North Alabama Educators Credit Union

+ DRIVE Wit Condenc EARLY FALL IS a popular time to buy a new car, and dealers o en offer rebates and other incentives to encourage you to finance your auto loan through the dealership. But taking time to shop around and compare North Alabama Educators Credit Union rates with the dealer offers could save you money over the life of your loan. Keep these smart buying strategies in mind the next time you visit a car lot. 1. Don't be swayed by low monthly payments. "The first thing a salesperson usually asks is, 'What monthly payment are you looking to pay?'" says Deanna Horner, Vice President of Lending at North Alabama Educators Credit Union (NAECU). "If you name a number, the dealer can usually get you that price. But you may end up financing your car for 84 months or paying a higher interest rate." 2. Ask about the buy rate before financing your loan at a dealership. When you apply for auto loan financing through a dealer, lenders provide the dealership with interest rate quotes known as buy rates. Many dealers, however, charge a higher interest rate than the buy rate when creating the sales contract because they receive financial incentives for doing so. "Dealers o en have a range of rates they can offer people with comparable credit scores," says Greg Olmsted, President and CEO of NAECU. "For example, they may have a buy rate of 3.00% APR for the loan, but if they can convince you to sign for 5.00% APR, they will earn additional income from the higher rate." In comparison, NAECU uses risk-based lending when determining interest rates. Your loan rate is tied directly to your Equifax credit score. NAECU also offers the same insurance and warranty options as dealerships—o en at lower costs. Dealers may charge up to $600 or $700 for gap insurance, for example, while NAECU members can buy gap insurance for as low as $195. 3. Be wary of too-good-to-be-true advertising claims. Some dealers promise to pay off consumers' loans in full if they trade in their current vehicle, but this promise can be misleading for consumers who owe more on their loan than the market value of their vehicle, which is known as negative equity. "Dealerships find a way to cover negative equity," Deanna says. "They may inflate the new vehicle's purchase price or deduct from the trade- in value." Before visiting a car lot, stop by the credit union or look online to see how much your current vehicle is worth. Also, meet with a credit union representative to make sure you get a good deal on your purchase price. "Consumers should treat their trade-in as one transaction and their new or used vehicle purchase as a separate transaction," Greg says. "The key is getting a fair deal on both transactions. Beware of adding large negative equity figures to a new purchase because the problem will only get worse in terms of negative equity on the new vehicle. We offer personal loans to cover negative equity, which can break the cycle moving forward." 4. Do your research. Once you've settled on a car make and model, compare the price at multiple dealerships. A dealer in a neighboring town may offer a better price than your local dealer. Also, watch out for TV, radio, or newspaper ads that promise a certain model for a certain price. Many times, the dealer may only have one or two cars in stock that fit the criteria outlined in the ad. Finally, consider seeking preapproval for an auto loan. Knowing what you can finance before you arrive at the dealership allows you to shop with confidence and better tailor your vehicle search. TO APPLY FOR AN NAECU AUTO LOAN, STOP BY A BRANCH OR VISIT NAECU.ORG TO APPLY ONLINE. + DRIVE SAVINGS JUST IN TIME FOR THE HOLIDAYS North Alabama Educators Credit Union's Fall Auto Loan Sale begins on Sept. 1 and runs through Oct. 31. Members can take advantage of interest rates as low as 2.39% APR* for 66 months and delay their first payment until after the holidays. 5 NAECU.ORG NOT FOR PROFIT, NOT FOR CHARITY, BUT FOR SERVICE

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