Auto Loans: How do they work and how do I get one?


So, you want to buy a car but aren’t sure where to start? Well, this guide is for you! An excellent first step is figuring whether you wish to purchase a car, truck, or SUV. Will you be looking to move a lot of cargo? Or maybe you want to take regular road trips, and legroom is a serious consideration—knowing which auto fits your lifestyle is critical. This will help you make sure you’re purchasing a vehicle that suits your needs. It also enables you to know what similar cars are selling for on the market.

Now that you have a vision and a budget, it’s time for the next step—securing your auto loan. First things, first:

What is an auto loan?

An auto loan is an excellent financial tool for when you’ve found the perfect vehicle and want to pay it off over time while getting the best value possible.

Loans are made up of three components:

  • The amount you borrow- AKA “The Principal,” the money you’ll use to buy the car
  • The annual percentage rate (APR) or attached interest rate
  • The amount of time it takes to pay off the borrowed amount with the interest

Each of these factors determines your monthly payment. Loan terms extended over fewer months will get you a lower APR but makes the monthly payment a little higher in exchange.

Do I need a car loan?

If you already have money saved up, you may not need a car loan, but it could still be beneficial. Obtaining financing can increase your vehicle choices, and frees up your cash, so all your savings aren’t depleted at once. In addition, making monthly payments provides you the flexibility to keep the money in your savings for emergencies or allocate it into investment opportunities.

How do I get an auto loan?

You’ll need to work with a qualified lender to secure an auto loan. The goal is to find a loan with favorable monthly payments, a low annual percentage rate (APR), and a term that works for your budget. Typically, credit unions offer lower interest rates and more personalized services than other types of lenders. Carolinas Telco Federal Credit Union (CTFCU) offers competitive car loans and financing options to suit your needs. Call us, apply online or stop by a branch location today to speak with an experienced loan officer to determine what options are best for you.

How long will it take me to pay off? Can I pay it off early?

That depends largely on the terms of your loan. However, we have useful auto loan calculators to help you evaluate car loan options so you can see the big picture and make an informed decision.

What is refinancing?

Refinancing means that you are paying off the remaining amount of a current loan with a new loan. Usually, the refinanced loan has more favorable terms in the form of a lower payment, better rate, or shorter payment term. It’s a smart financial move to periodically compare the terms of your existing loans to see if another lender has a better deal.

Can I refinance?

Refinancing an existing loan can often help you keep more money in your pocket. CTFCU handles many types of loan refinances for our members. Talk to us if you’re interested. We may be able to offer you a better rate than you are currently receiving. In addition, our loan officers will walk you through the process to help you find additional savings. If you have a loan financed elsewhere, contact us for a rate or payment comparison with no obligation.

Have any more questions about car loans or auto buying?

We’re happy to help!  Check us out online, stop by your local CTFCU branch, or call us toll-free at 1-800-622-5305.

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