Pros and Cons of Buying a Used Car | People's Community Federal Credit Union - Credit Union & Banking Services (2024)

FAQs

Why should I use credit union for car loan? ›

However, credit union auto loans are generally more affordable than auto loans from banks. They tend to offer lower interest rates, longer and more flexible repayment terms, lower fees, and more personalized customer service.

Getting preapproved for a car loan from a direct lender will aid you in negotiation, save you time and likely get you a better interest rate than you would qualify for at a dealership.

Lower fees: Credit unions are also less likely to charge expensive fees. Application and financing fees from big banks can add up and result in a higher monthly payment. Ease of application: You can apply for refinancing through a credit union online or by visiting a bank branch.

FICO is an acronym that stands for: Fair Isaac Corporation, the company that developed the FICO® credit scoring. FICO® credit scores are the auto industry standard for determining a potential buyer's creditworthiness.

It can be somewhat risky to buy a vehicle that has racked up more than 100,000 miles. Even if it's well-maintained and has about 100,000 miles left in it, such a car is already past its prime. Generally, vehicles are likely to start experiencing problems after the 100,000-mile mark.

What is a good APR for a car? ›

Car Loan APRs by Credit Score

Excellent (750 - 850): 2.96 percent for new, 3.68 percent for used. Good (700 - 749): 4.03 percent for new, 5.53 percent for used. Fair (650 - 699): 6.75 percent for new, 10.33 percent for used. Poor (450 - 649): 12.84 percent for new, 20.43 percent for used.

As independent franchises, dealers can sell the car at any price. Some dealerships and brands have developed no-haggle pricing. The price on the window is the price of the car, they say. In most cases, you'll still need to negotiate the value of your trade, the cost of financing and the price of any add-ons.

An interest rate under 5% is a great rate for a 72-month auto loan. However, the best loan offers are only available to borrowers who have the best credit scores and payment histories.

Because of the high interest rates and risk of going upside down, most experts agree that a 72-month loan isn't an ideal choice. Experts recommend that borrowers take out a shorter loan. And for an optimal interest rate, a loan term fewer than 60 months is a better way to go. You can learn more about car loans here.

The pros of buying used vehicles include lower costs, smaller loans, and less depreciation. Buying a used vehicle includes fewer choices, less reliability, and a lack of warranty.

Better Loan Rates

Just like a typical bank, a credit union offers all products, from car loans to mortgages. However, they offer lower interest rates on loans because of a customer-centric model. They are not focused on generating profits for shareholders and are primarily aimed at creating value for their members.

Credit unions tend to have lower interest rates for loans and lower fees. Banks often have more branches and ATMs nationwide. Many credit unions have shared branches and surcharge-free ATMs provided through the CO-OP Shared Branch network. Banks have historically had better technology online and for mobile apps.

Credit union profits go back to members, who are shareholders. This enables credit unions to charge lower interest rates on loans, including mortgages, and pay higher yields on savings products, such as share certificates (the credit union equivalent of certificates of deposit).

Easier qualification: Many credit unions work with customers regardless of their financial circ*mstances. If you think you might not qualify for a personal loan somewhere else, a credit union may be more inclined to give you a chance.