5 Tips for Buying a New Car

Published on December 27th, 2019

Leyden Credit Union near Elmhurst offers loans for new and used autos.  Unfortunately, many Americans make mistakes when they’re in the car market.  To help you avoid them, here are five tips for buying a new car.

1. Get preapproved for a loan before you begin shopping.

One of the very best things you can do when shopping for a new car is to get loan preapproval. For one thing, that forces you to think seriously about how much car your current budget will allow. Also, seeking a preapproved loan will reveal any problems with your credit you may need to correct. 

2. Buy before you need a new car.

A simple rule is that you should get a new car before you’re in a bind and forced to buy. If you drive your present car until something major fails and leaves you more or less stranded, your vehicle won’t have much trade-in value and you won’t have time to shop and consider your buying options. 

3. On the other hand, don’t buy too soon.

If you haven’t paid off your current loan and don’t have the cash to pay it off, many dealers will offer to pay off the loan balance.  However, what they’re really doing is adding your existing balance to the balance due on your new car. So, you’ll still be paying for a car you’re no longer driving!

4. Be wary of dealer add-ons.

Dealers often try to persuade you to buy a number of add-ons, things like tire protection plans, paint protection plans and GAP insurance that covers the difference between how much you still owe on the car and what your insurer will pay if your vehicle is totaled. The markup on these can be exorbitant, so be careful if a dealer is adding GAP to your loan.  At LCU, we offer GAP insurance for only $349. We’ve seen some auto dealers charge up to $800 for GAP.  

5. Avoid six- and seven-year loans.

Yes, these will mean lower monthly payments, but you’ll be paying a lot more in interest. For many, the “sweet spot” is probably a five-year loan. Monthly payments will be manageable, and when paid off, there should still be value in the car.

We hope these tips will help you.  For a variety of options in auto loans near Elmhurst and surrounding neighborhoods, we hope you’ll come see us at Leyden Credit Union.  

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