Auto Buying Guide - Los Angeles Police Federal Credit Union

Auto Buying Guide
Your source for
auto buying know-how >>
Find the right car or
truck—new or used
Budget for your monthly
auto loan payment
Prepare for your auto
purchase and negotiate
your best deal
Insure your vehicle,
quickly and easily
Welcome
Auto Buying Guide*
Budget Worksheet
Vehicle Worksheet
New Car vs. Used Car
Auto Loans 101
Auto Loan Pre-Approval
Buying Versus Leasing
Zero Percent Financing
Trading In
LAPFCU Resources
Contact LAPFCU
Welcome
Ladies and gentlemen, start your engines…
RIGHT AFTER YOU READ THIS AUTO
BUYING GUIDE!
Congratulations on your search for a vehicle. Whether you’re
getting a basic set of wheels for the daily commute or a dream
machine with all the options, having the right car is an important
part of your life. Having the right plan to purchase your next
vehicle is important too.
That’s where Los Angeles Police Federal Credit Union (LAPFCU)
comes in. We’re your source of auto buying know-how. We’ve
created this auto buying guide to help you:
•Find
the right car or truck—new or used
•Budget
for your monthly auto loan payment
•Prepare
•Insure
for your auto purchase—negotiate the best deal
your vehicle, quickly and easily
LAPFCU will put you on the road in the right car with the right
financing. Enjoy the ride!
2
Welcome
Auto Buying Guide*
Budget Worksheet
Vehicle Worksheet
New Car vs. Used Car
Auto Loans 101
Auto Loan Pre-Approval
Buying Versus Leasing
Zero Percent Financing
Trading In
LAPFCU Resources
Contact LAPFCU
Budget Worksheet
Next to housing, your vehicle may represent your largest monthly expense.
LAPFCU recommends that your monthly car payment not exceed 20% of your
monthly income after taxes and other expenses have been paid. Use the following budget worksheet to determine your target monthly payment.
The first part of the worksheet lets you tally your monthly items to show what
you have available after taxes and expenses. The second part is where you
calculate the 20% figure based on your remaining monthly income. Calculate monthly post-tax income in the first section. Add applicable expenses
in the second section and subtract the subtotal from post-taxes income. The
remainder will be an estimate of the amount of money you have available for a
monthly auto loan payment.
Monthly Income:
Monthly Income After Taxes $
Monthly Expenses:
Housing (Mortgage or Rent) $
Utilities $
Food $
Transportation $
(Gas, Parking Fees, Etc.)
Insurance (Home, Auto, Life) $
Clothing $
Entertainment $
Education $
Credit Card Payments $
Other Creditor Payments $
Other Vehicle Payments $
Child/Spousal Support $
Miscellaneous $
Amount available for your auto payment $
Multiply your post-tax and expenses monthly income by 0.20 to determine the 20%
figure that would be the recommended maximum monthly auto loan payment. $
post-tax
and expense
monthly
income
x
0.20
= $
recommended
maximum monthly
auto loan payment.
3
Welcome
Auto Buying Guide*
Budget Worksheet
Vehicle Worksheet
New Car vs. Used Car
Auto Loans 101
Auto Loan Pre-Approval
Buying Versus Leasing
Zero Percent Financing
Vehicle Worksheet
Use the following worksheet to identify your preferences in make/model and
options. Remember that options will add to the cost of the vehicle. Also note that
many manufacturers create option packages, with certain options commonly
“bundled” with others. It may be easier and more cost-effective to choose an
option package that contains most or all of the extra features you want.
Trading In
Vehicles:
LAPFCU Resources
Make
Contact LAPFCU
Vehicle Choice 1
Vehicle Choice 2
Vehicle Choice 3
Model
Style
Year
Base Price
Options
Yes/No
Notes
Engine (e.g., larger displacement, q Yes
turbo, hybrid, diesel, flex fuel)
q No
Transmission (e.g., automatic, q Yes
increased number of gears)
q No
Suspension (e.g., sport pack- q Yes
age, towing package)
q No
Traction Control
q Yes
q No
AWD (All Wheel Drive)
q Yes
q No
4WD (Four Wheel Drive)
q Yes
q No
Power Accessories q Yes
(e.g., seats, windows)
q No
Wheels and Tires
q Yes
q No
Leather Seating
q Yes
q No
Stereo
q Yes
q No
Navigation System
q Yes
q No
Trim Package
q Yes
q No
Sunroof/Moonroof
q Yes
q No
Trailer Towing Package
q Yes
q No
4
Welcome
Budget Worksheet
Auto Buying Guide*
Vehicle Worksheet
New Car vs. Used Car
Auto Loans 101
Auto Loan Pre-Approval
Buying Versus Leasing
Zero Percent Financing
Trading In
LAPFCU Resources
Contact LAPFCU
New Car Versus Used Car
A major decision when purchasing a vehicle is whether to go new or used.
Like other fundamental choices in your car-buying strategy, it depends on
personal needs and preferences. Points to consider:
Cost:
A used vehicle typically costs less than a new one. Down payments and
monthly payments will be correspondingly lower. A vehicle will also experience
its greatest depreciation during its first three years, potentially giving the
purchaser of a used vehicle better pricing. A used vehicle can also be an
effective strategy for purchasing a more expensive model within your budget.
Incentives:
A new vehicle may come with financial incentives, such as a rebate, that
make its more cost-competitive with used vehicles. Study available incentives
carefully to identify such deals.
Warranty:
Many manufacturers offer lengthy and comprehensive warranties on new
cars. Such warranties may lower or eliminate certain maintenance and repair
expenses, in turn reducing your total cost of vehicle ownership. Also, many
dealers sell extended warranties on new cars. Used cars may come with
warranties too, either a continuation of the original warranty if permissible
under the manufacturer’s agreement or a specific warranty issued by the
dealer. The length of time you plan to own your vehicle and the likelihood
of repairs will help you determine if a new car with its original or extended
warranty will save you money in the long run. It may also be beneficial to
investigate third-party Mechanical Breakdown Insurance for cost savings
versus dealer extended warranties and additional protection against costly
repairs. GAP insurance is another option, and it can protect you from being
upside down in a total loss should the value of what you owe on your vehicle
exceed the vehicle’s value. LAPCUSO Insurance Services, Inc., can help you
determine which coverage is right for you.
Taxes, Fees and Insurance:
Taxes, fees and insurance may be less on a used car due to its lower value
versus a new model. Determine any difference in such expenses between
new and used models when calculating your total cost of ownership.
Features:
In today’s competitive automotive market, manufacturers are upgrading
vehicles frequently to win customers. A new car may have certain features not
available on a comparable model that is only a few years older. Confirm your
“must have” options and find out if they are only available on new models.
5
Welcome
Auto Buying Guide*
Budget Worksheet
Vehicle Worksheet
New Car vs. Used Car
Auto Loans 101
Auto Loan Pre-Approval
Buying Versus Leasing
Zero Percent Financing
Trading In
LAPFCU Resources
Contact LAPFCU
Auto Loans 101
Like other financing programs, such as mortgages and credit cards, auto loans
come in a wide variety with different payment options and terms. Major points
to consider in an auto loan include:
Interest rate: The fee for borrowing money, a stated percentage of the
amount being borrowed. Interest rates can be fixed—a set percentage
for the lifetime of the loan—or adjustable—changing during the loan
within a stated range and under designated conditions.
Term: The length of time for the loan to be paid back. The term can
affect the dollar amount of each monthly payment and the total amount
paid in finance charges by the end of the loan period. Typically, the
longer the term, the less paid monthly. Be sure to see how much will be
paid in total finance charges costs over the course of the loan.
Fees: Any additional charges assigned to the auto financing. These
fees may be factored into the monthly payment, becoming part of the
effective APR (annual percentage rate), the final rate charged on a loan.
Your credit score plays a large role in your eligibility for different loan
programs. A better score generally entitles you to more favorable loan
conditions such as lower interest rates and fees. As part of the application
procedure, your LAPFCU loan consultant will check your credit report and
discuss the results with you. Some tips for maintaining and improving your
credit score:
•Keep
bill payments current
•Keep
debt loads reasonable; don’t run up credit cards to
the limit while making minimum monthly payments
•Don’t
take on additional debt like new credit cards
and charge accounts
•Show
a consistent work history.
Your LAPFCU loan consultant will explain auto loans thoroughly and work hard
to get you the best loan possible.
LAPFCU has some of the lowest interest rates available.
Compare our loans with other programs using our online calculator:
http://www.lapfcu.org
6
Welcome
Budget Worksheet
Auto Buying Guide*
Vehicle Worksheet
New Car vs. Used Car
Auto Loans 101
Auto Loan Pre-Approval
Buying Versus Leasing
Zero Percent Financing
Trading In
LAPFCU Resources
Contact LAPFCU
Auto Loan Pre-Approval:
The First Step in Buying Your Car
Question: “What is the right vehicle for me?”
Answer: “Buy the best car you can afford.”
What is the best car? That’s up to you, based on your transportation needs
and personal tastes.
How much can you afford? That’s where the auto loan experts at LAPFCU
can help. We’ll help determine the loan amount, down payment and monthly
payments that fit your budget. We’ll explain all our available loan programs
and show you the right choices to finance your next car. We’ll pre-approve your
auto loan so that you and the dealer know your purchasing power. Once you’re
pre-approved at LAPFCU, you can focus on the fun part—finding and buying the
best car for you.
7
Auto loan pre-approval is fast at LAPFCU...
Phone: 877-MY-LAPFCU (877-695-2732), press 3.
Web: CUFFS Online Loan Pre-Approval.
Visit www.lapfcu.org
Welcome
Auto Buying Guide*
Budget Worksheet
Vehicle Worksheet
New Car vs. Used Car
Auto Loans 101
Auto Loan Pre-Approval
Buying Versus Leasing
Zero Percent Financing
Trading In
LAPFCU Resources
Contact LAPFCU
Buying Versus Leasing:
Which is Right for You?
Buying versus leasing. These are the two big choices when financing
a car. And you do have choices. Whether you buy or lease depends on
your financial needs and driving habits. Some points to consider…
Costs:
A lease may have lower initial costs than a loan due to the lack of a traditional down
payment (although you should know that LAPFCU provides up to 125% financing,
including tax and license); however, a lease may include other types of upfront fees. A
lease may also have lower monthly payments than a loan, which makes it attractive to
many people. But a lease can bring end-of-term fees for excessive mileage and wearand-tear. There are no such fees when you buy a car. Once you make your final loan
payment, you own the vehicle outright.
Depreciation:
Depreciation is a factor in leasing or buying a car. When you lease a car, you are
essentially renting it for the duration of the lease. The lease holder determines what
the car will be worth at the end of the term (residual value) and calculates your lease
amount and monthly payments based on this depreciation. This is why seemingly
similar cars from different manufacturers can have different lease payments. A car
whose value depreciates by a relatively greater amount during the lease term can incur
higher monthly lease payments.
When you buy a car, it may depreciate to a value that is less than your loan balance, much
like a home that is “underwater.” The type of vehicle, the type of loan, and the size of your
down payment will all affect whether your loan balance will exceed your car’s value.
Equity:
Equity is your ownership stake in the vehicle, the portion of the principal you have paid
down through your down payment and subsequent monthly payments. When you buy a
vehicle, you build up equity and will have 100% equity when you pay off the loan. When
you lease, you have no equity. This can be important if you ever want to use a vehicle
as a trade-in for another.
Taxes and Insurance:
Leasing can have certain tax benefits if you use the vehicle for business. Your tax
professional can advise you on this strategy, including any restrictions on how such a
business vehicle must be used and driven to justify any write-offs. Insurers may charge
different rates for a purchased or leased car, with possible higher rates for leasing.
Check with your insurance professional for specifics.
New Car Rebates and Incentives:
Many new cars come with rebates and incentives from the manufacturer. These “financial
rewards” combined with the right auto loan program can create your most affordable
means to acquire a car. Discuss rebates/incentives with your LAPFCU loan consultant.
Remember, the positive factors you find in either leasing or buying will likely have
tradeoffs. Is the benefit of particular monthly payments for a leased car worth the
mileage restrictions? Is the benefit of equity in a purchased car worth its monthly
payments? Only you can answer these questions.
Your LAPFCU loan consultant can help you decide between buying or leasing. We even have
the POLEASE program which combines the best features of both in one financing solution.
8
Welcome
Budget Worksheet
Auto Buying Guide*
Vehicle Worksheet
New Car vs. Used Car
Auto Loans 101
Auto Loan Pre-Approval
Buying Versus Leasing
Zero Percent Financing
Trading In
LAPFCU Resources
Contact LAPFCU
Zero Percent Financing—
Too Good to Be True?
In recent years, zero percent financing has become a common promotion in
the auto industry. At first glance, it looks good—monthly payments that only
go toward the cost of the car, all principal, no interest. Like many things that
sound appealing, zero percent financing may have some “catches:”
Vehicle Price:
The ability to negotiate the final price of the vehicle may be limited if you opt
for zero percent financing. A lower negotiated price financed with an interestbearing loan may save you money in the long run.
Vehicle Availability:
Zero percent financing may not be available on the vehicle you want, or only
available on particular models. Choosing another type of loan may give you the
freedom to choose the exact vehicle you want.
Loan Time Period:
The “zero percent” payment phase may only be for a limited time during your
total loan time period. In other scenarios, zero percent financing may only be
available for a relatively short loan term, potentially increasing your monthly
payment amounts.
Additional Charges:
Zero percent financing may only be available with additional charges at the
beginning or end of the loan. If such charges are part of the financing, calculate
if you are truly saving money versus other types of loans.
Special Offers:
By choosing zero percent financing, you may exclude yourself from special
offers and rebates that come with other loan programs. Check if other loans
with such offers will save you money versus a zero percent financing deal.
Buyer Eligibility:
Some buyers may not qualify for zero percent financing or may have to pay
additional fees to be approved. Zero percent financing can be tricky. Speak
with an LAPFCU Loan Consultant before you choose this option.
Use our online calculator to compare 0% financing with LAPFCU
loan programs that incorporate dealer rebates and incentives.
Let the real numbers do the talking.
Visit: http://www.lapfcu.org
9
Welcome
Budget Worksheet
Auto Buying Guide*
Vehicle Worksheet
New Car vs. Used Car
Auto Loans 101
Auto Loan Pre-Approval
Buying Versus Leasing
Zero Percent Financing
Trading In
LAPFCU Resources
Contact LAPFCU
Trading in Your Existing Vehicle
Trading in your existing vehicle can give you a “head start” in the purchase of
your new vehicle, providing part or all of the down payment. The value of your
existing vehicle is largely based on industry guidelines for a vehicle’s make,
model and age. Mileage, options/features and condition also affect value.
Kelley Blue Book® is the premier source of auto pricing information. You can
access Kelley Blue Book online at www.lapfcu.org through LAPFCU’s Vehicle
Loans page (see “LAPFCU Resources” in this guide for more information).
The actual amount you receive for your trade-in is up to the dealer. This figure
can be negotiated like other aspects of a vehicle transaction. The dealer must
be able to realize a profit on your trade-in upon resale. If the dealer has a large
number of cars similar to your existing vehicle already on the lot, it could lower
the amount he/she is willing to offer on the trade-in. Your LAPFCU loan consultant can discuss the trade-in of your existing vehicle
and provide an estimate of its value.
10
Welcome
Auto Buying Guide*
Budget Worksheet
Vehicle Worksheet
New Car vs. Used Car
Auto Loans 101
Auto Loan Pre-Approval
Buying Versus Leasing
Zero Percent Financing
Trading In
LAPFCU Resources
Contact LAPFCU
LAPFCU Resources:
Auto Research
Eliminating Negotiation Hassles
Buying Your Vehicle
Trading in Your Existing Vehicle
Auto Insurance
Special Benefits for
LAPFCU Members
Buying a vehicle is a big decision which requires
preparation and careful attention. Narrowing your
choices depends on personal preferences and
practical considerations:
•What
impact will gas and insurance
costs have on your decision?
•How
many miles will you drive in a
typical week?
•How
many people will you have to
transport?
•How
much cargo space will you need
on a regular basis?
•Will
you have special requirements
like towing?
Once you have answered the above, finding,
buying and insuring the right vehicle becomes the
priority. Fortunately, LAPFCU has online resources
for completing your vehicle purchase, all available
within our website’s “Vehicle Loans” section.
Low Monthly Payment
Guarantee
If you get caught up in
the car-buying frenzy and
obtain a loan through
the dealership, call us
immediately. LAPFCU has
a low monthly payment
guarantee. We’ll beat the
payment on the dealer’s
loan program, or we’ll give
you $100.
Go to www.lapfcu.org to find:
Autoland™: A free membership concierge buying service which allows you to
purchase a new vehicle, conveniently and hassle-free. Autoland lets you work with
a local dealership or designated consultant to avoid unpleasant negotiations and
sales games. Your vehicle can be delivered to your home or any LAPFCU branch.
CUDL® (Credit Union Direct Lending): A program that extends your LAPFCU
purchasing power to a statewide network of participating dealers. Tell the dealer
you want to “CUDL,” and you’ll get a loan at LAPFCU rates. CUDL loans are
processed quickly no matter where you are in the state, with no need to contact
LAPFCU or pick up a loan check. CUDL’s Autosmart website also lets you view
new and used vehicles, locate vehicles and participate in online auctions.
11
Welcome
Auto Buying Guide*
Budget Worksheet
Vehicle Worksheet
New Car vs. Used Car
Auto Loans 101
Auto Loan Pre-Approval
Buying Versus Leasing
Zero Percent Financing
Trading In
LAPFCU Resources
Contact LAPFCU
LAPFCU Resources (cont.):
Enterprise® Car Sales: Offering a large selection of used vehicles, all with “no
haggle” pricing.
Kelley Blue Book®: The online home of the auto industry’s leading source for
pricing information on new and used vehicles. Kelley Blue Book is a valuable
reference to help you estimate the value of your trade-in and determine the
best deal on your next vehicle.
Autoland Advocar: An online marketplace where you can sell or trade-in your
existing vehicle.
LAPFCU Auto Loan Services: From the “Vehicle Loans” page, you can apply
for an auto loan and get pre-approved.
Insurance: Don’t forget the final “accessory” on your new vehicle: insurance!
We present insurance services through LAPCUSO Insurance. Call Los Angeles
Police Credit Union Service Organization (LAPCUSO, Inc.) at 877-MY-LAPFCU
(877-695-2732), press 7 to obtain your complimentary quote.
Our partnering insurance agency, Bichlmeier Insurance Services, is a local,
family-owned business headed by Jerry Bichlmeier, a 25-year veteran of LAPD.
Bichlmeier Insurance Services offers:
•Auto
Insurance
•GAP
Insurance (covering the difference between what
your vehicle is worth and what you still owe on the loan)
•MBI
(Mechanical Breakdown Insurance)
12
Welcome
Auto Buying Guide*
Budget Worksheet
Vehicle Worksheet
New Car vs. Used Car
Auto Loans 101
Auto Loan Pre-Approval
Buying Versus Leasing
Zero Percent Financing
Trading In
LAPFCU Resources
Contact LAPFCU
Contact LAPFCU Today
Buying a car should be simple. Owning a car should be enjoyable.
LAPFCU is here to make both a reality. Keep this guide handy as
your reference on auto loans. Visit “Vehicle Loans” on our website
frequently for information on finding and buying the right vehicle.
Contact us today, by phone or online.
Now...ladies and gentlemen…start your engines!
Auto Loans
877-MY-LAPFCU
(877-695-2732), press 3
[email protected]
Datatrac Great Rate Awards certify that the interest rate on a financial institution’s deposit or lending product
has outperformed their local market average during a quarterly or annual period. Datatrac monitors deposit
and lending= rates for over 90,000 financial institutions nationwide. www.datatrac.net.
*
The information contained in this booklet is designed to serve as general car buying information and is for
example purposes only. Please speak with an LAPFCU Loan Consultant for additional details regarding your
specific car buying and auto loan situation. All information is subject to change at any time without notice and
restrictions may apply. Ask for complete details.
13
Auto Buying Guide
Academy Branch
Los Angeles Police Academy
1880 N. Academy Drive
Los Angeles, CA 90012
8 am - 5 pm, M - F
877.695.2732
Manchester Branch
Ahmanson Recruit Training Center
5651 W. Manchester Ave.
Los Angeles, CA 90045
8 am - 5 pm, M - F
877.695.2732
Jesse Brewer Branch
3650 Martin Luther King Jr.
Blvd. Suite #185
Los Angeles, CA 90008
8 am - 5 pm, M - F
877.695.2732
Van Nuys Branch
16150 Sherman Way
PO Box 10188
Van Nuys, CA 91410
8 am - 5 pm, M - F
9 am - 1 pm, Saturday
Closed Sunday
877.695.2732
Communications Department
16150 Sherman Way
PO Box 10188
Van Nuys, CA 91410
Available 24 Hours a Day, 7 Days a Week
877-MY-LAPFCU (877-695-2732)
www.lapfcu.org
Auto Loans
877-MY-LAPFCU
(877-695-2732), press 3
[email protected]