Feeling Stuck in Your Car Loan? Might Be Time to Shop Around!

Some bills can’t be changed. For other bills, though, a little legwork can make a big difference in your monthly payment. Your car payment is a great example. Refinancing your vehicle loan can lead to a lower monthly payment, a shorter payment term or both! It depends on various factors, including the value of your vehicle, how much you owe and your credit standing.

Read on for three common life changes that might mean it’s a good time to refinance your vehicle.

1. Your credit rating improves

One of the biggest factor determining your auto loan status is your credit score. When your lender builds a loan package, they pull a credit report as a central part of that process. That number can determine your interest rate, whether you’ll pay an insurance premium and what other fees your lender might charge.

Keep a copy of the documents your lender provided regarding your credit score. That can allow you to revisit what it was to see if your credit score has improved. Nine months of steady repayment can boost your credit score, resulting in a less costly loan.

If you didn’t have much credit history when you purchased, refinancing could do you a world of good. Interest rates as high as 18% are common for new borrowers. Just a few months of solid payments may cut that rate in half.

2. You didn’t shop around initially

Many people feel railroaded throughout the car-buying process. They choose a car, and then are told the price, the monthly payment and everything else. It’s almost like the lender for your car loan is predetermined.

Dealers usually have a smaller range of lenders with whom they exclusively work. Those lenders have limited exposure to competition, so they can charge higher fees and rates. Do your own comparison shopping. Dealer rates can be 1 to 1.5% higher than those offered at smaller lenders, like credit unions.

If you’ve never shopped around for a car loan, it’s worth doing now. Do your shopping inside a 15-day period, though; multiple checks on your credit could negatively impact your credit score.

3. You need to change your monthly payment

Your financial situation may have improved since you bought the car and you can now afford to pay more per month. You’ll save money in the long term by doing just that. Shorter-term loans usually have lower interest rates. Also, you’ll pay off the overall balance on your car faster.

If money is tight, consider refinancing for a longer term. Although you’ll pay more in interest, you’ll reduce your monthly payment and save the money you need now. You may also be able to reduce the monthly payment if your credit score has improved, interest rates have dropped or if you’re getting a better rate from another lender.

Contact Olean Area Federal Credit Union to find out how refinancing can improve your financial life!

9 Steps to Buying Your First Car

Congrats—you’re buying your first car!

The process can be daunting, but Olean Area Federal Credit Union will walk you through it. Follow our guidelines for a stress-free ride!

1. Determine if you really need a car

OK, you weren’t expecting this, but it’s important to take a step back to review your actual transportation needs. Lots of college towns have a great bus system in place, which can save you loads on car costs. If you have a car-owning good friend you’ll be riding into town with each weekend, it may not pay for you to have your own set of wheels. Also, if your campus has everything you need within walking distance, it can be cheaper to rent a car when you need it instead of buying one now.

2. Know your budget

If you’ve determined that a car purchase is necessary at this point in your life, don’t start hunting for your dream car until you’ve worked out a realistic budget. Take a hard look at your other monthly expenses to see how much you can spare for a new set of wheels. Don’t forget to include some cash for auto insurance, gas and maintenance.

3. Create a tentative wish list

This is your first car, so it doesn’t need to have all the bells and whistles it does in your dreams. Sit down and make a list of all the “must haves” and “wants” you’re looking for in a vehicle. Determine how much each feature would cost you in a car and decide which are really important.

4. Obtain financing

If you’ve been saving up cash for your first car all through high school, you’re set! Otherwise, visit Olean Area FCU to learn about your auto loan options and to get your pre-approval.

5. Research your options

You’re ready to start looking for a vehicle that will satisfy your needs and wants. You can research ratings and user reviews on sites like Cars.com and create another list that contains your top three choices of car makes and models.

6. Look up listings

Start scavenging for listings of your car choices online and in your neighborhood. Once you’ve found several that might work, research their histories on Carfax.com and then contact the seller to set up a test drive.

7. Take it for a spin

If a car checks out and everything looks good, you’re going to want to take it for a test drive. Pay attention to details like legroom, acceleration, brake functionality and more while you drive.

8. Have it inspected

If you’re purchasing a used vehicle, it’s best to have it inspected by a mechanic before signing on the deal.

9. Make it official

If your car has passed the test drive and inspection, you’re ready to make it official! Be sure to read all documents before signing and obtain insurance before your first joyride.

Enjoy your new set of wheels and drive safely!

SOURCES:

https://www.carbuyingtips.com/first-time-buyer.htm

https://www.edmunds.com/car-buying/10-steps-to-buying-a-used-car.html

https://www.carbuyingtips.com/used.htm