car loans in parkville

Why Do I Need To Get Preapproved For A Loan?

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Q: I’m in the market for a new home, and everyone I talk to, from friends to financial Home with Sold Sign in frontadvisors, suggests I get preapproved for a mortgage before I start house hunting. Why is this so important?

A: You’re actually on the receiving end of great advice. When looking to take out a large loan, whether it’s for purchasing a home or buying a car, having that preapproval in hand before you start your search is crucial.

Depending upon the type of loan, the process of getting preapproved for a loan can take time. The lender will begin by asking for your financial history and other personal information. If you have a co-borrower, the lender will need this information about them as well.

You’ll be asked to provide your Social Security Number (SSN) and for permission to allow the lender to access your credit report. If the information you provide is satisfactory, as is your credit report, the lender will begin constructing the details of your loan. When they have determined how large of a loan you will be eligible for, they will grant you a preapproval letter. The letter will also detail your estimated interest rate on the loan, though that will sometimes also depend upon the specifics of your purchase, such as the year and condition of a car or appraisal on a home.

Having your preapproval letter will shorten the loan process significantly when you’re actually ready to take out the loan. However, that is only a small benefit of getting preapproved before you start “shopping.”

Here are some other advantages of getting preapproved for a loan:

1.) You’ll know what you can afford

Your preapproval will tell you exactly what you can afford. This way, you’ll avoid being disappointed later when you have your heart set on a certain home only to be told you can’t swing it financially. Knowing how large a loan you’ll qualify for will simplify your search and get you into your new home or car sooner.

Be sure to calculate other monthly costs, such as property taxes, home insurance and increased auto insurance rates when determining the actual amount of money you’ll need to shell out each month.

2.) Don’t get taken for a ride

Picture this scene at a car dealership:

Salesperson: So, you’re here to buy a new car! What are you looking for?

You: Well, I want something with a smooth ride and –

Salesperson: Got it. And how much of a monthly payment can you afford?

You: Weeelll, I think I can swing up to $200 a month, but I’d rather something closer to $150 if you —

Salesperson: Step right this way please! Let me show our new line of Camrys at just $205 a month! They have the most luxurious feel and the ride is smooth as butter!

What happened here is, quite simply, a salesperson looking to make the most money out of a customer. When you’re unsure about how much you can spend, the dealer will capitalize on your uncertainty and try to sell you a car that just barely skims the maximum amount you’ve decided you can afford.

Also, when you name a monthly payment you can manage, the dealer will work with that number instead of talking about the price of the car. They may try to inflate the payment with charges and fees just because they fit within your named payment amount.

In contrast, when you show up at the dealer with a preapproval in hand, the salesman will have to show you cars with price tags that fit within your loan amount.

Don’t get taken for a ride; get your preapproval before you set foot in the dealer shop!

3.) Be taken seriously

A car dealer will take you a lot more seriously when you wave that preapproval in their face, since having that information in hand shows you’re ready to buy.

When purchasing a home, the same rule holds true. A realtor will be able to assist you more efficiently when you know exactly how much house you can afford. They may also give you better service since you’re showing that you’re serious about buying a home. In fact, many realtors refuse to show homes to buyers who don’t have a preapproval in hand.

4.) Know you have financing you can trust

When you show up at the car dealership with a preapproval from your credit union, you know the deal is in your best interest. Many auto shops have access to several financing options and they’re almost always going to put customers into financing options that are in their own wallet’s best interests.

5.) Purchase your dream home

A preapproval makes you a valuable customer. It also helps you stand out from the pack. If you’re looking to buy a home in a competitive market, you may be competing with several other buyers for the same house. Having your preapproval will give you a leg up on bidding wars. A seller will be more eager to work with someone who’s already started the mortgage process. You can end your search sooner with a preapproval!

In the market for a new home or car? Don’t forget to call, click, or stop by Destinations Credit Union to hear about our fantastic rates on mortgage and auto loans!

Your Turn: Based on your own experience, why do you think it’s important to get preapproved for a loan? Share your thoughts with us in the comments!

SOURCES:
http://www.investopedia.com/mortgage/pre-approval/ 
https://www.nerdwallet.com/blog/loans/advantages-of-getting-pre-approved-for-a-car-loan/
https://www.google.com/amp/s/www.zillow.com/mortgage-learning/pre-approval/amp/

Dealer Auto Finance Scams

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So, you’re buying a car.  You’ve made it past the tedious comparison shopping, you’ve finished the  detail-oriented research and you’ve even endured the haggling with the salesperson.  Your tongue probably tastes like that terrible coffee they use in every car dealership in America, the kids are probably getting cranky and it’s pretty likely you’re thinking about everything else you could have done with your weekend.  But, it’s almost over.


“I just gotta go in to see the finance manager, sign some papers, and we’re on our way home.”  That feeling of relief washes over you, you let your guard down, and you don’t even realize until too late that you’re suddenly in a much higher monthly loan payment or longer term than you’d planned for.  What, in the name of Lee Iacocca, just happened?

The stereotype of car dealerships usually involves a salesman with a pencil moustache and a polyester jacket who lies through his nicotine-yellowed teeth about undercoating or telling you how the used car you were looking at has only ever been driven to church on Sundays.  That guy is easy to spot.  If the salesperson lies to you, you have some legal protections.  If you Google before you go, you’ll even know most of the tricks the salesperson might roll out. What you’re less protected against are the tricks that happen in the finance office. Below, we’ll talk about what to look for and how to avoid dealer finance scams so you don’t spend too much on your next car.  

1.)  Keep your wits about you.  Never let your guard down at the dealership.  Every person there wants to make money off of you and they’re very competitive.  Even if he or she says that they don’t want or receive commission on your particular sale (“I just need to hit my quota” or “One more sale puts me at my bonus, I’ll take a loss on this one”), that person is almost certainly a very competitive person who’s going to be comparing notes with his or her coworkers this afternoon.  

The finance office is designed to put you at ease, so you’ll lower your guard. The finance office is probably in a different part of the building, with different lighting and ambience.  The offices may be appreciably nicer, with actual walls instead of cubicles, some of which may have art hanging on them.  Clearly, the person you’re talking to is important, having been in such a nice office for so long.  

And that’s what should scare you.  The people in the finance office are often not financial experts by trade; after all they don’t need to do your taxes or invest your money.  They only have to understand one transaction.  Therefore, many dealerships will send their best salespeople to finance classes so they can have a smooth closer at the end of each transaction.  Don’t let the gray hair fool you; the person in front of you is just as competitive and sharp as the one on the sales floor.  After all, to get this office, the finance officer had to be really fantastic at making sales.

2.)  Know your credit score.  There are a lot of reasons to know your credit score before you make a large purchase, including the fact that you should check your credit report for irregularities fairly often, whether or not you’re buying anything.  When you buy a car, it’s especially important.  Finance managers like to use customer ignorance against them, and if you don’t know your up-to-date credit history, then they’ll smell blood in the water.

While the most obvious example is to try to charge you more than you need to pay, you might not expect that another classic is to offer you a loan at a far lower rate than you deserve.  The idea is to offer you a rate so low you can’t say no, then wait a few weeks before telling you that the financing unexpectedly fell through.  Don’t worry, he or she will tell you, you can keep the car.  There’s a clause in your contract that says “subject to financing,” so he or she found a different lender. The good news turns sour, however, because your new rate is through the roof and you’ve already signed the contract and taken delivery of the vehicle.

Don’t take a loan at a rate that’s too good to be true.  If you’re tempted by an offer in the finance office, ask how long it’ll be valid. Then, take it home and show it to your lawyer, so someone you trust can tell you if it’s on the up-and-up.  If you don’t want to pay your attorney’s rate, you can also bring it to us.  We’ll take a look, let you know about any potential pitfalls, and we might even be able to beat that rate or provide a better term, saving you even more money. Remember, if they say that the deal expires today (particularly on the weekend) or that you can’t take your contract with you, it’s almost certainly because they don’t want you to take the time to think about what you’re doing.

It’s never a good idea to trust someone who doesn’t want you to think. Get your credit score for free once a year from annualcreditreport.com.


3.)  Walk in with an offer.  Then, walk out with an offer.  The best way to get a fantastic rate on a loan for a new or used car is to finance through Destinations Credit Union.  We aren’t looking to make a profit, we’re looking to support our members.  We’re also trustworthy – it’s why you’re here in the first place, after all – so you know our great rates aren’t scams.  So, come see us first and you can walk into the dealership with your loan financing already approved (or apply online and note that it is a preapproval).  You’ll know how much you can spend, taking the pain out of negotiating. You’ll also know what interest rate you’ll get and have a pretty good assurance that your monthly payment will be manageable.  Plus, you’ll only need to run your credit score once, so you don’t have to worry about losing points from looking it up too often.  

Don’t let the salesperson know that you’ve already gotten financing, though. The dealership knows how much it wants to make on the transaction, and it doesn’t care if that money comes out of the trade-in, the sale, or the financing. If you know how much your trade-in is worth and you have your financing taken care of, then the only place they can make money is on the sales price.  If they know that, they’ll be less flexible on the sales price.  Let them think that if they give in a little on the sales price, they’ll be able to make it up in financing.  

But you also need to be able to walk away.  Just like any other part of the sale, whomever can walk away controls the deal.  If the terms of the loan the dealer offers you sound great, thank them and take them with you and let’s compare notes.  We’re here for you and we promise to burn the midnight oil figuring out what we can do to make the best deal you can get.  

This might all seem a little excessive.  Maybe you’re good at negotiating, you’ve looked up all the dealer scams and dirty tricks, and you can get the loan really close to what you want.  You’re only off by $50 or so, and if you just sign the papers you can take the car home tonight and be done with the whole process.  

Remember, $50 may not sound like much, but over a 60-month loan, that’s $3,000 plus interest.  Who would you rather see pocket that $3,000:  the dealership or your family?  To put it another way:  if your child racked up $50 in extra data charges on your phone bill, how would you feel?  What if he or she did it every month for five years? Let’s beat the finance office together.

Buying a Used Car Part Two: Loans and Negotiation

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If you missed part one of our guide to buying a used car, take a moment to click here and check it out.  We covered choosing the right car, understanding the value of the vehicle and many aspects of the process up to the point you sit down with the person from whom you’ll make a purchase.

Question:  Do I really have to negotiate?  It’s such a terrible experience and I feel so intimidated. 

Negotiating a car sale isn’t most people’s cup of tea.  If you’re buying from a dealer, it means sitting down with someone who may have more experience than you do, particularly with car sales.  It doesn’t have to be an intimidating process, though.  You have all the power in the transaction:  you can buy a car from the first person or the 10th, while the salesperson needs to make every sale he or she can. 

Question:  How can I make the negotiation go smoothly?

Know your price – The Internet is a fantastic resource.  Once upon a time, the salesperson knew more than the customer about car prices, and that was particularly true of used cars.  Now, you can determine the price you’re willing to pay before you ever walk in, and refuse to pay one cent more than that.  If you want, you can even email back and forth between multiple salespeople, letting them bid against each other.   

Don’t say too much – There’s very little you can say to make a negotiation go better, but there’s a lot you can say to make it go worse.  You’re not going to cause the other person to have a sudden change of heart and cut you a better deal, but you might give the clues they need to know they can hold out for more money.  If in doubt, don’t say anything.  It can be difficult, particularly when the silence is awkward and tense, but saying nothing is often the right thing to do.

Walk away – It’s an old saw in sales: “He or she who can walk away controls the deal,” and it’s been passed down from bullpen to bullpen because it’s true.  If you aren’t willing to walk away and leave the salesperson without a sale, then what incentive does he or she have for lowering the price?  It feels terrible to spend an entire Saturday on car lots and still wake up on Sunday without a car, but you need to get over it.  When you go out to buy a car, make a resolution to wait a week before you buy.  That will make it easier to walk away and give you time to make sure you’re certain of your purchase.  If you wait, you might even get a phone call during the week with a better price, particularly if it’s near the end of the month or if it’s been raining.  Is it worth a few day’s wait and another day’s work to save a few hundred dollars?  In most cases, it is. 

Question:  Should I finance the car at the dealer? 

One of the keys to negotiating a car deal, whether at the dealership or from a private seller, is securing the best financing available.  After all, even one percent difference in your interest rate can be worth hundreds, or even thousands, of dollars over the life of the loan. 

Get your financing first – The best way to get the best rate is to borrow from your credit union.  Our auto loans have fantastic rates, and we’re not trying to sneak in any hidden charges or fees.  If you come to us first, you can make a clear plan for how much you can spend, so you’re not surprised when that first payment is due.  We can also tell you how much you’ll need as a down payment, and we might even have some good tips on who you can trust in town.  You can start the pre-approval process online. 

Hopefully, if you’re planning on buying a used car, you’ll save money and get a vehicle that will make you happy for years to come.  If not, feel free to trade your vehicle in and start the guide over from the beginning. And remember, you’re always welcome to talk with your partners at Destinations Credit Union for more information and guidance to make your car buying experience as enjoyable as possible.

The Effects of China’s Market Crash On Typical Americans Like You

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Predicting the future of international finance can be a fool’s errand. Fluctuations in a small aspect of a small market can ripple in untold ways, changing the environment all the time, like the proverbial butterfly responsible for all of those hurricanes.

Unfortunately, shrugging in the face of the unknown is really uncomfortable when it comes to finances. When we need to know how it will affect us, we go to financial advisors.

What about when we don’t have any specific investments in either area?  How might it affect us then?  Below are some of the people likely to be affected by the economic news of China’s struggles last week.  Some it will hurt, some it will help and some we’ll have to wait and see. 

You might be hurt if:
Your portfolio is heavy on retail brands.  In the last decade or so, American demand for retail goods slowed at the same time Chinese demand grew, so many of our corporations recorded sales growth that was largely or exclusively based on Chinese consumers.  Yum! Brands, Intel, McDonald’s and Starbucks all rely on Chinese consumers for between 15 and 20 percent of their revenue, and the Chinese middle class just got hit with back-to-back market crashes.  We won’t really know which companies were hit the worst until sales figures and quarterly reports start coming out, but you should identify which stocks you own that are heavily invested in China and see what they plan to do to keep afloat.
 Your income is directly related to manufacturing.  Banks around the world are stockpiling dollars because American currency seems much safer than a Euro that’s dealing with a crisis in Greece or any Asian currency that is inextricably tied to China.  As a result, the dollar has increased in value about 3% in the past month.
That sounds great, but a strong dollar makes exporting more difficult and makes imports cheaper, both of which make it harder for American manufacturing firms to compete with overseas factories. The Obama administration, like the Bush administration before it, has repeatedly pushed China to strengthen its currency for this reason, but has little to show for it.  Some financial analysts suggested the Asian free trade agreement signed last month was meant to prevent exactly this kind of situation: Chinese market insecurities resulting in problems for American manufacturing.
You might be helped if:
You own a business.  Whether your company is big or small, a strong dollar gives you a leg up right now.  Obviously, you can order stock from overseas, knowing it will cost less and pocket the profit.  It might be time to think bigger, though.  If your dollar is worth 3% more than it was a month ago, that means any loan you take out will come at a discount.  If you wanted to buy a $10,000 piece of equipment from China but scoffed at the interest rate, you can cut it considerably right now. 
You own a home.  It may not be obvious at first, but everything in your home goes through China. Your car had parts manufactured or assembled there, your clothes, your furniture … everything. You’ll feel the effects of Chinese firms trying to get sales every time you go to the store and possibly until Black Friday.

But you could also get a great deal on home fixtures and appliances very soon. Chinese factories need the cash, and with their domestic housing bubble bursting, you’re the only one left to buy that amazing new washer/dryer.  What if you moved up your remodel to this fall?  You could be looking at glorious home goods at ridiculous prices.

Talk to Destinations Credit Union about automobile and personal loans. Get one of the lowest loan rates in the Baltimore area in addition to the cheaper cost of the goods you want to buy.  Let’s see if we can help you capitalize on this opportunity. 


Sources:

http://www.theguardian.com/us-news/2015/jun/24/barack-obama-fast-track-trade-deal-tpp-senate

Five Reasons To Use A Credit Union Instead Of A Big Bank

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Many people go to a big bank because they’re easy to find.  Those banks spend billions on advertising and building branches on every corner.  Becoming a member of a credit union takes a little more work – finding one that you can join takes a little bit of research.  But, it’s easier than you think.  Most people in the United States are eligible to join a credit union.  You can find one through work, or where you live, or through organizations you belong to.

Last year, 2 million people between the ages of 18 and 35 joined a credit union. 28% of credit union members are under 35 while 54% of them are under age 50. The tools of technology are making it easier to see the value that credit unions offer.

Don’t just take our word for it. Do your research and see for yourself how credit unions compare to for-profit banks. Consider these five categories:

1.) Ease of service

Here’s a fun game. Call a corporate bank with a simple request, like checking the balance of a savings account. Count the number of irritating phone tree menus you have to sift through before you could talk to a real person who could answer your question. You win when you get frustrated and slam the phone down in anger!

For-profit banks have earned a reputation for cumbersome customer service and out-of-touch policies. Getting information on financial services, like credit repair or auto loans, means sitting on hold for hours. Credit unions, on the other hand, provide easy-to-use services and real, live human beings who can answer questions, make recommendations and help you understand the complicated world of finance.

2.) Lending practices

For-profit banks answer to corporate owners. They expect a predictable, stable rate of return on their investments. This demand puts a straitjacket on lending and ensures those practices never deviate from a pre-determined formula. Take income, multiply by credit score, divide by 2, that’s the interest rate they’ll charge.

However, let’s pretend you just got a new job, so last year’s tax returns aren’t a good indicator of how much you are earning. That’s not in the formula, so it doesn’t matter. Credit history ruined by an old medical bill? Corporate banks stop reading after the first three words of that sentence. In short, there’s no room for flexibility and interest rates tend to be much higher.

Credit unions are community institutions, so helping people out is part of what they do. Their rates tend to be lower than those of corporate banks. They also tend to be more willing to make exceptions for details that may not be reflected in the conventional lending formula.

3.) Online banking is everywhere

In the wild west days of the Internet, only corporate banks could afford online banking. Now, your pet gerbil can have his own website. The Internet is everywhere and credit unions are on board. The services you use every day, like online bill pay, direct deposit and checking on account balances are just a click away. Credit unions are increasingly integrated with e-commerce services like Paypal and Square, making it easier than ever to send and receive money electronically.

Mobile services, such as transfers and remote deposit are increasingly more common at credit unions.

4.) Educational resources

Corporate banks have historically made a killing by keeping people in the dark about their practices. Credit card companies made it hard to tell exactly how much interest you were being charged. Banks charged overdraft fees without ever telling you they were doing it. These things got so bad, Congress took action. Consumer ignorance was built into the profit model of big financial institutions. Educating consumers was not just a waste of money to them, it was actually costing them business.

Credit unions are not-for-profits that want to make their communities a better place. Part of that mission includes financial education. If you need advice about home-buying, making a budget or using credit responsibly, your credit union will be happy to help.

5.) Savings

Credit unions work for their members. They pay back the money they make to their members in the form of dividends. Since their members are also the people paying for their services, they don’t have much of an incentive to charge an arm and a leg in interest and fees.

Credit unions also offer competitive rates on savings accounts and Certificates. Because they don’t have to siphon off money to pay shareholders, they can return that money to their investors: you know, the people who do their banking with the credit union. Compare the earned interest on a credit union checking or savings account to those offered by a for-profit bank. Then, go open an account at a credit union. You’ll thank yourself later.
Destinations Credit Union offers many of the same services you’ll find at the big banks, but can save you money on your everyday banking needs.  Want to get started?  Join Destinations Credit Union today!

Car Buying Tips

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If you have great credit, getting a car loan at a great rate is no problem. In tight credit markets, some buyers with less than stellar credit may have trouble getting a loan at a reasonable rate.

There are lots of ways to finance your car, even without the best credit, but be careful — these may cost you a lot of money in the long run.

Check your Credit Union’s rates first!

No matter what your credit score, chances are we can offer you a better rate because we are not-for-profit and owned by you, our members.

Do your research

You will most likely pay more for your vehicle if you go into a dealer not armed with information about the vehicle you are interested in purchasing. Make sure you do the research and know how much you should be paying for your new or used vehicle. The internet has made it easy to get this information — just go to the AutoSmart section of our website to get started.

Get Pre-Approved

Apply for your loan to see exactly how much you can afford before you go shopping for your car.  You’ll know exactly what your credit score is and what rate you qualify for through this process. You can then make your best cash deal. Apply online and simply leave the make and model information
blank or write in “pre-approval.”  If you already have your financing in place, beware of a dealer scam involving getting you to fill out a credit application, even though you are not applying for credit. They claim it is required by the “Patriot Act,” but it is not. This is an attempt to run your credit to try and get you into the dealer financing.

Beware of “Choose Your Payment”

Many dealers are now offering to let you choose your payment. While this may seem like a good idea on the surface, all it really does is extend the term of your loan, costing you thousands in extra interest and leaving you with a car that is worth far less than you owe on the loan. As an example, a $20,000 car financed at 7% APR for 5 years will run you $396 per month and you will have paid at total of $3,763 in interest by the time it is paid off. Taking that same loan, and choosing a payment of $250, you will be paying the loan for 9 years and will have paid over $7,000 in interest! If you can only afford a payment of $250, choose a car that fits your budget, instead of choosing a payment on a more expensive car.

Low Rate Financing vs. Taking a Rebate

It is generally better to negotiate the best cash price, take the rebate, apply it to the principal balance of your loan and finance at the best possible rate outside of the dealer. If you run the numbers, you’ll usually find you save money this way.

Purchasing GAP Insurance

If you put less than 20% down on your new vehicle, you may want to consider GAP insurance. The minute you drive a new car off of the lot, the value depreciates significantly. If your car is stolen or totaled in an accident, you may find you owe more on the car than the insurance is willing to pay you.
Guaranteed Asset Protection (GAP) insurance makes up the difference.  Don’t just take what the dealer offers you though! Check around because you can usually get the policy less expensively elsewhere (such as your credit union).

Extended Warranties

You may want an extended warranty on your vehicle, especially if you have trouble coming up with the funds to repair it on your own. However, beware of the dealer “requiring” the warranty in order to get the loan. Some unscrupulous dealers will tell you that in order to sell the product. Most likely, you will pay less for a warranty if you purchase it through the Credit Union. It’s a choice, not a requirement!

If you have questions throughout the car buying process, call Destinations Credit Union.  We’re here to help you get the best possible deal.

Long-Term Planning And Your Auto Loan: How Destinations Credit Union Can Help You Save

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If you’re thinking about buying a new car, you know that the best time is rapidly approaching. The end of the model year means car prices on current year vehicles will never be lower. That means now is your chance to grab a new car for the lowest possible price.

If you’re a savvy enough consumer to wait until dealers are desperate to sell, you owe it to yourself to wait just a little bit longer to do your research on financing options. Don’t be fooled by dealer promises of zero percent financing. Let’s take a look at three hidden costs that come with these advertised low rates. 

  1. You may not qualify for zero percent financing. Car commercials don’t talk about the fine print, but dealers place a pile of restrictions on zero percent financing. If your history with credit is anything less than perfect, don’t expect to qualify for these rates. Roughly 60% of people who apply for those loans get rejected. 
  2. These loans are usually short-term. If the dealer is offering zero percent financing over the life of the loan, expect it to be no more than 3 years. This means a much higher payment than you’d have on a 5- or 7-year loan. Additionally, many zero percent financing offers only cover part of the life of the loan – usually 6 months. After that, you’ll be paying more in interest.
  3. Most importantly, choosing zero percent financing will usually prevent you from taking advantage of other discount options. Zero percent financing is offered instead of manufacturer rebates and other discounts. Also, these financing packages are usually incompatible with special discount programs like Ford’s Friends and Family package.

This last hiccup can mean zero percent financing is actually more expensive than a loan obtained through a private lender, like Destinations Credit Union. To see this effect, let’s take a look at some numbers. We’ll assume that you’re paying $20,000 for a car. You’re presented with two choices. You can take 0% financing on a 3-year loan or you can get 1.74% APR* on a 5-year loan from Destinations Credit Union, plus a $2,000 rebate. Let’s see how those options break down.

 
If you take the 0% financing option, your monthly payment will be $555. Assuming no other fees or problems, you’ll pay $20,000 over the lifetime of the loan. Your payments will be higher, and if you can’t make one of them, you’ll be paying more in interest next month (in addition to all the months that follow).
If you take the rebate and reduce the cost of the car to $18,000, your monthly payment will be $314 for a 5-year loan at the credit union – a much more reasonable amount. Over the lifetime of the loan, you’ll pay a total of $18,808. That means you will save $1,192 and have a lower car payment.

Even if it’s not incompatible with cash back incentives and other rebates, having outside funding lined up before you go to the dealership can be a tremendous advantage in negotiating. By continually postponing questions of financing, you can let the dealer think there’s still money to be made. This position might lead them to give you more on your trade-in, lower the price of the car or offer you more options.

The loan you get to pay for your car may be the biggest financial decision you make outside of your home. You owe it to yourself to do your research and treat this momentous decision with diligence. You wouldn’t buy a car just because it had an enticing price tag. Why would you do that with a loan?

Remember, dealerships make money from financing. They want you to finance your car through them, because it’s one more way for them to profit from the sale. It’s also one more piece of information they can use to manipulate the total price of the car in their favor. You can take that power away from them by doing your research on car financing.

If you’re considering buying a new car, your first call shouldn’t be to the dealership. It should be to Destinations Credit Union. Our professional staff can answer any questions you might have about auto loans and other options to finance your new car. Buying a car is one situation in which that old cliche` “knowledge is power” really is true. Take the time to educate yourself about your vehicle financing options (visit the AutoSmart section of our website to help with your research). Your wallet will thank you for it! Call Destinations Credit Union today. 

*APR=Annual Percentage Rate.  Rates may be higher based on credit history.

 


10 Myths About Credit Unions

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How much do you know about credit unions? Test yourself on these 10 myths-how many did you believe until today?

Myth #1: You must meet strict eligibility requirements.

Fact: While credit unions do require that members meet certain requirements to satisfy a common bond, many of these are broad and few of them truly limit membership.

Myth #2: Getting to the ATM is difficult because my branch isn’t nearby.

Fact: With up to 65,000 ATMsavailable through various networks, availability is not an issue.

Myth #3: Changing my banking from a traditional bank to a credit union will be a hassle.

Fact: Credit unions offer the same services as banks, including automatic bill payments and direct deposit. Most services will transition easily and go uninterrupted.  A”Switch Kit” can make the transition easy.

Myth #4: With all the fancy advertising, banks must have more money than credit unions.

Fact: While this may be true, it’s because credit unions are not-for-profit organizations. Rather than spend money on advertising and marketing, credit unions rely on the community for marketing. The money saved is rolled back into services for members or distributed back to members as dividends.

Myth #5: Credit unions don’t offer reward programs.

Fact: Many credit unions do offer reward programs on credit and debit cards. For those that don’t, take a look at the fees that are associated with the various accounts. At a credit union, you’ll save on fees. Do your bank rewards outweigh the fees you’re paying on each account?

Myth #6: Credit unions aren’t very tech-savvy.

Fact: Credit unions don’t promote mobile options as aggressively as banks, but that doesn’t mean they don’t offer them. According to a study by CFI Group, bank customers rated their satisfaction at 86 out of 100 in online and mobile banking versus 90 out of 100 among credit union members.

Myth #7: Credit unions are just like banks.

Fact: Credit unions are not just like banks. Members own a piece of the organization and own a vote in determining how the credit union is managed. Credit unions also return all earnings back to members with their low fees and great dividend rates.

Myth #8: Credit unions have an unfair advantage over banks because they don’t pay taxes.

Fact: Actually, credit unions DO pay taxes. As a not-for-profit, member-owned financial cooperative, there are some taxes that credit unions don’t pay. Those “unfair advantages,” of course, are passed on to members.

Myth #9: Credit unions are not regulated.

Fact: Credit unions are held to the same laws and regulations as banks. In fact, credit unions face more restrictions on the investments and loans they make.  Destinations Credit Union is regulated by both the State of Maryland and the National Credit Union Administration.

Myth #10: Credit unions are good places to save money, but that’s about it.

Fact: Credit unions offer consumer loans, debit and credit card services, online banking and bill pay, checking accounts, retirement investments, mortgages, car loans, and more. They are a great place to take care of all your banking needs.

Destinations Credit Union
online@destinationscu.org

5 Tips For Buying Your Next Car

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If you have great credit, getting a car loan at a great rate is no problem.  In tight credit markets, some buyers with less than stellar credit may have trouble getting a loan at a reasonable rate.  There are lots of ways to finance your car, even without the best credit, but be careful — these may cost you a lot of money in the long run.

Check your Credit Union’s rates first!  No matter what your credit score, chances are we can offer you a better rate because we are not-for-profit and owned by you, our members.

Do your research

You will most likely pay more for your vehicle if you go into a dealer not armed with information about the vehicle you are interested in purchasing.  Make sure you do the research and know how much you should be paying for your new or used vehicle.  The internet has made it easy to get this information — just go to the AutoSmart section of our website to get started.

Get Pre-Approved

Apply for your loan to see exactly how much you can afford before you go shopping for your car.  You’ll know exactly what your credit score is and what rate you qualify for through this process.  You can then make your best cash deal. Apply online and simply leave the make and model information blank or write in “pre-approval.”

If you already have your financing in place, beware of a dealer scam involving getting you to fill out a credit application, even though you are not applying for credit.  They claim it is required by the “Patriot Act,” but it is not. This is an attempt to run your credit to try and get you into the dealer financing.

Beware of “Choose Your Payment”

Many dealers are now offering to let you choose your payment.  While this may seem like a good idea on the surface, all it really does is extend the term of your loan, costing you thousands in extra interest and leaving you with a car that is worth far less than you owe on the loan.  As an example, a $20,000 car financed at 7% APR for 5 years will run you $396 per month and you will have paid at total of $3,763 in interest by the time it is paid off.  Taking that same loan, and choosing a payment of $250, you will be paying the loan for 9 years and will have paid over $7,000 in interest! If you can only afford a payment of $250, choose a car that fits your budget, instead of choosing a payment on a more expensive car.

Low Rate Financing vs. Taking a Rebate

It is generally better to negotiate the best cash price, take the rebate, apply it to the principal balance of your loan and finance at the best possible rate outside of the dealer.  If you run the numbers, you’ll usually find you save money this way.

Purchasing GAP Insurance

If you put less than 20% down on your new vehicle, you may want to consider GAP insurance.  The minute you drive a new car off of the lot, the value depreciates significantly.  If your car is stolen or totaled in an accident, you may find you owe more on the car than the insurance is willing to pay you.  Guaranteed Asset Protection (GAP) insurance makes up the difference.  Don’t just take what the dealer offers you though!  Check around because you can usually get the policy less expensively elsewhere (such as your credit union).   

Extended Warranties

You may want an extended warranty on your vehicle, especially if you have trouble coming up with the funds to repair it on your own.  However, beware of the dealer “requiring” the warranty in order to get the loan.  Some unscrupulous dealers will tell you that in order to sell the product.  Most likely, you will pay less for a warranty if you purchase it through the Credit Union.  It’s a choice, not a requirement!   

Car and car loan bargains to be had this Fall?

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End of the year model close-out sales have been a staple in the car buying arena as far back as I can remember.  This year, though, dealers may not have a glut of 2012 cars sitting on their lots ready to move.  For whatever reason (better inventory management, better sales), many dealers just don’t have the inventory that they normally do at this point in the year.  The availability may depend on the car you want to buy.  For example, a local inventory search for a Ford Mustang convertible (a car I would love to get) shows only 2 within 100 miles of the Baltimore area.  I did the same search on a Chevy Silverado truck and found over one-hundred 2012 models left within that same 100 mile radius.

Dealers are offering some rebates and low rate vehicle financing, but only on selected models, and for the financing portion, only if you have great credit.  Usually you have to choose between a rebate and low rate financing and almost always, the rebate is the better option. (Our website has a good calculator in the AutoSmart section to help you evaluate your choices.)

When you’re buying a car (new or used), do your homework.

Research the vehicle you want to buy.  Know what you should pay for it.  Get pre-approved for your car loan so that you don’t have to waste time in the dealership and you can negotiate the best cash price.  Your Credit Union has some of the lowest car loan rates in Baltimore.  Let the Credit Union loan officer look at the offer before you commit – if the dealer is trying to pull a fast one, we can often spot it for you.  We also have car buying services that can help you save money.  Make sure you include the Credit Union as a valuable trusted partner in the car buying process!

Carol Szaroleta
Director of Marketing & Business Development
Destinations Credit Union