A Closer Look at Auto Loans

Few people have enough money to pay cash for a car. Instead, they choose to get auto loans. Auto loans are specially designed by lenders to finance the purchase of a vehicle. At GCS Credit Union , we offer competitive rates on auto loans and work with several O’Fallon-area car dealerships on financing deals. Before you take out an auto loan, it helps to understand how these loans work. Here is what you need to know: 

Man buying a car for his wife

Why Choose an Auto Loan?
Why can’t you just get a personal loan to buy a car? You can, but it isn’t in your best interest. Auto loans are designed to be used for car purchases and have terms and interest rates that are set up accordingly. By choosing another loan option, you may end up paying for your car longer than you actually own it, and increased interest rates can make the car cost more.

How Are Auto Loan Rates Determined?
When you apply for an auto loan, one of the biggest factors is your credit score . If your credit score is on the low end, your interest rate on the loan will be higher. Some lenders also charge higher interest rates on loans for used cars. The term of your loan, or how long you plan to spread out your payments, also factors into your interest rate. The longer the repayment period, the higher the rate will be.

Why Get an Auto Loan at a Credit Union?
Although you can apply for auto financing through a dealership, there are many advantages to getting your auto loan through a credit union. At your credit union, you won’t have the pressure of a dealership salesperson trying to upsell you on features. Your credit union can also help you decide if you’re getting a fair price for the car. Last but not least, credit union auto loans are simple-interest loans, unlike dealer loans, which front-load interest. Simple-interest loans are easier to pay off early.

Before you go car shopping, get pre-qualified for an auto loan at GCS Credit Union in O’Fallon. Apply online or call (618) 797-7993 to learn about our rates. 

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