Category Archives: Car Buying, Auto Loans and Financing

Tips for Buying Your First Car

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Purchasing your first car is one of the most exciting experiences in life. However, it can also be overwhelming and costly if you don’t know what to do. Fortunately, we’ve prepared a short guide to help you with the process.

Do Your Research and Be Prepared

A car buyer’s best friend is information. There are many websites today that can give consumers data on the features and pricing of every vehicle available. Before stepping into a car dealership, you should know the vehicle you want to purchase and the price you’re willing to pay.

What you don’t want to do is to go to a dealership without having a financing offer. Many car dealers make much of their profit via their financing offices. This means they get a cut of any auto loan they get when their buyers accept. That’s why before visiting dealerships, you should get a pre-approved financing offer from a credit union. This way, your dealer will have to come up with a better offer if they want to make a sale.

Compare Prices from Different Dealerships

The various auto dealerships out there are not the same, even if they display the same exact makes and models. Most people start and end their car shopping experiences at the dealer that is most convenient to them, which can be an expensive mistake.

According to COX Automotive, 41% of car buyers only go to a single dealership when buying a new car. When you shop with just one dealer, you can’t make comparisons to know if a better deal is available to you. Just like any purchase, you should compare the prices of the same vehicle from different dealerships. Letting another dealer know that they have competition is often enough to make them strive to earn your business.

Don’t Be Pressured into Getting Costly Add-Ons

Apart from financing, dealers also make money by selling add-on products. Although some may be valuable, many of them have high markups and can be purchased at lower prices outside the dealership. Avoid being tempted to purchase these products since they’ll only add cost to your monthly payment. A good trick to get the real price of any add-on is to multiply the extra cost by the length of your auto loan.

Close the Deal the Right Way

If the pricing and financing look right to you, then it’s time to close the deal. Be sure that you review the contract carefully. Check to ensure that the numbers match what you have agreed upon and make sure there are no extra fees or charges. After signing the contract, the vehicle is now yours to drive.

Conclusion

Purchasing your first car is truly an exciting process. By following the above tips, you can get the car that you want without overspending. Also, be sure to ask your local credit union if they have a First Time Car Buyer’s Program. Here at First Financial, we absolutely do! This program allows our first time member car buyers to finance their first vehicle without a co-signer, as well as we offer terms up to 84 months.*

Learn more and apply online today!

*Not all applicants will qualify, subject to credit approval. No credit required, however no derogatory credit allowed. Rates are fixed and will be based on model year of vehicle & term. Maximum loan amount is $12,000 and minimum is $6,000. Not all applicants qualify for 84 month term, term will be based on model year of vehicle. No co-signer is required, but other terms and conditions apply to qualify for loan. Must meet all of the following underwriting guidelines for approval: Minimum 15% down payment, no previous auto loans, must be ages 18-30, minimum 12 months employment or employment contract, and debt to income ratio no more than 40%. Must provide 2 references, 2 most recent paystubs, and proof of insurance prior to funding. Enrollment in automatic payments is required. Applicants who close on a First Time Auto Loan, and post a selfie with their new car using hash tag #FirstFiFirstCar on Instagram, will be entered to win a $50 Visa gift card. Drawings are bi-annual (June 30th & December 31st). One winner per drawing. Winners will be contacted within 1 week of drawing. A First Financial membership is required to obtain an Auto Loan and is available to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean counties. A $5 deposit in a base savings account is required for membership. Other terms and conditions may apply, see credit union for details.

Source:

Cox Automotive 2019 Car Buyer Journey Study: https://www.coxautoinc.com/learning-center/2019-car-buyer-journey-study/

References:

http://info.academyforddealer.com/4-steps-to-buying-a-new-car

https://www.investopedia.com/articles/pf/09/best-price-on-a-new-car.asp

https://www.autolist.com/guides/cheapest-way-to-buy-a-car

Buying vs Leasing a Car

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Deciding between purchasing or leasing a car is usually a difficult choice to make. On one hand, it may be intimidating to part with a large sum of money upfront if you choose to buy the car off the lot. However, financing is usually an option that helps lessen the financial burden. Additionally, you do end up owning the vehicle as soon as you drive it home.

On the other hand, you also have the option to lease. Once you’ve signed all the necessary documents, you get to drive the vehicle home – a vehicle that may have been too expensive for you to buy outright. You will also end up in a cycle of monthly payments to keep a new car, and will not be the permanent owner – unless you choose to buy the car at the end of the lease term.

Benefits of Buying a Car

The greatest advantage that you get when purchasing a car is that you actually own it from the day you bring it home. This means that, unless you go for an auto loan – you don’t have to worry about monthly payments and can choose to sell it at any time.

Even with an auto loan, when you’ve finished paying it off – you have complete equity in the vehicle. Although initial monthly payments may be higher than leasing, from a long-term financial perspective – buying is typically a smarter choice.

Buying a new car also usually means lower insurance premiums compared to when you lease. Additionally, a newly bought car means that you can rack up as much mileage as you want with no overage fees. You can even customize the car as you see fit. Overall, buying a car usually ends up being a cheaper option in the long run.

The Low Down on Leasing a Car

Although the idea of leasing a car may sound appealing, it actually comes with a few things to be conscious of compared to purchasing a vehicle.

  • By the end of the lease, you may have actually spent more than you would have by outright paying for the car or financing it.
  • Longer car loan terms at the end of your lease (if you choose to finance your vehicle once the lease is up) – may seem attractive, but you will actually end up paying more based on the interest alone.
  • People who choose to lease one car after the other will have monthly payments that go on for a long time. In the long term, the more cost-effective way to own a car is to buy and keep it until it’s no longer economical enough to maintain.
  • Most auto loan leasing contracts require you to stay within a set number of miles. Going over that limit means you need to pay an extra charge for the mileage penalty. The cost can be as low as 10 cents to as much as 50 cents for each extra mile.
  • If you decide that you don’t want the car anymore before the lease ends, you might be stuck paying thousands of dollars for early termination penalties and fees. These expenses will all be due at the same time.
  • Although monthly lease payments tend to be cheaper than auto loan payments, you will have no equity in the car at the end of the contract.

Buying a new car is typically more advantageous than leasing a vehicle in the long run. The overall amount you’ll spend when purchasing a car over time often ends up being significantly less in comparison to leasing — also keeping in mind the value of the car you get to keep when buying. Not to mention, more flexibility too.

Ready to get pre-approved?

Learn more or apply online!

Article Sources:

https://www.npr.org/2019/10/31/774757867/5-tips-for-buying-a-car-the-smart-way

https://www.investopedia.com/articles/pf/05/042105.asp

https://www.investopedia.com/articles/personal-finance/012715/when-leasing-car-better-buying.asp

https://www.consumerreports.org/buying-a-car/leasing-vs-buying-a-new-car/

Three Reasons Your Car Insurance is So Expensive

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Did you know the average American pays $1,674 a year or about $140 a month on auto insurance?*

Like it or not, it’s a necessity if you own a car – however, it doesn’t have to be so expensive. Want to try and get a better rate? Here are three things that might be impacting your auto insurance premium.

The make and model of your car is a major contributing factor in how much you’ll pay for insurance. Some cars are cheaper to insure than others. Insurance companies will charge less to insure safe vehicles, as they’ll pay less for any claims you make. For example, a car with a high safety rating could get you a small discount. Likewise, some types of vehicles are statistically more likely to be stolen – so the type of vehicle you are insuring could also be a contributing factor. Rates for these types of vehicles can be more expensive to insure as a result.

The more traffic violations you have, the higher your insurance. Traffic violations and car accidents can result in a premium increase upwards of 200%, compared to what you were paying before the incident. Your premium increase will depend on a couple of things: the severity of your violation and whether you’ve been convicted in the past. Typically – traffic tickets and accidents will drop off of your record in three to four years, allowing your premium to hopefully go down again.

In most states, insurance companies will charge you more if you have poor credit or no credit history. Much like getting a loan or applying for an apartment or a mortgage – your credit score will impact whether or not you get insurance and how much you will pay. Only three states have banned insurance companies from using your credit score to factor into your insurance costs (California, Massachusetts, and Hawaii).

With that being said, there’s a few ways you can save!

Shop around! As a member of First Financial, did you know you are eligible for car insurance through our TruStage Insurance Program which partners with Liberty Mutual? Learn more and get started here, or call 855-418-6513. +

Improve your credit score! Contact us for a free credit report review. Not only could you save money on your insurance, but you could reduce the interest you are paying on loans you have with other lenders.**

*Based on a 2021 study by Bankrate.com

**Not all applicants will qualify, subject to credit approval. First Financial FCU maintains the right to not extend credit, after you respond, if we determine you do not meet our guidelines for creditworthiness. Current loans financed with First Financial FCU are not eligible for review or refinance. A First Financial membership is required to obtain an auto loan and is available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. A $5 deposit in a Base Savings Account is required to establish membership.

+TruStage insurance products and programs are made available through TruStage Insurance Agency, LLC. Life insurance and AD&D insurance are issued by CMFG Life Insurance Company. Auto and home insurance are issued by leading insurance companies. The insurance offered is not a deposit, and is not federally insured, sold, or guaranteed by your credit union.

Car Prices Hit a Record High, What Does this Mean for You?

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The average new car price hit a record high of $38,255 last month, according to JD Power. That’s up 12% from the same period a year ago.

If you’re out car shopping right now, be prepared to pay bigger bucks than usual for that vehicle. About two-thirds of car buyers paid within 5% of the sticker price last month, with some even paying above sticker price. That means there are fewer deals to be had and fewer negotiations taking place.

Why? Due to a computer chip shortage at auto plants around the world, car dealers are left with a fraction of the vehicles (both new and used) than what they typically have on hand. Since more people are buying used cars, they are also becoming as difficult to get as new cars.

Here are a few things to keep in mind if you’re in the market for a new or used vehicle right now:

  • Don’t expect a great deal: Don’t be surprised if the dealership only discounts the vehicle you’re looking at by a few hundred dollars, if anything at all.
  • Search outside of your community: Not finding what you want in your local area? Look at dealerships a bit further away from home. This can make a difference in getting the car you want or in hopefully getting a better deal.
  • Ask for top dollar for your trade-in: One bright spot is if you have a vehicle to trade-in, because of the shortage – trade-in values are at an all-time high. This can help cushion the higher sales price.
  • Hit pause: According to Edmunds, the vehicle shortages might last for another six months or so. If you’re not in a hurry to buy a car right now, their best advice is to wait a bit.

Are you still considering buying a new or used vehicle and need a loan? Click here to find out about a First Financial Auto Loan or get pre-approved to ensure you know where to start, what monthly payments you can afford and get the best deal possible for you.*

Waiting it out? You may be able to save by refinancing your current vehicle from another lender.** Click here to get started by filling out our online quick Auto Loan Review inquiry form.

Do you have a lease coming due soon? Another option is to keep the car you already know and love, by buying out your car lease.* Get started here.

*APR = Annual Percentage Rate. Not all applicants will qualify, subject to credit approval. Additional terms & conditions may apply. Actual rate may vary based on credit worthiness and term. A First Financial membership is required to obtain a First Financial auto loan and is available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. See credit union for details. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan.

**Not all applicants will qualify, subject to credit approval. First Financial FCU maintains the right to not extend credit, after you respond, if we determine you do not meet our guidelines for creditworthiness. Current loans financed with First Financial FCU are not eligible for review or refinance. A First Financial membership is required to obtain an auto loan and is available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. A $5 deposit in a Base Savings Account is required to establish membership.

3 Ways to Supercharge Your Car Buying Savings

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Are you missing out on one of the best deals in car buying? With many people opting to continue to stay at home due to COVID-19, many rental company vehicles have been stationary. Why is this important?

Many of these car rental companies are looking to make deals with increasing unused inventory, like Hertz, which recently filed for bankruptcy. If you do decide to buy a former rental vehicle, there are a few things you should do to ensure you’re making a smart purchase.

RESEARCH

Did you know that you could save up to 15 percent more when you purchase a rental vehicle?* While you can save a significant amount by buying a rental car, you should still do your research on price ranges to ensure you’re getting a great deal.

We also recommend researching and checking out the car as you would if you were buying it new. Be sure to consider which vehicle you believe to be the best fit for your lifestyle and determine your budget from there. Remember, you will need to take precautions when purchasing a car from a rental company (as you normally would when looking to buy any vehicle) — even if you’re considering a certified vehicle.

We also recommend checking for any vehicle recalls. If there has been a recall, take the extra step to cross-reference the recall with a vehicle history report — rental car companies have been required to fix these types of issues for at least the past few years.

CONDUCT A PRIVATE INSPECTION

Many rental car companies have a lengthy trial period. Use this time to your benefit and conduct an independent vehicle inspection before you buy. Even certified pre-owned vehicles should be inspected to ensure that your vehicle is safe and that you are making a solid purchase. Along with reviewing recalls and the vehicle history report, this could go a long way in putting your mind at ease when buying a used vehicle from a car rental company.

SECURE YOUR FINANCING

The purchase price of the vehicle is only one step in the process. While rental car companies can save you up to 15 percent off the sticker price when buying one of their vehicles, getting the right financing can significantly boost your savings. When you secure auto loan pre-approval with First Financial FCU, you can ensure you snag an affordable rate and monthly payment.** Check out your options for financing your next vehicle and view our affordable rates on auto loans. You can apply online 24/7 and close electronically too!

*Source: CNN Business

***APR = Annual Percentage Rate. Not all applicants will qualify, subject to credit approval. Additional terms & conditions may apply. Actual rate may vary based on creditworthiness and term. First Financial FCU maintains the right to not extend credit after you respond if we determine you do not meet our guidelines for creditworthiness. Rates are fixed and will be based on model year of vehicle & term. Current loans financed with First Financial FCU are not eligible for review or refinance. A First Financial membership is required to obtain a First Financial auto loan and is available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. See credit union for details. A $5 deposit in a base savings account is required for credit

What to Do When Your Vehicle Lease Ends

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My car lease is almost up, now what?

This is a common question when nearing the end of an auto lease. In most cases, you have three options:

1. Walk away from the lease.

Walking away from a lease may cost you in disposition or termination fees, mileage charges, and additional costs for wear and tear.

2. Trade the vehicle in.

Most times, you don’t have to trade the vehicle in to the dealership that leased you the vehicle. This may help you avoid those end-of-lease fees that may be associated with walking away from the lease.

3. Purchase the vehicle.

This will also help you sidestep the disposition and other end-of-lease fees. You’ll have the first option to purchase the vehicle. If you don’t purchase it, the dealership gets the next opportunity and the leasing company after that.

First Steps as You Near the End of Your Lease

Before you make a decision, look up the residual value and true value of your vehicle. The residual value is the amount you can purchase the vehicle for at the end of your lease. This number is essentially set in stone.

The next number is the true value. This is what a dealership would intend to pay for your currently leased vehicle. You can choose to research this number through online websites like Kelly Blue Book or NADA, however these platforms will only provide estimates. The official true value can only be found by inquiring what a dealership would pay for your vehicle today.

Should I Buy?

The steps above will indicate two things: What you would have to pay to purchase your vehicle, and what equity your vehicle still has. Once you know these numbers, you can consider whether purchasing the car is right for you.

Purchasing your leased vehicle is a good idea if:

  • Your car has excessive wear and tear. This means when you go to trade in the vehicle or walk away from the lease, you’ll be charged additional fees for fixing any damages. If you purchase the vehicle, you can choose to pay to fix those items when it’s convenient for you and your budget.
  • You’re way over—or under, on mileage. If you’re way over, you’ll owe a hefty charge for trading your car in. If you’re under your allotted miles, you’ll likely have equity in your vehicle’s value versus what you would purchase it for.
  • You love your car! Yes, sometimes the numbers don’t have to match perfectly. You may be exactly at your mileage allotment, and you still want to keep the car you’ve had for the past few years. This might be a great option too, and we’re happy to help you do so (and potentially save some money on monthly car payments) with our Lease Buyout Program.*

Need help deciding which option is best for you? Our Loan Department is happy to talk through your decision with you, and help you get the best possible deal. Get started by calling 732.312.1500, Option 4 or apply for our lease buyout loan online or fill out our quick online inquiry form and a representative will contact you.

For more information, check out our previous blog post: Reasons Buying Out Your Lease Makes Good Financial Sense

*APR = Annual Percentage Rate. Not all applicants will qualify, subject to credit approval. Additional terms & conditions may apply. Actual rate may vary based on credit worthiness and term. A First Financial membership is required to obtain a First Financial auto loan and is available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. See credit union for details. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan. Federally insured by NCUA.