Tips for Buying Your First Car

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

4 Financial Tips for College Students

Many U.S. colleges and universities are already back in session, as we approach the Labor Day holiday. If you’re back in school or just beginning college as a freshman, you already know you have a lot more freedom – but there’s also more responsibility. The financial decisions you make now, can often determine whether you can live comfortably in your financial future. Having some guidelines at this stage in your life can help cut down on unnecessary spending, and can also help you save more for your future.

Here are some tips to consider as you are making your own financial decisions:

1. Save for an Emergency Fund – Always have extra finances set aside in case you encounter a sudden emergency. This will help you to avoid debt and can save you from a sudden financial restriction. A good rule of thumb is to save around 10% of the money you get. One easy way to do this is to have another bank account for your emergency funds. That way, your normal expenses will come from your main account and your emergency savings will be kept separate so as to not be tempted to use it.

2. Take Care of Your Credit – Being in college will likely be the first time you will encounter a credit card. Even if you manage to get a card with a high limit, you should never maximize your limit. A good rule here is to keep your credit usage at around 30%. If you end up owing too much, you could incur high-interest charges that can send you into a debt problem.

Another strategy you could follow is to only use the card if you have money to pay for the purchase right away. Save that money for when the payment is due. That way, you don’t overspend and can work toward building a good credit score. Having a high credit score can help you land better loan rates in the future.

3. Start Investing & Saving for Retirement – Starting to invest and save for your future retirement early can make a difference when it comes to your future income. You may consider working on an IRA (Individual Retirement Account), or investing in the stock market – especially once you start working. Whatever your decision, be sure that you are making your money work for you. It is also a good idea to meet with a financial advisor to help you manage any investment or retirement accounts you may have, once you do start your first full-time job.

4. Budget Your Food Expenses – Food can take up most of your budget if you’re not careful. From fast food to splurging on snacks, this can empty your wallet fast. By setting a budget for your food, you’ll think about ways to make the most out of it. You’ll begin looking for cheaper yet more filling options. Another way to approach this is to plan your groceries ahead of time. By knowing exactly what you’re going to buy, you can control the amount you spend on food. Even a bit of research online can give you access to inexpensive yet satisfying meals.

Don’t Fear Mistakes

Part of learning how to be better with money is making a few mistakes along the way. Don’t put yourself down if you made a mistake with the money you spent. Simply take note of the mistake, and try to prevent it from happening again. As long as you keep improving and developing good financial habits, you’ll be setting yourself up for your future financial success.

Article Sources:

https://www.debt.org/students/financial-tips-college-students/

https://www.meratas.com/blog/how-to-manage-money-as-a-college-student

https://www.moneyunder30.com/financial-tips-for-new-college-students

Summer 2021 Newsletter

As Summer comes to a close, we hope all our members are staying safe and healthy as we get ready for back-to-school.

In a continued effort to go green, we’re publishing our newsletter electronically – it can also be found on our website and social media sites. Paper copies will be available in our branches.

The Summer Newsletter features the following articles:

To view a copy of the newsletter, click here.

Wishing all of our student and educator members a successful new upcoming school year!

What is a Payday Loan and How does it work?

A payday loan also called a “cash advance” or “check advance” loan, is a type of unsecured personal loan based on how much you earn in your paycheck. These loans charge borrowers with high interest and have short-term repayment demands.

Due to their extremely high-interest rates, payday loans can keep you in a cycle of debt. Payday loan lenders usually don’t consider the borrower’s ability to repay and often charge added fees through hidden provisions. Read on to learn why payday loans are not typically an ideal option and to see some better loan alternatives.

How Payday Loans Work

Amount Borrowed

There is a limit on how much you can borrow in most cases. The amount can range from $300 to $1,000, with $500 typically being the most common amount.

High Interest

Payday lenders charge all borrowers the same interest rate. It can be as high as 780% annual percentage rate (APR), with an average payday loan running as high as nearly 400% APR.

Short-Term Repayment

Payday loans must be paid back once you get your next paycheck. The loan term usually goes from two weeks to a month.

No Installments

A regular personal loan allows you to pay back the money borrowed in installments. With payday loans however, you will most likely have to pay back the interest and principal all at once. This amount is usually more than what your budget can handle.

Automatic Repayment

When taking out a payday loan, you sign a check or document that permits the lender to take money out of your bank account. If you fail to repay the loan as scheduled, the lender will either cash the check or withdraw the money from your account.

Alternatives to Payday Loans

If you need to borrow money, consider the following alternatives instead of taking out a payday loan.

Create a Budget

Evaluate all your expenses, including rent, utilities, and food, and create a budget. Know how much money is coming in and how much you can afford to spend on your expenses. Then, find ways to cut down on unnecessary expenses to be more in line with your income.

Get Credit Counseling

If you need help dealing with your debt, you may need to get credit counseling. There are non-profit agencies that can offer credit advice at little to no cost. They can also help you set up a debt management plan (DMP).

Better Loan Options

Getting a personal unsecured installment loan from your local credit union is probably a better option over a payday loan. With lower interest rates and fees, they are most especially beneficial for borrowers on a tight budget. When you make on time payments, it will even help build your credit and help you qualify for lower loan rates in the future! Learn more about our Fast Cash Payday Alternative Loan here.*

*Loans of $200 to $1,000 available for terms of one to six months. An application fee of up to $20 will be charged; other fees and charges may apply. At least one month of First Financial Federal Credit Union membership is required to obtain a Payday Alternative Loan, and is open 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 credit union membership prior to opening any other account/loan. Not all applicants qualify, subject to credit approval. Rates vary based on creditworthiness, but will not exceed 28%. Terms and conditions of this offer may be subject to change at any time.

References:

https://www.investopedia.com/terms/p/payday-loans.asp

https://www.debt.org/credit/payday-lenders/

https://www.moneycrashers.com/how-do-payday-loans-work-dangers-payday-loan-alternatives/

https://www.investopedia.com/credit-unions-vs-banks-4590218

Buying vs Leasing a Car

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

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.