What to Know Before You Buy a Car

Have you been considering purchasing a vehicle? Now could be the right time for you to buy, as dealerships and DMVs start to open back up in New Jersey.

Due to declining sales in light of the COVID-19 pandemic, dealerships are most likely highly motivated to sell vehicles right now – but you may not necessarily get the deal that is best for you. Our goal is to encourage you to do your due diligence and buy a vehicle that works for your lifestyle and budget. To help you make a smart decision, we’re providing a few tips to ensure you’re well-informed.

Know you have choices. Due to dealerships looking to make up for lost sales, they’re probably offering flashy, headline-making deals. However, once you take a look under the hood, the deals aren’t always as great as they can seem. For instance, a cash rebate is more likely to be a better deal than 0 percent interest when paired with a low-interest loan that can lower your monthly payment. Therefore, consider taking the rebate and finance or refinance your ride with First Financial!*

Consider your warranty options. When you’re buying a vehicle, whether new or used – dealers will try to sell you or automatically include add-ins like warranties to your loan. When buying a car, think of how long you plan to own it. If you trade or upgrade your vehicle often, you may not need an extended warranty. Typically, new vehicles come with manufacturer warranties that supersede any extended warranties. This means that your extended warranty has no value until the original manufacturer warranty expires.

If you plan on keeping your vehicle for an extended length of time, an extended warranty could be right for you. Compare the costs of the warranties the dealer offers with our Mechanical Repair Coverage options.**

GAP Insurance. GAP stands for Guaranteed Asset Protection. What is GAP insurance? It’s optional car insurance coverage that helps you pay off your auto loan in the event that your car is totaled or stolen, and you owe more than the car’s current value. This helps bridge the “gap” between what you owe and what your insurance is willing to pay. For example, say you owe $25,000 on your car but the actual value is $19,000. If you incur a total loss accident, your insurance will most likely only pay the value amount of $19,000. GAP insurance will pay the other $6,000 so that you are debt-free. Compare the GAP insurance from the dealership with our Loan Payment Protection options.

If you’ve made up your mind to purchase a vehicle, don’t be intimidated by the dealership. Take control of your car buying journey and get pre-approved with First Financial.* Learn more about our current auto loan offerings, or fill out a quick inquiry form online. We can help you compare the numbers and guide you to make the best financial decision for you!

*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.

 **Mechanical Repair Coverage is provided and administered by Consumer Program Administrators, Inc. in all states except CA, where coverage is offered as insurance by Virginia Surety Company, Inc., in WA, where coverage is provided by National Product Care Company and administered by Consumer Program Administrators, Inc., in FL, LA and OK, where coverage is provided and administered by Automotive Warranty Services of Florida, Inc. (Florida License #60023 and Oklahoma License #44198051), all located at 175 West Jackson Blvd., Chicago Illinois 60604, 800.752.6265. This coverage is made available to you by CUNA Mutual Insurance Agency, Inc. In CA, where Mechanical Repair Coverage is offered as insurance (form MBIP 08/16), it is underwritten by Virginia Surety Company, Inc. Coverage varies by state. Be sure to read the Vehicle Service Contract or the Insurance Policy, which will explain the exact terms, conditions, and exclusions of this voluntary product. MRC-2341946.1-1218-0121 © CUNA Mutual Group

6 Things to Do Before You Buy Your Next Car

1. Figure Out What You Need

It’s not always about what you want, but what you need. If it’s your first car, you may only need something that will get you from point A to point B and around town – and won’t need to spend a huge chunk of change.

2. Acknowledge What’s Practical

This is about tempering expectations. Before you buy, be realistic about your situation. Is your family growing? You may want to think about a larger vehicle like an SUV or mini van.

3. Check Into Your Credit

Do you know where you stand with your financial reputation? You’ll get better loan terms and be in a better position to negotiate if you have good credit. Look at your credit report to see if there are errors that could drag you down. Also, have a look at your consumer credit scores from free sites like Credit Karma and Credit Sesame. While they aren’t “official,” they can give you a good idea of where you stand.

4. Know Your Budget

You can use car loan calculators to figure out monthly payments versus total loan amounts ahead of time. Know your budget, and be prepared to stand firm. Once you get to the dealer, there’s a good chance they will try to nudge you a bit by focusing on a monthly payment and convincing you to get a 60-month or 72-month loan. Figure out a total price you want to pay for the car, and stick to that.

5. Research the Options

Do your homework.  Look into cost and vehicle reliability. Figure out what works best for you in terms of safety, fuel economy, and so on. Consider Certified Pre-Owned or a lease return if you’d like a newer “used” car. These are lower cost, but still come with warranties and other perks.

6. Look for Incentives and Sales

Look for deals like year-end clearance events and manufacturer incentives. Check to see what’s available before you get out there, then use that information to negotiate the best terms.

For more advice on buying a car – check out our guidebook: Buying a car in 5 easy steps and video. If you live, work, worship, volunteer, or attend school in Monmouth or Ocean Counties in New Jersey – we can help you finance your next vehicle.* Learn more and 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. Federally insured by NCUA.

Article Source: Miranda Marquit for Moneyning.com 

8 Things to Know Before Leasing a Car

Should I lease? What is leasing anyway? Here’s what you need to know.

1. Leasing Is Paying For What You Use

Let’s imagine that a particular car costs $30,000 new and that it has an estimated value of $21,000 after three years of use. The amount of depreciation incurred is $9,000. Divide this amount by the number of months in the lease (in this case, 36 months) and you get your monthly lease payment: $250.

Now, there are also finance charges and taxes to include, but in essence, leasing is paying for the depreciation that occurs over time from your use of the vehicle. At the end of the lease, simply return the car or buy it outright by paying the remaining value of the car (in this example, $21,000).

2. Some Cars Lease Better Than Others

Cars of the same price and type can cost vastly different amounts of money to lease.

These variations mostly boil down to the details of each manufacturer’s lease program. Every month, automakers release new lease programs that establish the following:

  • Residual value: The car’s estimated value at the end of the lease.
  • Money factor: The interest rate expressed in a different way.
  • Cash incentives: If available, these lower the final selling price of the car.

3. Leases Can Be Negotiated

Advertised “lease specials” create the impression that lease prices are set by the manufacturer—as if they were promotional menu items from McDonald’s.

In truth, individual dealers determine the selling price of a car, who then apply the manufacturer’s lease program to arrive at the actual cost. A manufacturer’s lease special simply assumes a particular selling price that they expect dealers to honor. The selling price can most certainly be negotiated.

4. Watch Out For Marked Up Rates and Fees

Aside from setting the sales price, dealers can also mark up the money factor. This may result in hundreds or thousands of extra dollars paid over the course of a lease. Leasehackr.com posts the official money factor for hundreds of vehicles, so you can check if you’re being charged too much.

With a lease, you’ll also pay an acquisition fee and often a disposition fee. These are legit fees, but some dealers mark them up as well. In exchange for paying these fees, you benefit from certain inherent advantages of leasing—explained below.

5. Someone Else Takes On The Risk Of Depreciation

When an automaker sets the residual value of a particular model, they often overestimate the car’s actual lease-end value.

For example, Leasehackr leased a 2013 Mercedes-Benz E350 BlueTEC, which had a residual value of $44,036 after two years of use. In actuality, the car was worth about $34,000 on the open market when it came time to return the car.

By leasing, Leasehackr avoided $10,000 in depreciation that we would have otherwise incurred if purchased instead. This amounts to over $400 per month saved!

Some automakers are spot-on with their estimates. Others intentionally inflate their residual values to make their leases cheaper. And sometimes they just get it wrong. Regardless, when you lease, someone else takes on the risk and uncertainty of depreciation.

6. You Can Cash Out On Any Lease Equity You Have

Sometimes, the opposite scenario happens: your car is worth more at lease-end than its official residual value. This might occur if your car becomes highly desirable in the used car market.

With many automakers, you can actually arrange a third-party, such as CarMax or Beepi, to buy out the car. If CarMax offers you, say, $23,000 for the car, but the residual value is $21,000, then they will write you a check for the difference ($2,000).

7. You Only Pay Sales Tax On The Cost Of The Lease

When you purchase a car, you pay an amount of sales tax based on the selling price of the car. This can amount to thousands of dollars that you never get back, even if you end up selling the car a few years later.

In most states you pay sales tax only on the cost of the lease. These tax savings more than make up for the acquisition fee required on a lease.

8. Never Put A Down Payment On A Lease

If your car is ever totaled or stolen, you can always walk away from a lease without penalty (thanks to GAP insurance). However, you won’t always get your down payment back— so don’t pay one to begin with.

A down payment obscures the cost of the lease and makes it more difficult to compare deals. Any car can be leased for $199 per month if there’s a sufficient down payment.

Article Source: https://leasehackr.com/blog/2015/9/19/8-things-you-should-know-before-leasing-a-new-car