Should I Roll My Current Car Loan Into A New One?
At Ascension Credit Services, we are constantly touting the benefits of Credit Union financing over traditional lending institutions. However, what happens if you have already purchased a car and immediately regret the terms and conditions of the loan?
You might try to modify your existing loan. Here are a few tips we recommend:
Finding Financing on Your Own
Most dealerships have partnerships with banks, allowing them to create auto loans when you buy. While convenient, these loans often come with a higher price in interest or fees.
Credit unions and smaller banks often offer better interest rates on car loans. You can contact your local credit union or bank to gain pre-approval before you begin car shopping. This gives you a budget to stick to and will relieve some of the hassles of car buying.
The Benefits of Credit Unions
Once you have a pre-approval, you have an amount you can spend and budget to stick to. Be sure to not mention how much you have available to a car salesman—that will become the price they are looking to settle on.
Choose a price below the pre-approved amount, so that you will be able to cover the cost of taxes, tags, and title with the rest of your loan. These three costs can be significant as well, so you could reduce initial costs by paying for them with your loan.
You could extend your use of the car. Use your car until it is no longer feasible to repair it, or when repair costs exceed the value of the car.
Negotiate the Best Possible Price
Don’t be afraid to negotiate the price with the car dealer before you buy the car. Car prices are definitely negotiable, and you may also be able to negotiate the down payment amount, interest rate, or other terms. If you hate to haggle, check the car prices at a no-haggle dealer and compare them to see who can offer you the best price.
Some car companies will even offer you a lower interest rate if you buy a new car, and you may think this is the best option because you will save interest on the loan amount. However, a car takes the biggest hit of depreciation in its value over the first three years of its life. You may end up losing as much in resale value as you would save in interest when buying a used car, so be sure to do the math before signing on the dotted line.
Working with credit unions is only one of several services we provide for our clients at Ascension Credit. Feel free to call us anytime at 214-810-2733 for more information.
