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How to Finance Your Next Vehicle

By: American Heritage07.11.19

We all need reliable, affordable transportation. For many of us, an auto loan is essential when it’s time to buy our next new or used vehicle. The type of financing you choose and the lender you turn to for your loan is a bigger deal than you might think.

Over your lifetime, you’ll probably own many different vehicles. You will likely spend more money on these vehicles and related expenses than you’ll spend on your home. In fact, an AAA study suggests you’ll spend between $6,000 and $9,000 per year on fuel, maintenance, repairs, insurance, fees, depreciation, and interest. That’s a lot of money.

It’s best to save where you can, starting with your financing. By getting a low-cost loan, you’ll save hundreds – if not thousands – of dollars over time.



Auto loans vary based on a several factors: whether you’re buying new or used, your credit score, the size of your down payment, and the term you select. But they all work in basically the same way. A financial institution lends you money to buy your car. You repay the loan’s principal and interest in monthly installments, and at the end of the loan’s term (typically two to seven years), you own the car, free and clear.

Because your vehicle serves as the collateral for the loan, lenders typically offer a more affordable rate than they would for an unsecured loan (which represents a higher risk for them).

Along with insurance and maintenance expenses, the interest you’ll pay on your auto loan is a major factor in the overall cost of your vehicle and should be considered as you plan your purchase. As you research auto loans and lenders’ advertised rates, it may appear that interest expenses won’t add too significantly to your monthly payment. But over time, it adds up.

Let’s say you want to borrow $30,000 for a new car and pay it back over five years (60 months). Lender A offers you its best rate of 3.5% APR, and Lender B offers its best rate of 4.5% APR. Lender B’s monthly loan payment will only be $13 higher. Not a big difference, right?

Over the life of your loan, you’ll end up paying $780 more to Lender B.

That money could be spent on gas or added to your savings. Our online calculator will help you compare financing offers and avoid overpaying.  



Among the best car buying tips is “let the buyer beware.” While most car dealerships are run honestly and professionally, a few may resort to high-pressure sales tactics, a complicated negotiation process, and “dealer add-ons” designed to pad their profits. Even if you’ve explained that that you need a day or two to consider your options, an aggressive salesperson may try to pressure you into signing on the dotted line today.

This is a big purchase for you, so be careful to avoid any rush decisions you might regret.



Fortunately, it’s possible to take more control over the buying and financing process. Here are three ways to reduce the stress associated with – and avoid overpaying for your next automobile:


Get Pre-Approved at Your Local Credit Union

When deciding on an auto loan, you don’t have to finance through your dealership. You can save time and hassle, and potentially enjoy more negotiating power, with an affordable pre-approved loan from your local branch. American Heritage offers free pre-approvals and will help you figure out how much you can spend before you even set foot in the dealership, preparing you to shop confidently and find a car that’s right for your budget.  


Take Advantage of Car Buying Resources

How do you know you’re getting a good deal? What did others pay for the same vehicle? Timesaving online auto buying services are a smart way to find the right vehicle and know that you’re getting the best price. Plus, auto buying services like ours let you avoid the stress of negotiating with a dealer by offering straightforward pricing. While the peace of mind and convenience are great, being able to find a competitive price on your next vehicle means you’ll pay less in loan interest too.


Know the Car’s History

Buying a used car, truck, or SUV is a great way to save, but not knowing how well the previous owner treated this vehicle presents a risk. You don’t want to end up with a lemon, so it’s important to research the car’s history to help you make a more informed decision. Here at American Heritage, members can receive a free CARFAX report (a $40 value) to learn the car’s accident and damage history, service records, ownership details, odometer rollback notifications (which indicate potential fraud), open manufacturer recalls, and more.



No matter where you choose to buy your next vehicle, American Heritage is your one-stop shop for car buying.

Members can access a full range of solutions for car buying and insurance, and we’ll make financing a breeze with our easy application process, friendly, low-pressure service, and some of the best auto loan rates in our area. Even if your credit is less than perfect, we’ll work hard to offer the most affordable financing option for you. 

When it’s time to buy, turn to the local team that’s here to help you get moving. Learn more and get your free pre-approval today.



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