Are Credit Union Car Loans Worth It?

Buying a car is something that everyone needs to go through at least once. You get to learn a lot when you go through the process. You will definitely make a few mistakes, but ultimately you will come out with a new car when you finish.

After you go through it at least once, then you know how to do it for the rest of your life. Your negotiation skills will improve, and the experience will turn into knowledge. As soon as you set your eyes on a pretty ride, it’s time to figure out how you’re going to pay for it.

This is the turning point in the entire deal. Is it going to be cash, or will you schedule your payments in the future? Both scenarios are valid, and we’re going to cover the pros and the cons.

The pros and cons

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If you have the money at your disposal, then it’s always better to get a car with cash. This is a great option if you want to pay zero interest in the future. On the other hand, you should know that a car isn’t a true asset. That means that it starts to lose value as soon as you drive it off the dealership.

You can only spend money on the car. This includes gas, changing parts, regular services, and washing it. It’s completely different than investing your money in the market. However, you need something to drive. This is why it never makes sense to go way over your budget and then try to make ends meet.

Don’t sacrifice five years’ worth of beautiful dinners just to get a high end and luxurious ride. Plus, paying with cash means that you can sell it anytime you want if you get bored of it. If you get a loan, that won’t be an easy option because you’re going to have to go through different procedures with the company that sold it.

Now, when you don’t have the money upfront, you can always get a loan. This means that you will have monthly payments for a few years until you pay everything. If you don’t want something brand new, then you can always get a used car for a much lower price.

When you pay with cash, a huge sum of money goes away from your household. This means that you can’t use it for anything else. On the other hand, when you take out a loan, you can manage your finances better. This means that you won’t feel such a strain on your pocket. A small amount of money going away from your bank account will not make a difference in your daily life.

When does it make sense to get a loan?

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There are two main things that you have to take into consideration before taking a credit union car loan, such as one from for a new vehicle. The first one is that you have a fund that can cover about half a year’s worth of payments. And the second one is to get the lowest interest rate possible.

If you can get an interest rate that’s lower than 2 percent, take the deal. The emergency fund you have will serve to cover the costs in case something unexpected happens. No one knows what the future holds. There may be financial setbacks, health issues, or some other expenses that you’ll have to cover.

That’s why having a fund that can last you half a year is an absolute necessity. Don’t put the money you don’t have into things that aren’t going to last for a long time. Most Americans use their cars for five years before they sell them. That’s not a long-term investment.

What if you can’t get the car you want?


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If both of the options above can’t pay for the car you have in mind, then you have two choices. The first one is to find a car that’s in your budget category. The second thing you can do is save some money for a few months and then come to the dealership again.

Think of buying a car as buying a smartphone. There’s a new version every year. Get something that you can use for a long time, and be careful with your finances.

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