New-car prices are still high, with Kelley Blue Book reporting an average transaction price in April of $48,510. The good news is that prices are leveling off this year. Better news: This month's virtual car sale through Tropical Financial Credit Union can make your purchase easier and more affordable.
Smart borrowing requires shopping around and asking the right questions. Tropical Financial is making the process easier with its online sale through June 23rd. Eligible credit union members save a quarter of a percentage point on their loan rate when they finance through TFCU Auto Advisors. And Tropical is offering no car payments for the first 90 days to qualified borrowers.
Before and during the hunt for a new or used SUV or sedan, you should:
Know your credit score and budget: The higher the score, the more likely you are to qualify for a lower interest rate that will lower your monthly payment. Just how much car you can afford is another story. Add up essential monthly expenses such as housing and utilities to learn the right monthly payment for you.
Get pre-approved: Tropical Financial will provide you with a loan amount and interest rate based on your finances. This will give you leverage with sellers and enable you to avoid dealer financing, which may prove more costly.
Check loan rates: Tropical Financial posts its current new and used car borrowing rates online. You can find terms of 36 to 72 months.
Add up borrowing costs: A longer term will lower the monthly payment and increase your total interest costs. So will lender charges, ask which are required and which are optional. They could include documentation and lender acquisition fees, payment and car-value insurance plans, and vehicle maintenance and damage coverage.
Price the car, then the loan: A dealer might inflate the vehicle price to offset its lower loan rate. If you’re a Tropical Financial member participating in the virtual sale, you already know your financing terms.
Avoid the upsell: Dealerships may offer extended warranties, unlimited car washes, enhanced windshield protection and other add-ons that drive up financing costs. You may not need or want them, and they can often be purchased elsewhere for less.
Pay down the vehicle: The more you contribute to the purchase price, the more you save. Consider this scenario for a $50,000 vehicle financed at 6% APR for 5 years: With a 10% downpayment, your monthly payment will be $870. Put 20% toward the price, and that figure falls to $773.
Tropical Financial has partnered with 70-plus local dealers to provide you with member pricing. Not a member yet? Click on the button to become one today and take advantage of the savings.
