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How Should I Finance My New Car?

Learn more about auto financing terms and tips to better prepare you for your journey with financing a new vehicle

How To Finance Your New Car

Buying a new car is one of the biggest purchases you’ll make. After researching, test driving and finding the car of your dreams, you are finally ready to bring it home!

While a new set of wheels can be exciting, remember that a car purchase also involves a financial commitment. It’s important to know just how much you’ll be paying and what you can do to influence those payments.

There are various ways to find auto finance options that are right for you. Learn more about different finance options, compare loan offers and tips to afford your new car.

Obtain Financing Before You Shop

Do your research and compare your financing options to ensure you receive the most favorable loan terms and pay less for your car over time. Important car loan terms you should understand includes:

  • Annual Percentage Rate (APR) - The annual percentage rate, also known as APR, refers to the loan’s interest rate as a yearly metric. You can use the APR percentage to calculate how much it costs to borrow money over time and serves as a great starting point for how much you will pay to take out a loan.
  • Loan Term - The amount of time you have to repay the loan in full is referred to as the loan term. Keep in mind that a shorter loan term will make your monthly car payments higher, but fewer payments will need to be made.

Get financing from a credit union instead of waiting for the dealership! With low interest rates and flexible payback options, credit unions make applying for an auto loan easy. Financing tools such as an auto loan calculator can help determine the right length of loan term that fits your needs and budget.

Compare Loans

To obtain various financing offers visit car dealers, credit unions or banks, and online lenders. You can then compare your loan offers and use them as leverage to obtain the best deal! Here's some information about each source of lending:

  • Car Dealerships - Car dealership financing departments specialize in providing car loans from multiple lenders. With this option, you can enjoy the convenience of purchasing and financing your new car in one location. You may also take advantage of dealer financing low introductory interest rates, generous trade-in values, and other incentives. However, you will probably need excellent credit to qualify for the low interest rates.
  • Online Lenders - Complete car loan applications online if your credit is not great. Based on your credit history and score, online lenders can provide you with an interest rate and a maximum loan amount they will lend you. Use this information to compare car loans from other sources and ensure you select the right loan for your needs.
  • Credit Unions or Banks - Visit local credit unions and banks to inquire about a new car loan. You may qualify for a low-interest car loan if you already hold accounts or otherwise do business at the credit union or bank. As an extra incentive, credit unions, like Listerhill, offer personalized service, feature user-friendly loan applications, and support the local community.

At Listerhill Credit Union, we are here to help you find an auto loan that works best for you, without the hassle. Skip the application fee and borrow up to 100% of the vehicle’s cost. Pay at a pace that is best for you with our payment terms up to 75 months.

Apply For An Auto Loan With Listerhill Credit Union

Maximize Your Existing Vehicle

Turn your existing car into cash when you sell it privately or trade it in at the dealership. Use the cash from this sale to cover a portion of your new car’s cost. If you wish to trade in your existing car, first check Edmunds or Kelley Blue Book to see how much your vehicle is worth.

Take that estimate and any maintenance or upgrade records you have for your car to the dealer. This information could increase your vehicle's trade-in value and reduce the total cost of your car loan.

Increase Your Down Payment

Most car dealers require buyers to put some money down before they complete financing paperwork. Try to pay at least 20% of the car’s price as a down payment. You’ll owe a lower monthly payment and save interest when you increase your down payment amount.

Choose The Right Repayment Term

Car loans typically take three to seven years to repay. Choose a short term, if possible, to reduce your overall costs and avoid owing more money than your car is worth. Although your monthly payments will be higher on a short-term loan, calculate the costs for a variety of term lengths and number of months. You can then select the option with affordable monthly payments and an acceptable total cost.

Calculate The Extras

In addition to the cost of your new car, you’ll owe a variety of extra fees and costs. Ask the dealer to verify the exact amount of common fees such as:

  • Sales tax
  • Vehicle registration
  • Document fees
  • Extended warranty costs
  • Aftermarket optional accessories

You could save money by negotiating these fees. Also pay cash for these extra costs rather than financing them - this step allows you to save money and still obtain reliable transportation.

Consider Gap Insurance

In the event of a car accident, GAP (Guaranteed Auto Protection) insurance will pay the difference between your new car’s value and the loan amount. This insurance product can give you peace of mind, especially if you owe more than the car’s worth.

Before you select or finance gap insurance, review the loan’s terms. If you put enough money down and only finance your car for three years, there is a chance you will not owe more than your car is worth, making GAP insurance unnecessary.

Read The Contract Carefully

The dealer will give you dozens of papers to sign. This paperwork contains details about the loan terms, vehicle condition, and your repayment contract. Take your time and review each page carefully. Don't be afraid to ask questions if you don’t understand terms or other details before you sign!

Finance Your New Car With Listerhill Credit Union

A new car provides reliable transportation, and it can be a wise financial investment if you finance it the right way. Follow these tips as you save money and afford your new ride!

To get started today, contact Listerhill Credit Union to drive away knowing you made the best financial decision.

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Frequently Asked Questions

  • How can I access my Listerhill accounts without a nearby branch?

    If you live in Alabama or in south central Tennessee but don't have a Listerhill branch location nearby, there are still plenty of ways to access your accounts. You can use our online banking, mobile banking app, and cards app to access your accounts from your devices. You can also take advantage of our CO-OP Shared Branches for easy access to your money wherever you are. If you need to get in touch, we're always one call away.

  • Can I open a Listerhill account online?

    You can open your Listerhill account from the comfort of your home with our easy online application. Or, if you want to apply for a mortgage, you can learn more about our offerings and start your application here.

  • Am I eligible for membership at Listerhill?

    If you live, work, attend school, or own property anywhere in Alabama or Maury County, TN, you're in luck! You're eligible to become a Listerhill member.

  • The Great Giveback Official Rules

    1. Eligibility: No purchase or obligation necessary to participate and win. All participants must be 19 years of age or older at time of contest participation. Employees of Listerhill Credit Union are not eligible to register for the contest.

    2. How To Enter the Contest: All Listerhill members who have consumer loans in good standing, (subject to limitations below) are automatically entered. Anyone who takes out a new loan with Listerhill Credit Union, or refinances a loan from another lender with Listerhill Credit Union (subject to limitations below) will automatically be entered to win. Limit of one entry per loan.

    NO PURCHASE NECESSARY: To enter the contest without a loan, send a self-addressed, stamped envelope to: Listerhill Credit Union, P.O. Box 566, Sheffield, AL 35660, Attn: Great Giveback Contest Entry. Limit one entry per person. Written entries must be received no later than July 3, 2021.

    Listerhill Credit Union will not be responsible for incomplete, lost, late, misdirected or illegible entries or for failure to receive entries. All entries become property of Listerhill Credit Union and none will be returned. Any questions regarding the number of entries submitted shall be determined by Listerhill Credit Union in its sole discretion, and Listerhill Credit Union reserves the right to disqualify any entries by persons determined to be tampering with, violating, or abusing any aspect of the contest.

    3. Contest Entry Requirements: In the event the Credit Union, in its sole discretion, determines that any Entry contains content that does not comply with these Official Rules or does not otherwise comply with regulatory guidelines, Credit Union reserves the right to disqualify the entry.

    4. Determining the Winner: A Credit Union employee will select at random four (4) $500 winners (one per day July 12-15) and one Grand Prize Winner from all entries received on July 16, 2021. You do not have to be present to win.

    5. Prizes: $500 Cash Prize: the Credit Union will award four (4) members with $500 cash each. Grand Prize: The Credit Union will pay up to $25,000 toward your loan with Listerhill Credit Union, or combination of loans. No loan payments will be made to loans with any other lender. No cash equivalent provided, and the total prize amount may be less depending on the outstanding amount of loan balance(s) with Listerhill Credit Union. In no event will the prize awarded exceed the total amount of the winner’s outstanding balance of qualifying loans with Listerhill Credit Union. Federal, state and local taxes are the sole responsibility of the winner. IRS regulations require the Credit Union file a 1099 on behalf of the winner.

    A Credit Union employee will call the prize winners and the prize winners will be called up to five times during regular business hours at number provided on entry form and will leave no messages. Failure to reach winner during these calls may result in disqualification of winner, forfeiture of his or her interest in all prizes, and selection of a substitute winner drawn from the drum. Winner will be required to schedule a time, at least 48 hours in advance, to visit Listerhill Credit Union, located at 4790 2nd Street, Muscle Shoals AL, 35661 in person, during regular business hours within seven (7) days of being notified to claim prizes by providing proof of eligibility for prize won and completing and signing an affidavit of eligibility and a liability and publicity release. Failure of any Winner to timely contact the Credit Union, visit the above Credit Union office in person and sign and return any required affidavit and release, or to claim a prize or comply with any term or condition of these Official Rules, will result in drawing Winner's disqualification and the forfeiture of his or her interest in the prize. Winners may waive their right to receive prizes. Prizes are non-assignable and nontransferable. No substitutions allowed by winner.

    6. To be eligible to win, all loans must be in good standing (not more than 30 days past due at the time of drawing. Eligible loans are limited to auto loans (no indirect dealer loans), personal loans (no loans secured by real property, such as mortgages, 2nd mortgages, and Home Equity Lines of Credit) and recreation loans made to consumer borrowers (not business or commercial loans).

    6. Participation. By participating, entrants agree to be bound by these Official Rules and the decisions of the Contest. Except where prohibited, acceptance of any prize constitutes winner's consent to the publication of his or her name, biographical information and likeness in any media for any commercial or promotional purpose, without limitation the Internet, or further compensation. Prizes not won and claimed by eligible winners in accordance with these Official Rules will not be awarded and will remain the property of the Credit Union.

  • How do I redeem my Merchandise Rewards?

    The easiest way to redeem your Merchandise Rewards is to log into Listerhill’s Online Banking and click the “Get Info” link to the right of your credit card information. This will take you to our credit card servicing site within the same window. Select “Rewards” on the upper right side within the screen (below FICO Score) and on the next screen, click on the CURewards logo. This will automatically sign you in to be able to redeem your Merchandise Rewards points!