Credit union car loan calculator

Why credit union auto loans are often cheaper

Credit unions are member-owned and not-for-profit, so they often pass savings on as lower auto loan rates and fewer fees than banks or dealer financing. The gap is frequently half a point to two points, which on a $25,000 five-year loan is hundreds of dollars. You need to be a member, but membership requirements are often easy to meet through where you live, work or a small donation.

Use the rate field to compare a credit union quote with a dealer’s rate on the same car: change only the rate and compare the total interest.

Use a pre-approval as leverage

A pre-approval from a credit union gives you a firm rate before you talk to a dealer. If the dealer’s financing arm can beat it, you benefit; if not, you have a loan ready. Compare the APR, the term and any fees, not just the monthly payment.

$27,180 financed: payment by loan length

At 6.2% APR, financing $27,180 (the $28,000 price plus 6% sales tax and $500 in fees minus $3,000 down) costs $528.00 a month over 60 months and $399.67 over 84 months. The longer loan lowers the payment by $128.33 but adds $1,893 in interest. Going the other way, 36 months raises the payment to $829.33 and cuts total interest to $2,676.

How the interest rate changes a 5-year loan

On the same $27,180 over 5 years, each full percentage point of APR moves the payment by about $12.76 and total interest by about $766. Rates depend on your credit score, the loan term and whether the car is new or used, so get a pre-approval from a bank or credit union before you walk into a dealership.

What a bigger down payment does

A down payment reduces what you finance, which cuts both the payment and the interest, and it protects you from owing more than the car is worth early in the loan, when new cars depreciate fastest. Here is the same $28,000 car at 6.2% over 5 years with different down payments.

Paying extra

Adding $100 a month to this loan would pay it off 10 months sooner and save $835 in interest, as long as your lender applies extra money to principal and charges no prepayment penalty. Ask before you start.

Can you afford a $28,000 car?

A common rule of thumb, the 20/4/10 guideline, suggests 20% down, a term of at most 4 years and total car costs under 10% of gross income. On payment alone, $528.00 a month points to a gross income of roughly $63,400 a year to stay at 10%, before insurance, fuel and maintenance. This loan departs from the guideline because the down payment is 11% rather than 20% and the term of 60 months is longer than 48, so the payment is lower than a stricter plan would give but the loan costs more overall.

Will you owe more than the car is worth?

New cars commonly lose around 20% of their value in the first year and roughly 15% a year after that, though this varies by model. Using that rough rule on a $28,000 car, the car stays worth more than the loan from the end of the first year. Gap insurance can cover the difference if the car is totaled while you are underwater.