- Required annually
  • Routine Maintenance (oil changes, air filter, tire rotation)

2. Go to a financial institution you trust for a pre-approval.

Getting a pre-approval involves applying for an auto loan. In doing so, we pull your credit report and examine your debts and repayment history. To determine if you are approved and at what interest rate, we examine your credit score, your debt-to-income ratio, the loan-to-value of the vehicle you are purchasing and your employment history. You can apply for pre-approval with us online or in person at a branch.

3. Research the Type of Car you Want and Determine the Value. 

Gone are the days where buying a car almost had to start at a dealership. Now, it’s very likely to find the vehicle that you want and do a good bit of research online before ever having to see the car in person. This shift in how vehicles are purchased allows YOU to be an informed consumer, just by taking the time to do the research. Once you find a car that you want, use a valuation tool to determine value. Most lenders in the Goldsboro, NC area use NADA Guides. At NC Community Credit Union, we lend off of NADA’s Clean Retail value. Depending on the age of the vehicle you are looking at and your creditworthiness, you may be able to get a loan for more than 100% of the value. Typically, we will allow you finance a warranty for your vehicle and GAP protection on top of the your loan for the vehicle. However, keep in mind that the best rule of thumb is to keep the amount financed as close to the clean retail value as possible.

This will put you in a better equity position with your vehicle. Equity is the difference between what you owe on a vehicle and what it is worth. Negative equity means owing more than what your vehicle is worth. Most dealerships use average trade-in when providing you a number that they will pay you for your trade.

Negative equity can occur if you trade in a vehicle too soon after purchasing it. New vehicles tend to lose anywhere from 15-20% of their value as soon as you drive them off the lot whereas used vehicles have already taken an initial hit to their value and lose value at a slower pace moving forward. Putting money down on a vehicle purchase can help your equity position. See a note about this below.

4.  Talk Price and Not Payment When You Visit a Dealership.

Why, you might ask? If you tell a dealer that you can afford $400 a month, they may try to stretch out your financing term to get you to the payment you need. In some cases, this can set you to have a larger amount of negative equity. At NC Community Credit Union, we recommend financing no longer than 72 months for new vehicles $30,000 and greater; no more than 60 months for used vehicles $12,000-$30,000 and no more than 48 months for used vehicles less than $12,000.

5. A Down Payment is a Good Thing!

If you don’t have more than approximately 3 tradelines on your credit and/or do not have previous auto loans paid satisfactorily for greater than one year, be prepared to put down at least $1,000 on your vehicle. If you can put more money down, it is to your benefit. Your vehicle is your asset. The more money you put down, then less you will have to finance and as a result you will pay less overall interest on your loan by financing less.

Questions?// Call us at 919.734.8224 to speak directly to a loan specialist- we are happy to help!

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Welcome to Your Community Credit Union! We are a community based financial institution located in Goldsboro, NC. If you Live, Work, Worship or Attend School in Wayne County, North Carolina you are eligible for membership by opening a savings account with just $1!