What You Need to Know About Auto Loans

Your auto loan will affect your monthly budget the whole time you have it, so do some research carefully before signing on the line. Here’s all you need to know about auto loans.

How do auto loans work?

When you get an auto loan, you’ll have the funds you need to buy the car in one lump sum, which you’ll pay back a bit of each month, along with interest, over the term of the loan, which generally lasts 5-7 years.

Where do I apply for an auto loan?

There are two main sources for auto loans:

Direct lenders. This includes financial institutions, like banks and credit unions. You’ll probably have the opportunity to get pre-approved through these lenders, which can make car-shopping a lot easier. You can get pre-approved through us here!
Dealership financing. This option lets you buy and finance your ride all in one stop. A dealership loan, though, may come with high-pressure sales tactics, a higher interest rate, excessive add-ons or a combination of all these elements.

How high will my monthly payment be?

Your monthly payment amount is determined by several key factors:

The loan amount. The amount you borrow will be equal to the value of the car you’re purchasing. Lessen the cost by making a sizable down payment or trading in your old vehicle.
The annual percentage rate. Usually referred to as the APR, this is the effective interest rate you pay on your loan.
The loan term. The typical length of most auto loans is five years, but some lenders will let borrowers stretch the term to seven years or even longer. A longer-term loan means paying less each month, but it also means paying more in total interest over the life of the loan.

How can I score the lowest interest rate on my loan?

Shop around for a lender. Get quotes from several lenders to find the one that offers the lowest rate.
Boost your credit score. In the months before you apply for an auto loan, take steps to boost your credit score, including paying all credit card bills on time, working to pay down outstanding balances, and not opening new cards. Read about 6-different ways to boost your credit score.
Borrow less than you qualify for. A smaller loan amount generally means a lower interest rate, too.

Use our auto loan guide to make an informed decision about your loan.

Your Turn: Have you recently taken out an auto loan? Share your best tips with us in the comment.

*Rates are dependent on credit qualification, length of term, loan-to-value (LTV), age of vehicle, and if the vehicle is new or used. All loans are subject to credit approval. Federally insured by NCUA.

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TRUTH IN SAVINGS DISCLOSURE

Except as specifically described, the following disclosures apply to all the accounts.

Rate Information. The dividend rate, or interest rate, and annual percentage yield on your accounts are set forth on the reverse side. The annual percentage yield is a percentage rate that reflects the total amount of dividends/interest to be paid on an account based on the dividend/interest rate and frequency of compounding for an annual period. For Certificates of Deposit and IRA Certificates of Deposit, the interest rate and annual percentage yield are fixed and will be in effect for the term of the account. The annual percentage yield is based on an assumption that interest will remain on deposit until maturity. A withdrawal will reduce earnings.
Nature of Dividends. Dividends are paid from current income and available earnings after providing for the required reserves. The dividend rates and annual percentage yields are the prospective rates and yields that the Credit Union anticipates paying for the applicable dividend period.
Compounding and Crediting. Interest and dividends will be compounded and credited as set forth on the reverse side. The dividend/interest period for each account is also set forth on our Rate and Fee Schedule. The dividend/interest period begins on the first calendar day of the period and ends on the last calendar day of the period.
Balance Information. The minimum balance required to open each account is set forth. Interest is calculated by the daily balance method which applies a daily periodic rate to the principal in the account each day.
Accrual of Dividends. Dividends will begin to accrue on cash deposits on the business day you make the deposit to your account. Dividends will begin to accrue on noncash deposits (checks) on the business day you make the deposit to your account. If you close your account before accrued dividends are credited, accrued dividends will not be paid.
Account Limitations. The account limitations for each account are set forth in our Membership and Account Agreement
Your account will mature on the maturity date set forth on your account receipt or renewal notice.
Early Withdrawal Penalties. A penalty may be imposed if you withdraw any of the certificate funds before the maturity date or the renewal date, if this is a renewal account.
Amount of Penalty. For Certificates of Deposit and IRA Certificates of Deposit the amount of the early withdrawal penalty for your account is 90 days’ interest for a term of 12 months or less, and 180 days’ interest for a term over 12 months.
How the Penalty Works. The penalty is calculated as a forfeiture of part or all of the interest that have been earned on the account. This penalty applies to earned interest and principal.
Renewal Policy. Certificate of Deposit accounts will automatically renew for another term upon maturity. You have a grace period of seven days in which to change or withdraw the funds without being charged an early withdrawal penalty.
Exception to Early Withdrawal Penalties. At our option, we may redeem the account before maturity without imposing an early withdrawal penalty under the following circumstances:
- When an account owner dies
- or is determined legally incompetent by a court
- or other body of competent jurisdiction.
Nontransferable / Nonnegotiable. Your account is nontransferable and nonnegotiable. The funds in your account may not be pledged to secure any obligation of an owner except obligations with the Credit Union.
FEES FOR OVERDRAWN ACCOUNTS. Fees may be imposed on each check, draft item, ATM card withdrawal, debit card withdrawal, debit card point of purchase, preauthorized automatic debit, telephone initiated withdrawal or any other electronic withdrawal or transfer transaction that is drawn on an insufficient available account balance. The entire balance in your account may not be available for withdrawal, transfer or payment of a check, draft or item. You may consult the Funds Availability Policy for information regarding the availability of funds in your account. Fees for overdrawing your account may be imposed for each overdraft, item or transaction. If we have approved an overdraft protection limit for your account, such fees may reduce your approval limit. Please refer to the Rate and Fee Schedule for current fee information.

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Suggested opening amount- $25

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Yes

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Accepted and encouraged

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Available after 90 days

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Instant Issue

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Available

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