GFA Federal Credit Union

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  • Aug 24, 2021

Shopping for a new or used vehicle? Start with GFA. You’ll be glad you did!

Auto financing is not just about the loan – when you control the financing, you control the deal!

When making a car-buying decision, several factors come into play - the price, trade value, warranty & after-market sales, fees, and the financing. But what many members don’t realize is that the finance process, often an after-thought, actually determines the outcome of the entire deal. As that’s where the profits are typically made.

Best to consider the financing first

Research shows that consumers who enter into their auto transaction with pre-arranged financing (like a loan pre-approval) are happier than those where the financing is controlled through the dealer. A keen understanding of the numbers throughout the process can solidify choices while preventing surprises and buyer’s remorse.

Plus; getting a loan pre-approval helps you protect your identity, because you no longer need to share your personal financial information with the dealer(s), and their partners.

It’s not just about the rate

While dealers often entice members with hopes of a lower rate, what they really want is control of the loan, because, once they control the loan, they control the deal, and can sell more products by bumping the payment a little (“It’s only the price of a cup of coffee a day” $2 a day --- which is a $3,000 decision) or, by extending out the term of the loan (i.e. more payments & interest).

Putting this in perspective; on a typical $15,000 5-year loan, a 1% drop in rate will save you about $8 per month, while controlling the loan (deal) and borrowing $1,000 less will save you about $18 per month. The lesson here is (before you go shopping), you want to know where you stand with your trade/loan (if any), available cash down (incl. taxes & fees), and monthly payment objective. GFA’s Auto Advisor can then help you identify the appropriate vehicle(s) as well as the loan term that will meet your needs and budget.

Protecting your car (with an extended warranty) and your loan (with GAP insurance) can cost much less at the credit union

Once the vehicle is selected and the trade is negotiated, consumers are directed to the dealer’s finance office, where they are presented several options (all sound compelling and all at an additional cost). The more costly of these include paint & fabric protection, tire & wheel protection, extended warranties, and GAP insurance (which, in the case of a total loss, covers any deficiency in the loan payoff after the insurance claim is paid).

While paint & fabric and tire & wheel protection are pretty straight-forward, GAP insurance and extended warranties require more thought. But please note; if you choose to go it alone at the dealer; keep in mind that all these products are negotiable. And most finance managers are paid on penetration as well as profit (so they’d rather sell products at a discount than not sell them at all).

Benefit of credit union GAP+ over dealer GAP

In my experience, GAP insurance costs half what it does at the dealer, and it’s twice the product. Your member service rep or Auto Advisor can explain the considerable differences.

Considering an extended warranty?

Purchasing an extended warranty is a big decision with several factors: Who is underwriting the warranty? Is it the manufacturer, dealer, or the credit union? What’s the term of the warranty (years and/or miles)? Is there a deductible, and what’s covered? In my experience, extended warranties offered through the credit union are a much better buy. And GFA’s Auto Advisor can help you determine if an extended warranty makes sense for you, while comparing the many options out there.

See our Auto Advisor BEFORE you go shopping!

In summary; while we’re bombarded with low rate and low payment ad’s, there’s more to financing your next vehicle than just the rate. The better prepared you are, the better you’ll do at the dealer.  And that’s where GFA’s member service and Auto Advisor teams come in. If you’re considering the purchase or lease of a new or used vehicle, please be sure to talk with our team BEFORE you go shopping. We are here to help ensure you get the best deal, from the best dealers, a loan that works for you, and have a pleasant experience! What’s better than that?   

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