What is the best way to finance a new vehicle? Local credit unions are promoting car loans — is this a wise choice?
1. Loan from a bank
2. Loan from a credit union
3. Financing from the manufacturer via the dealership (e.g. Toyota, Volvo, etc.)
So how do you evaluate what option maybe best for you? The answer is less complicated than you think.
First, research the interest rates available. For most consumers, you best option is going to be financing through the manufacturer via dealership. In many cases, there is no cost to finance as 0% financing is available – that is free money and in some cases, these loans extend for up to 5 or 6 years. Banks and other lending institutions are for-profit money lending institutions – so they can’t afford to 0% car loans or they’d make no money.
Second, consider the ease of financing. Again, financing from the manufacturer via the dealership is the most convenient alternative. While you are choosing your vehicle, you can also complete the application for financing and ready to drive off the lot in your new vehicle!
Credit unions are actively trying to secure car loans in order to compete with 0%-1.9% financing being offered by manufacturers including Toyota and Volvo, so they are offering cash back with a loan. Keep in mind that in addition to Toyota offering loans including 0% for a Camry, 4Runner, Venza or Prius and 1.9% for a Corolla or Avalon, there are also cash-back offers available. Toyota is offering $1000 cash back on a Camry or Highlander; $750 cash back on a Sienna; or $500 cash back on a RAV4. This is a great time to buy a vehicle with these low or 0% interest rates!
With Volvo offering 0.9% for five years on most vehicles, the reality is banks and credit unions have to be as aggressive as they can be, but they can’t compete with the low financing being offered by the manufacturers at this time. I encourage you to first evaluate what rate you qualify for at the dealership.
Keep in mind that dealerships also offer special terms for new grads, veterans and those in active military service. Certified pre-owned are also backed by Toyota and Volvo. Like new vehicles, you can choose terms from 2-6 years, however, interest rates do vary for pre-owned.
You can pay off the loans in advance without any penalty. By the way, when you’re meeting with our Business Manager, you’ll learn about the warranties included with your purchase. Certified pre-owned vehicles are warrantied for 100K miles. We make it so easy for you to be instantly approved for a loan from 0-1.9% on most new vehicles, so why would you want to go anywhere else? Get informed. Stay informed. We at Jaffarian Volvo Toyota Scion are happy to help protect your wallet and assist you in all your vehicle-related decisions, including financing.