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The Ultimate Guide to Understanding Car Loans: Everything You Need to Know

Whether you’re a first-time buyer or looking to refinance, understanding the essentials of car loans is crucial for making informed decisions. In this blog, we’ll dive into the fundamentals of car loan financing, share practical tips for securing the best deal, and provide a step-by-step walkthrough of the application process. Additionally, we’ll feature valuable insights from our Vice President of Dealer Services, offering expert advice to both members and non-members. Join us as we break down the complexities of car loans and empower you with the knowledge needed for a seamless and successful financing experience.


What Should I Know When Purchasing a Car?

Purchasing a car can be an exciting time. However, before you make a large purchase, “it’s important to know as much as possible about the condition of the vehicle,” said Karen Hanbury, VP of Dealer Services at Legacy. This is especially true when purchasing a used car. Hanbury says if you’re purchasing through a dealer, “it’s a good idea to require that they provide a copy of the Carfax or AutoCheck Report.” She goes on to say that in most cases, “dealerships offer these for free.” However, if purchasing from an individual, you can obtain a copy of one of these reports yourself. When purchasing a new car, understand that in many cases the total value of the car is higher than that of a used car. In this case she recommends using an online calculator to figure a payment that you can live with and stick to the budget you decide. She also encourages you to consider your “needs” versus what you “want.”


Karen also recommends a few tips when it comes to financing your vehicle. First, know what your loan rate is and what affects your rate. “Rates are determined by credit score, the year, model, and mileage of the vehicle, the term (number of months financed) and the loan to value.” Next, she addressed the down payment for your car. If you have moderate credit or if the vehicle value is much less than what you are trying to finance, you may have to pay a down payment. Whereas if you have excellent credit, a down payment may not be required.


How can I Secure the “Best Deal”?

When it comes to securing the “best deal” there are many factors to look at. One of the first things Hanbury says to do is consider getting prequalified for a loan. This way “you know the max amount you’re approved to spend, and the dealer is assured of financing agreements.” The lender that pre approves you can also help you determine which term is best for you. The next thing to know is the value of the vehicle you are looking to purchase, no matter if it’s new or used. There are many options to review the value of the vehicle, the most common are Kelley Blue Book, J.D. Power, and Black Book. Another thing she wants buyers to be prepared for is dealerships offering you products that come with additional costs. “They may include extended warranties, protection plans, and/or GAP Insurance” she says. Though these offers may be beneficial, they can affect your total cost and should be budgeted for. If you are getting pre qualified through a lender, you may want to compare the products and prices they can offer you, to what the dealership offers for similar products.


How can I Finance My Vehicle with Legacy?

We want to make the loan application as simple as possible. You can apply online in minutes. Once you’ve finished your application, a loan officer will be in touch with you within 24-48 hours to help finish the process.


What are some Additional Tips for Purchasers?

Here are some additional tips from Legacy’s Dealer Services team:

  • Insurance Quotes: consider getting an insurance quote before deciding on a vehicle. Sedans, coupled with safety ratings, tend to have less expensive premiums.
  • Beware of Scams: do not purchase from an individual without a bill of sale, the original title in hand, and proper identification of the seller.
  • Dealership Reviews: Don’t underestimate the value of working with a dealership that has good reviews. Additionally, dealers may be more willing to negotiate at month-end when they are trying to make sales quotas. The same goes for year-end. Click here to learn more about our Elite Dealer program, or to find a recommended dealership in your area.
  • You’re In Control: Don’t be afraid to walk out if the vehicle pricing is inflated. Any promises of repairs should be in writing.


Purchasing a car is a significant financial decision that requires careful consideration and thorough preparation. By understanding the condition of the vehicle, setting a realistic budget, and shopping for competitive rates; you can make informed choices that align with your financial goals. Securing the best deals involves getting prequalified, knowing the true value of the vehicle, and being aware of additional products and their costs. Financing your vehicle with Legacy Credit Union ensures you receive personalized service, backed by our dedicated Dealer Services team. 

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