The Parents’ Guide to Car Buying and Financing


smiling family looking out of a car window

July 12, 2018

Does it seem like every time you manage to corral your children in the family vehicle, they find a way to hide fish-shaped orangey snacks between the seats or leave a messy trail of school supplies, overdue library books and remnants of another on-the-go meal?

An automobile is no place for the faint of heart. Neither is auto loan shopping.

It’s no wonder that many parents trade in – and up – vehicles as their children grow up.


What’s That Smell?

The car that shuttled your newborn home from the hospital now bears the stains of leaky juice boxes. The trade in gets washed only when it rains because your fourth grader broke the button to roll down the backseat windows – leaving them in a permanent state of midair suspension. And that minivan you bought to serve your growing family now reeks of soccer cleats, long-forgotten treats and something you can’t – or don’t want to – identify.

Indeed. It’s time to get a new vehicle. But where can you get vehicle financing that’s in line with your family budget? And how can you use this as a lesson to teach your children about the value of money and stewardship of God’s resources.


Enter the World of Vehicle Financing

Most consumers spend considerable time and effort researching vehicles to buy – 10 hours by some estimates – but stop short of learning as much about financing.

Consumer Reports submits that you’re leaving yourself vulnerable if you don’t have financing in place before visiting a new or used car dealership. The dealer will offer its own financing program, which may carry a higher interest rate than available from other lenders. This misstep could cost your family hundreds, even thousands, of extra dollars.

Instead, the consumer advocacy group offers some advice you can take to the bank:

  • Focus on the annual percentage rate (APR). You could see significant long-term savings with a lower rate.
  • Then do the math. That offer of zero percent factory financing may not be the best option because many manufacturers offer rebates in lieu of special financing.
  • Consider the length of the loan. If your budget permits, a shorter term means higher monthly payments but overall savings.  Plus, shorter-term loans could mean lower APRs.
  • Build equity in your vehicle as quickly as possible. One sure-fire way is to put as much money down as possible.


Find a Lender on Your Side

Just as every four-door sedan is not equal, every loan won’t fit your needs. You need to shop around. Although financing through a dealership might sound easier, a U.S. News & World Report post suggests starting with a local credit union.

  • Rates at credit unions are usually better. In one estimate, auto loan rates at credit unions run between 1 and 1.5 percent lower on average than banks.
  • Credit unions offer better service. Members say they get more personalized service than with previous commercial banking experiences.
  • The range of educational materials is broader. Credit unions value long-term relationships with members, so almost all are willing to discuss financing options and provide tips about how to assess the value of car purchases.
  • Credit unions are nonprofit. This status means representatives aren’t compensated for selling you a loan. Members regain all profits in the form of lower rates on other financial products and more flexible loan options.

If you’re in the market for a new vehicle loan, ECCU puts members in the driver’s seat. One of our products might suit your budget and line up with your values. Check out our auto loans and use our online loan and payment calculator to learn how much you could afford or estimate monthly payments.

And then enjoy your sweet new ride. That is, until, the kids pile in.

Category: Common Cents