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Mid-Atlantic Federal Credit Union will help you find the perfect car, develop a budget for it and get the financing you deserve. We’re your resource when it’s time to purchase your next vehicle. MAFCU.org is loaded with helpful information including loan calculators, participating dealerships and strategies for negotiating the best deal for you. We’ve also included several helpful worksheets found on page 3 that you can use in your planning process.
1. Do your homework
Don't let your purchase be an emotional decision. Emotions in car buying should come after you've done it right. Do research before you visit the dealership. You will find all kinds of helpful information on auto buying at MAFCU.org. Auto Fusion, MVCP, and UBS can help with pricing. Kiplinger's Personal Finance and Consumer Reports are some other good sources for information. What is the trade in value? Use the worksheet on page 3 to help you set the vehicle price.
☞ TIP: You can go to Edmunds.com,
kbb.com (Kelly Blue Book) or the NADA.com to determine invoice cost as well as trade in value of your current vehicle.
3. Budget
☞ TIP: Get several comparative insurance quotes. Companies rate vehicles independently based on their data. Check out insurancequote.com for more detailed information.
Determine what you can afford to pay per month. Your long-term monthly debt load (car payments, mortgage or rent payments, property taxes and insurance, student loans, and installment payments) should not exceed 50% of your gross monthly income. You can use the worksheet on page 3 as a guide.
2. It’s all about the price.
Knowing what the dealer paid for the vehicle will help negotiate a much better deal. Dealer invoice is the price the dealer paid excluding advertising costs, destination charges or special regional pricing. The next step is to figure out the cost for options and subtract any rebates or incentives being offered. Will you be paying cash or financing? Do you have a vehicle to trade in?
☞ TIP: Go to MAFCU.org and look under
Auto Resources where you’ll find our Consumer Loan Calculator to calculate the vehicle cost and monthly payment that meets your income. Also, it’s always a good idea to find out about your credit in advance. On our website is the ConsumerInfo Credit reporting link which can get you that information including explanation of FICO scores and what lenders look for.
4. Find dealers
Buying a car and applying for MAFCU financing has never been easier. Through the Credit Union Auto Loan Network, you have the ability to find local dealers that you can contact to receive pricing and availability BEFORE you even step foot into the dealership.
6. Making the deal
Negotiate UP from the dealer invoice that you already calculated, not down from the Manufacturer’s Suggested Retail Price (MSRP). For used vehicles, negotiate up from wholesale value, NOT down from retail value. Once you've negotiated the best price, make sure you've taken a test drive. You shouldn't buy a car without a test drive.
☞ TIP: Go to MAFCU.org and click on Auto
Resources. Follow the Credit Union Auto Loan Network link. Plug in your zipcode and you’ll be taken to dealerships that are convenient to you and have the car you’re looking for.
☞ TIP: Contact the dealer at the end of the
month or toward the finish of a model year, when your negotiating position will be much stronger. Go to MAFCU.org for calculators or more information.
5. Financing
Don’t be fooled by zero percent or low interest rate financing. You've heard the 0% come-on that automakers tout, but here's the whole story: These terms may not apply to the model you want. They are almost always available only on slower-selling models. Or might be limited to just what the dealer has in stock. It may require a shorter loan term and require bigger down payments or can have prepayment penalties. They may disqualify anyone with a less-than-perfect credit history. What's more, you usually are given the choice between 0% financing and a rebate. In many cases, you can save money by taking the rebate and financing with a low-rate loan through MAFCU. We’ve done the math for you! The following chart shows how:
7. Important Extras to Consider:
Once you reach the Finance & Insurance (F&I) office, the dealer will offer you a wide assortment of extras for your vehicle. Of the huge number offered, here are two you may want to consider: Guaranteed Asset Protection (GAP): GAP protects you from the difference between what your insurance company says your vehicle is worth and what you actually owe on the loan if something happens to your vehicle. GAP should be considered if you owed more on your last vehicle than it was worth and agreed to have the dealer add the additional amount to your loan. Be sure to read the fine print – not all GAP coverage is the same. And GAP is only available at the time you sign for your loan.
Manufacturer Financing
Annual percentage rate Purchase price Trade-in/Down Payment Rebate Loan amount Term Monthly payments $18,000 36 mos. $500.00 0% $20,000 $ 2,000
CU Financing
4.25%* $20,000 $ 2,000 - $ 2,000 $16,000 36 mos. $474.17
Your credit union saves you $25.83/mo, or $929.88!
Or, the credit union can make your payments even more affordable with a 48-month loan at $363.06/month or a 60-month loan at $296.47/month.
*Rate shown is for illustrative purposes only. Actual rates will vary. Rates are based on an evaluation of each applicant's credit.
Service Contract/MBI: If you are planning to keep the vehicle for 5 years, contemplate this purchase. Service contracts are accepted almost everywhere and cost more than MBI, but usually provide more coverage. A service contract is a contract with a company or manufacturer to maintain equipment in working order at an agreed upon price over a fixed period of time. With Mechanical Breakdown Insurance (MBI) a part usually has to break on the car to warrant repair, and often you must pay the bill with the repair shop and submit a claim on your own. Know the difference between a service contract and MBI. The more dependable type of car you choose, the cheaper the extended warranty should be.
TIP: Avoid most of the extras offered at the dealership unless you have some room in your auto budget.
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DEALER COST WORKSHEET
The invoice of car and options Transportation (copied from window) Tags, tax, and title What the car “cost” the dealer: $ ___________________________________________________ +$ ___________________________________________________ +$ ___________________________________________________ =$ ___________________________________________________ (This is where you want to negotiate from)
AUTO BUDGET WORKSHEET
Gross Income per Month: Amount of total monthly debt load Monthly: mortgage / rent payment property insurance car payment(s) credit card(s) student loan(s) other credit $ available for new car payment $_________________________________________ x 50% or 0.50 =$ ______________________________________________________ -$ ______________________________________________________ -$ ______________________________________________________ -$ ______________________________________________________ -$ ______________________________________________________ -$ ______________________________________________________ -$ ______________________________________________________ =$ ______________________________________________________