Tips to Financing During COVID
by Stephanie Hart
Finding the car of your dreams can make your heart skip a beat. But, then you have to come back to earth and figure out how to pay for it! And like everything else, the pandemic has had an effect on new and used car financing. So our Stephanie Hart looked at how you can maximize your funds and still drive off in your dream come true.
STEPHANIE HART: Before stepping onto a car lot like this one, you’ll want to prepare yourself financially before applying for an auto loan.
Afterall, pandemic or not, this is still the second largest purchase you’re going to make behind a home.
First: find out your credit score. The higher it is the more you’ll save on auto-financing. If it’s low, take steps to raise it.
Second: set a budget. Figure out how much you can afford to spend on a vehicle.
Third: save money for a down payment. The higher the down payment, the less you have to finance and the less you’ll pay in interest over the life of the loan.
Lastly, research vehicles and deals online. See what’s out there and compare. Education equals savings!
The process can be overwhelming, but take a deep breath, keep an open mind and take comfort in knowing… it’s a great time to be shopping for car financing!
Financial institutions are eager to lend money because of the pandemic’s effect on the economy.
Plus, as a result of COVID-19, it’s more popular than ever to check out dealership websites or make phone calls to inquire about financing.
What you will learn, may have you jumping up and down! We talked to Jones Junction, a multi-franchise new and used car dealer in Bel Air, Maryland.
DARLINGTON NWABA: Usually you obtain either low interest rates or incentives, but during the pandemic the manufacturers have been giving customers both.
STEPHANIE HART: A double dose of deals! Bring it on!
We checked and many manufacturers are advertising 0% interest for 60 months.
Your options essentially are, financing through a dealership or a bank and really there’s no right or wrong answer.
As a comparison, contact banks or credit unions and see what kind of rates they’re offering. That way you know what you can afford.
And take it a step further, get pre-approved for an auto loan through a bank before even contacting a dealership. This tactic helps you secure the best APR possible.
These days the pandemic has prompted more people to apply for auto loans online.
At Baltimore's MECU credit union, the statistics tell the story.
ADRIAN JOHNSON: In 2020, 68% of our members were applying online so that has jumped tremendously. In 2019, just as a comparison, 48% so you can see the jump.
STEPHANIE HART: In general, you can usually get a lower interest rate on a new car through a dealership than on a used car.
Keep in mind, those incredible incentives are typically reserved for consumers with excellent credit scores.
ADRIAN JOHNSON: We’re talking about credit scores that are 780 plus. In the state of Maryland, we’re talking about credit scores, on average, FICO scores, being 712. There are a lot of folks out there that just don’t qualify- a lot of consumers.
STEPHANIE HART: If your credit score is not so good, and you don’t have a pre-approved loan from a credit union or bank, not to worry.
In most cases, the dealership can help.
DARLINGTON NWABA: We deal with multiple credit unions in the area and we can help you find the best one that suits the financing needs of our customers.
STEPHANIE HART: In the end, whether you choose to finance through a dealership or a bank, don’t rush into anything. The incredible deals are here to stay while the country recovers from the economic loss of the pandemic.