Articles

Buying a car requires a lot of time and research. And that’s just deciding on the model and features! So of course the financial aspect can seem overwhelming to add on top of everything else. That’s why we’ve created this guide to help you navigate the process of financing your next set of wheels. 

What lenders consider

To secure a loan for your new or used car, you’ll need to meet certain qualifications set by the lender. The better you meet these qualifications, the more likely it is that you’ll be approved and offered a low rate.

Most lenders look at the following:

• Credit history and debt load. The lender will want to know if you’ve had a good record of repaying debts in full and on time. They will also check how much debt you have to determine if you can afford an auto loan in your budget. Your credit score and credit report will provide all of this information to lenders, so be sure to check yours before applying for a loan.

• Down payment amount. Dropping a large down payment on your car can help you qualify for a better loan. Financial experts recommend putting down at least 20% of the purchase price for a new car. Used car purchases should ideally have at least a 10% down payment.

• Loan term. Most auto loans range from three to six years in length. Opting for a longer loan term can cut down on your monthly payments, but raise your interest rate. If you can afford the higher payments, you can save more money in the long run with a shorter term loan.

• New versus used. Used cars have the benefit of usually costing less than new cars, which means a smaller loan to pay off. New cars, however, are more likely to qualify for better interest rates. At Advancial, you can rest assured that our auto loan rates are the same whether you choose used or new.

Dealership vs. credit union loans

Dealerships frequently advertise their financing specials, enticing people to come in. But the dealership isn’t necessarily your best choice for an auto loan, as they act as a middleman and frequently mark up their loan rates. Other times the loan offer might truly be great, but the conditions to qualify are so strict that it’s difficult to get approved.

Going directly to a credit union for a loan cuts out the middleman, making it easier to get a low rate. Plus, as a not-for-profit, a credit union like Advancial operates for the good of its members instead of profit. On top of all that, getting preapproved for a car loan at Advancial gives you an advantage at the dealership.

The power of preapproval

Getting preapproved for an auto loan doesn’t just help you set a budget. It’s a powerful bargaining chip as well. To the dealership, you’re the same as a cash buyer, meaning the dealer can’t negotiate based off of the monthly payment. Instead, they’re forced to negotiate the total price of the car, meaning you’re likely to pay less – and negotiate less – overall. You’ll also avoid unnecessary add-ons, because you’re preapproved for a set amount and can’t go over it.

Extra costs to consider

Before making your purchase, you should know that the price of car itself isn’t all you’ll need to pay. You can expect several other costs that may put you above your loan preapproval amount:

 • Sales tax. This can easily equal thousands of dollars. For instance, a $34,000 car taxed at 6.25% will be charged $2,125 in taxes.

• Title and registration. Title and registration fees vary widely by state, but expect to pay an average of about $100 for these fees.

• Dealership fees. Not every dealership has these fees and they are negotiable. According to Edmunds, the median price of dealership fees is $150 in Texas, $299 in Oklahoma, and $200 in Louisiana and Alaska.

Frequently Asked Questions on Auto Loans

Can I get an auto loan if I have bad credit?

Auto loans aren’t as difficult to qualify for as some other types of loans. However, not everyone will qualify for an auto loan. Work on improving your credit and/or apply with a co-applicant to increase your odds of being approved.

Are APR and interest rate the same thing?

The interest rate applies to the principal balance of a loan only. APR, or annual percentage rate, also factors in fees and costs of the loan.

What is GAP insurance and should I get it?

GAP insurance, or guaranteed asset protection insurance, is optional protection for car buyers. In the event of a total loss of your car, it can help cover the costs that auto insurance may not cover. This gap in coverage is due to a new car’s significant drop in value in the first few years of ownership. Standard auto insurance will cover the car’s market value and not necessarily what you owe on the loan. GAP insurance covers the difference.

What are Advancial’s current rates for auto loans?

You can find our most up-to-date loan rates online.

When is the best time of the year to buy a car?

The end of the year is one of the best times to buy a car. It’s in October, November, and December that most dealerships are working to meet yearly and quarterly sales goals. To incentivize a sale, dealers are more likely to offer a good deal during these months. If you can’t make the end of the year, the next best thing is the end of each financial quarter - specifically the last week or last day of the quarter if you can swing that.

Can anyone apply for an auto loan through Advancial?

We welcome anyone to complete a loan application with us. If you aren’t yet an Advancial member and you apply for an auto loan with us, we will contact you to discuss how you may be eligible for Advancial membership.

Ready to get the show on the road?

The team at Advancial can help you get preapproved for an auto loan. Visit us online or stop by one of our branches to start an application and learn more about our auto loans.

Three simple digits. That’s all it takes to capture the quality of your credit history. It seems simplistic, but credit scores are an important tool that lenders use for virtually all loan and credit applications. Those three digits help lenders determine if they can trust you to repay a loan fully and on-time.

How credit scores are calculated

First, a clarification: You actually have many different credit scores generated by various credit bureaus and data analytics companies. However, the most common are FICO^® score and VantageScore 3.0. Both of these scoring types use a range of 300 to 850, with 300 being considered “very poor” and 850 being “excellent.” A good credit score, 700 and up, puts you in a better position to get loans and credit cards with lower rates.

Here’s how different aspects of your credit history are considered when calculating your FICO score and VantageScore:

Payment history – 35%

Payments made on time raise your credit score, and late payments bring it down. Advancial can help you pay bills on time with our electronic Bill Payer service.

Credit utilization – 30%

Credit utilization measures the debt you owe compared to the total credit you have available. Reducing your debt can help keep your credit utilization low.

Length of credit history – 15%

Old accounts you consistently use can help improve your score. If most of your accounts skew toward being newer or you have accounts that you no longer use, your score may be docked.

New credit – 10%

When you apply for a new credit card or loan, a hard inquiry into your credit history can ding your credit score. Opening several accounts within a short period can also have a negative effect.

Types of credit – 10%

Managing multiple forms of credit (e.g., auto loans, student loans, credit cards) responsibly can boost your score. Lenders like to see a track record of repaying both revolving credit and installment accounts.

How credit scores are used

Your credit score might be pulled in a variety of circumstances:

• Loans and credit. When you apply to borrow money such as for an auto loan or a new credit card, the lender will look at your credit score to determine your eligibility and interest rate.

• Insurance. Insurers can pull a version of your credit score, known as an insurance score, to determine your auto insurance rate. Note that this practice is banned in some states.

• Renting. When you apply to rent an apartment or duplex, the landlord will check your credit score. This can influence whether you may need a co-signer or a larger security deposit.

Despite popular belief, employers and utility companies don’t access your credit score. However, they may be able to request a copy of your credit report.

Benefits of a good credit score

As we’ve touched on, having a good credit score can be extremely beneficial for reaching your financial goals. A high credit score can help you:

• Qualify for loans
• Get lower interest rates
• Need smaller down payments
• Score a lower insurance rate
• Be approved for higher credit limits

Strategies to improve your credit score

Improve your credit score and reap the benefits with these tips:

• Keep your credit utilization ratio below 30%. Accomplish this by fully paying off your credit card statements and charging less to credit.

• Avoid closing old accounts. Unless you’re accruing fees, it’s generally better to leave old accounts open as they improve your credit utilization ratio and your average account age.

• Don't open unnecessary new accounts. If you know you’ll need a high credit score to open a future account – like a mortgage – it’s wise to not open accounts that you don’t need.

• Settle all fines and tickets. An outstanding parking ticket or even library fines can reduce your score if a collection agency gets involved. Concentrate on saving money to pay off these debts and any additional fees.

• Correct any errors on your credit reports. Your credit score is based on the information included in your credit report, so it pays to review it for inaccuracies. Federal law entitles you to a free copy of your report once every 12 months from each of the three major credit bureaus (Equifax, Experian, and TransUnion). Simply go to annualcreditreport.com or call 877.322.8228.

• Make payments on a secured loan or secured credit card. These lending options are specifically designed to help people improve their credit. You borrow against your funds and slowly repay over time.

Learn more ways you can build credit.

If you’re in the market for a rewards credit card, you may be wondering which is the best for you. Before you apply, be sure to consider:

1. Rewards you’ll actually use. For example, one card may provide generous airline miles – great, unless you prefer road trips or staying close to home. Even if you enjoy travel, airline-branded credit cards generally provide points that are good only for purchasing tickets on that particular airline. If you want to go someplace they don’t fly, you’re out of luck. If you’re an avid shopper, you might prefer a card that lets you redeem points for merchandise. Or, maybe you’d just like to get cash back on your purchases and stash that money in a savings account.
2. The annual percentage rate (APR). Many cards come with interest rates of 25% or higher. If you tend to carry a balance, these cards likely will cost you more in interest than you would earn in rewards. Tip: Work on improving your credit score to qualify for the best rate.
3. The annual fee. Some cards charge an annual fee ranging from $25 to hundreds of dollars. Consider a card with a $69 annual fee that offers 1.5% cash back on all purchases. If you spent $5,000 during the year, you could expect $75 in rewards – but after your annual fee, you’d net only $6.
4. The balance transfer fee. According to Bankrate.com, a typical balance transfer fee is 3%.* That means if you transfer a $5,000 balance to a new card, it will cost you $150. Look for a card with a no transfer fee if you intend to transfer a balance.
5. Whether you can earn bonus points. Certain cards provide additional points or discounts if you shop at specific service providers or merchants.
6. Whether you can pool points. Some issuers provide rewards points on debit cards as well as credit cards and let you pool the points to get to a desired reward level faster.

Leverage your card for faster rewards

Once you choose the right card, these strategies can help you pile up points even faster:

1. Use your credit card for everyday spending. Consider charging that daily latte, dinner out or other purchases to your credit card. Just be careful to keep track of spending so you stay within your budget.
2. Use automatic billing. You generally can have monthly bills, such as cellphone and utilities, automatically charged to your credit card. Again, be sure you budget for these expenses.
3. Strive to pay off your outstanding balance each month. If you avoid paying interest charges, those points you earn are really money in your pocket!

Compare the benefits of Visa^® Rewards Plus

Once you research other cards, you’ll find that Advancial offers a wide range of perks. With Advancial’s Visa Rewards Plus credit card, you’ll:

• Earn 1 point (1%) for each dollar spent
• Earn 1.5% rewards if you spend $2,500 or make 25+ purchases during a billing cycle
• Enjoy 0% APR for the first 12 months after opening the card (plus, there’s no balance transfer fee)
• After that you’ll benefit from a low rate of 8.90% to 14.90% based on creditworthiness (that’s right, Advancial’s highest interest rate is lower than most institutions’ lowest rate)
• Earn bonus points when you use your Advancial debit or Visa Rewards Plus card for in-store or online purchases at popular local and national merchants through Ampre and Ampre Online
• Automatically combine debit and credit card points for more rewards and easy redemption

Perhaps best of all, you can redeem your points for cash back, merchandise, travel, gift cards, green products and charitable donations – the choice is yours!

Visit Advancial to learn more about our credit cards, including Visa Rewards Plus, Secured Savings Visa^® or Dinero Visa for teens and young adults, or to apply online.


* Source: Bankrate.com.
 
 

A checking account that makes you pay to access your own money is no friend to your finances. Truth is, plenty of banks charge fees that can chip away at your account balance. Not so at Advancial. Our checking accounts are designed to benefit your bottom line, not a bank’s shareholders.

Check out the Advancial difference

According to Bankrate.com, the average monthly service fee for non-interest-bearing checking is $5.57 – you’d need an average daily balance of more than $600 to avoid the fee. Interest-bearing accounts charge a whopping $14.35 a month on average (and you’d need to maintain an average daily balance of more than $6,000 to avoid the fee – yikes!). Overdraft fees average $33.23, and the average surcharge to use an out-of-network ATM is $3.02.*

A bank customer with an interest-bearing account who is unable to maintain the average daily balance could end up spending more than $172 a year in service fees. And that’s before adding in overdraft and foreign ATM fees.

In contrast, Advancial’s Ultimate Checking account offers:

• No monthly service fee
• No minimum balance**
• No overdraft transfer fee
• No foreign transaction fee
• $0 fee on non-Advancial ATM transactions***
• Free online and mobile banking
• Free checks

And that’s not all …

Our Ultimate Checking account also provides benefits you won’t see in most other checking accounts, including:

• Dividends. Earn dividends on your Ultimate Checking balance.**
• Debit card rewards. Earn 1 point for each $5 spent on your card. Redeem for travel, cash back or choose from a long list of gift cards and merchandise.
• Save Up^SM program. When you enroll in this program, Advancial rounds up all debit card transactions to the nearest dollar and transfers that amount to your savings account. It’s an easy, automatic way to build your savings or emergency fund. That change adds up!
• CO-OP Shared Branch Access. Enjoy access to 30,000 surcharge-free ATMs and more than 5,000 locations nationwide through the CO-OP Shared Branching Network.

Teens? Expats? We’re here for you, too

We want our younger members as well as new arrivals to the U.S. to benefit from Advancial’s checking programs:

Dinero Checking is designed for teens age 13 to 18. It offers many of the same features as Ultimate Checking – no minimum balance, free ATMs, no monthly fee, debit card rewards and the Save Up program. Dinero Checking helps teens learn about managing money, while allowing their parents to keep track of their spending (an adult is required to be co-owner of the account).

Inbound USA Checking is designed for recent expats. When you move to the U.S. for work or studies, it may be difficult to open a bank account. Inbound USA Checking makes it simple, with free checking and ATM access as well as no foreign transaction fees. Major banks in the U.S. may also offer expat banking accounts, but monthly fees usually start at $10 a month.

Start making the most of your money today with your Advancial membership. All it takes is a $5 deposit in an Advancial savings account and you’ll be on your way to taking advantage of everything we have to offer. To learn more about eligibility or to apply for membership, visit any Advancial location or go online.

* Source: Bankrate’s 2018 checking account and ATM fee study, bankrate.com.

Getting out of debt may sometimes feel like digging out an entire beach with a child’s toy shovel. But ditching your debt is not impossible. First, it’s important to remember that not all debt is bad. Some debt helps you live a more fulfilling life. For example, student loans may allow you to get the training or degree you need to land a good job. Mortgage loans can allow you to own your own home – few people can purchase a home with cash on hand. Even an auto loan may be considered good debt if it means you can buy a safe and reliable vehicle for transportation.


 

So, what’s bad debt?

Personal loans, credit cards and store cards are not in themselves bad. But having too much debt is bad if you are having difficulty making payments. You may be in over your head if you answer yes to any of the following questions:

• Do you carry balances from month to month on more than one credit card or store card?
• Do you pay only the minimum due each month?
• Do you sometimes exceed your credit limit?
• Have you had more than one late payment penalty in the past year?
• Have you ever taken out a payday loan to cover bills?

 

Two strategies for paying off debt

How you work towards paying off debt depends largely on what motivates you. For example, if you want to pay the least amount of interest, pay off the highest-interest-rate debt first:

1. Pay as much as you possibly can each month on the highest-rate debt, while paying the minimum on other debts.
2. Once that bill is paid off, direct the money you would have paid to the next-highest-rate debt, while continuing to pay the minimum on remaining balances.
3. Repeat until debt is gone.

If you are more likely to be motivated by seeing entire balances disappear more quickly, try the snowball method:

1. Pay as much as you possibly can each month on the bill with the lowest balance. Pay the minimum on other debts.
2. Once you pay off the smallest bill, start paying as much as you can on the next lowest bill. Continue paying the minimum on other debts.
3. Repeat until debts are paid.

Of course, neither of these strategies will work unless you stop adding more debt to your load. Commit to getting spending under control. Stay away from the mall, opt to pack a lunch and make specialty coffee a nice reward, not a daily habit.
 

Other debt-reduction strategies

Perhaps you’ve accumulated a wallet full of high-rate store cards because of the promotions they offer. Those offers look attractive, but the average interest rate on a store card is a whopping 25.64%.¹
In the long run, what you save on promotions is likely far less than what you are shelling out in interest.

Consider doing a balance transfer to a lower-rate credit card. A balance transfer may result in a more affordable monthly payment and fewer bills to keep track of. Plus, you may save hundreds of dollars in interest payments.

If you qualify, the Advancial Visa^® Rewards Plus offers:

• No balance transfer fees
• No annual fee
• 0% interest for 12 months on balance transfers and purchases
• After that, your interest rate will be 8.90% - 14.90% based on creditworthiness – even the highest rate is way less than the average store card!

Imagine how fast debt could melt away if you are managing one monthly payment at a much lower interest rate.

Save on financial products

Another debt-reduction strategy is simply to lower your monthly costs. For example, are you paying a monthly fee for a checking account? Getting hit with foreign ATM fees just to get to your money? Advancial members have access to our Ultimate Checking account , which features no monthly service fee, no minimum balance requirements, unlimited free ATMs worldwide, free mobile banking - you name it, we’ve got it. .

Getting out of debt isn’t easy, but it’s definitely worthwhile. Advancial is here to help you make the most of your money with free products, low rates and superior service the big banks just can’t match.


¹Source: Creditcards.com, https://www.creditcards.com/credit-card-news/retail-store-credit-card-survey.php