Automobile loans can drive personal economic direction

Buy? Edmunds.com reported the average value of used cars jumped more than 16 percent in July. And in June franchised dealers sold 1.2 million used cars and trucks, up 22 percent from a year earlier. If you plan to purchase a used auto during this time, plan on paying top dollar.

Or refinance? In August 2020, average auto loan rates varied from 4.20 percent to 15.97 percent depending on your credit score and whether the loan was for a new or used vehicle, according to U.S. News & World Report.

What does this mean to you? Are you in a better position than when you first financed your vehicle? Does it make sense to consider refinancing your auto loan? We often find credit union members can save thousands of dollars over the life of their auto loans by refinancing from higher interest rates to lower credit union auto loan rates.

Whatever you do, do your homework.

Transportation costs are a major expense, usually the second largest next to a household’s rent or mortgage payment. Prior to shopping for your next vehicle, check with your local credit union or bank to learn more about your financing options.

If you are considering a new or used vehicle, a loan pre-approval before shopping may save money. Some lenders such as the credit union, offer their loans directly through their dealer partners for added convenience.

Lastly, it is important to protect your credit and your investment. Optional payment protection, such as credit life or credit disability insurance may be a wise investment as it would pay your debt in the event of death or pay your payment in the event of disability.

If your vehicle is totaled, Guaranteed Asset Protection (GAP) insurance covers the difference between what you owe and what your vehicle is worth. Extended warranties can be included in your monthly loan payment and can cover repairs for unexpected breakdowns that go beyond the manufacturer’s warranty. These options may be offered at a relatively low cost by your local lender and can provide valuable peace of mind.

We are committed to empowering you with the knowledge necessary to improve your financial life. More information and interactive calculators are available on the credit union’s website to help you learn about various financial options and make smarter financial decisions.

Together, we can make more possible for ourselves and our fellow Kentuckians by sharing financial education tools and resources. Here’s to making smart financial decisions.