February 19, 2025

Auto Buying Decisions

With the Federal Government returning back to the office, many people may be thinking about a new car for their commute. The Credit Union is here to answer some common questions that you may have:

  1. What type of car should I buy? (Electric (EV), Hybrid, or Gas) and what is most economical?
  2. How do I find a good deal on a car, and where?
  3. How do I get a lower rate vs. lower payment?
  4. How do I protect my new car?

We have solutions for all your questions and more, so let’s “drive” in.

What type of car should I buy?

Choosing the right type of car depends on your needs, budget, and environmental concerns. Here’s a breakdown of the pros and cons of gasoline-powered, electric, and hybrid cars to help you decide.

Gasoline-Powered Cars

Pros Cons
Lower up-front costs Least environmentally friendly option out of the three
More available models Higher regular maintenance costs
Higher top speeds Fluctuating gas prices
Easier fill-ups than electric cars  
Longer range than electric cars  

Electric Cars

Pros Cons
Lowest environmental impact Lower travel range
Lower day-to-day running costs Inconvenient charging due to few charging stations and how long it takes to charge the car
Quieter and smoother ride Highest initial cost
Lower maintenance costs  
Tax credits available from Federal and state governments to offset initial costs  

Hybrid Cars

Pros Cons
More environmentally friendly than gasoline-powered cars Least environmentally friendly than an electric car
Quieter than a gasoline-powered car Maintenance can be more expensive than the other two options
Longer life span on engine parts than gasoline-powered cars Lower top speeds than gasoline cars
Less “range anxiety” than electric cars  
Tax credits available from Federal and state governments to offset initial costs  

To read more about gas vs. hybrid vs. electric cars, read this article.

How do I find a good deal on a car?

Finding a good deal on a car can be challenging, but with the right tools and knowledge, you can make the process much smoother.

Financing Differences

The Rule of 78 and simple interest are two ways to calculate interest on auto loans. The Rule of 78 (often used by car dealers) means you pay more interest in the early months of the loan. This can be costly if you plan to pay off the loan early. Simple interest, on the other hand, is calculated based on the remaining loan balance, so your interest payments are spread more evenly over time. If you make extra payments or pay off the loan early, you save on interest with simple interest. Overall, simple interest is usually more favorable for borrowers.  This is the method that the Credit Union uses.

Preapprovals

Getting a pre-approved loan is a crucial step in the car-buying process. It allows you to shop with confidence, knowing exactly what you can afford and qualify for. When it comes to financing, opting for a loan from a credit union rather than with a dealer can often result in better rates and terms. Credit unions typically offer lower interest rates and more favorable loan conditions. Here’s how our pre-approval process works:

  1. Submit a vehicle loan application. This application will be reviewed to determine your eligibility for a loan.
  2. Once approved, your pre-approval is good for 30 days. This gives you ample time to shop for your desired vehicle.
  3. Request a pre-approval letter. This letter can be shown to dealerships to demonstrate your financial readiness and secure better deals.

Car Discounts

TrueCar is a car-buying service we partner with to make the buying process stress-free by connecting you with trusted local certified dealers. You can search for top brands and get discounted, upfront pricing. If you love the car, you can lock in your price online, including all available incentives and discounts. Then, choose the right Interior Federal loan for you and apply in minutes. Finally, head to the dealer knowing exactly what you’ll pay, or have the car delivered right to your house, making the process smooth and hassle-free.

Want an even better deal? Open a DSA account for a loyalty reward discount up to 0.25% APR. (Must meet the qualifications to receive any discount) Call our member services team to see what loyalty rewards you may qualify for.

What about rates and payments?

When considering rates and payments for your car loan, it’s important to understand how the loan term affects both.

  • Lower rate: To secure a lower interest rate, apply for a shorter loan term. Shorter terms typically come with lower rates because the lender’s risk is reduced. This means you’ll pay less in interest over the life of the loan, but your monthly payments will be higher.
  • Lower payment: If you prefer lower monthly payments, apply for a longer loan term. While this will reduce your monthly payment amount, it usually comes with a higher interest rate. Over time, you’ll pay more in interest, but the lower monthly payments can make the loan more manageable within your budget.

How to protect your vehicle?

  • GAP: Guaranteed Asset Protection covers the difference between what you owe on your car and its current market value if it’s totaled or stolen.
  • MRC: Mechanical Repair Coverage helps cover the cost of repairs after your manufacturer’s warranty expires.
  • Debt Protection: Debt Protection protects your loan payments in case of death, disability, or involuntary unemployment.
  • Vehicle Insurance through TruStage: Check out a quote from the credit union to see how much money you could save!

Related Content: New & Used Auto Loans

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