Cars & the Coronavirus: What you Need to Know about Buying or Refinancing a Vehicle during COVID-19
We’ve spent months hearing about how the coronavirus has impacted the food and service industry, fitness facilities, and schools. But what about auto? While we were told to stay at home in early 2020, Americans still needed to drive to and from essential businesses. But the COVID-19 pandemic altered the business of cars. That new car smell is now hand sanitizer or disinfectant; dealerships are offering home test drives; and touchless delivery is now a thing of the present. But more importantly, inventory on car lots has started to dwindle. Manufacturing plants can’t churn out vehicles as fast due to closures and furloughs. So what can you do to still find good deals on a new car or refinancing options? Here are some do’s to consider:
- Buy the car. When making a big purchase, our natural instinct is to shop around. But with a lower inventory in the market, we might not be able to do that. If you find a car you love, pull the trigger and buy it. You may lose out on that deal if you shop around too long.
- Have an open mind. We tend to make checklists of everything we want when making a big purchase. You know you want this brand, with this all wheel drive, with this interior package—the list goes on. But during this period of COVID-19, flexibility is key. Low inventory is making it difficult to check all the boxes. If you’re in the market for a new SUV, consider different brands with similar features. Dealerships are offering a plethora of deals that include deferred payment options and longer contract agreements. Keeping an open mind can get you a better car in the long run.
- Expand your search. If you know what you want and you don’t need to test drive, call multiple dealerships from near and far and have your car shipped to you! Research to see what deals dealerships are offering. An auto mall from across the state could be offering the best financing option!
Not in the market for a new vehicle but looking to refinance instead? It might be the right choice for you if your credit score has changed or if you qualify for a better interest rate. And right now, rates are low due to COVID-19. Refinancing can be a great benefit if it’s done correctly:
- Do shop for interest rates. Chances are that interest rates have changed since purchasing your vehicle. Since interest rates are low, it may be time to consider refinancing if you can get a lower interest rate. Shop around at various lenders to find the best refinance deal that will save you money.
- Do consider refinancing if your credit has improved. It may be economically beneficial for you to refinance your auto loan if your credit has improved since first purchasing your car. The higher the credit, the better the loan deal you receive. So if you’ve paid your bills on time and haven’t taken out multiple lines of new credit since your original loan, your credit score may be higher which will look good to auto lenders.
- Don’t extend the length of your loan. One of the options to auto refinancing is to extend the length of your loan. However, if you’re looking to save money, don’t go this route. While extending the length of the loan means lower monthly payments, it also means an increase in interest which increases the total price of the vehicle.
- Don’t refinance at the end of the loan term. It’s true what they say; the value of the car drops as it drives off the lot. The older the vehicle, the less value it holds overtime, making it harder to refinance. Since you do pay most of the interest on the loan when you first purchase the vehicle, it is best to refinance at the start of the auto loan.
Whether you’re looking for a vehicle loan or need to refinance, Telhio Credit Union may be able to lower your monthly payment and help you save. Check out our loan options to see which one is right for you!
This is a mutli-part sponsored series presented with paid support by Telhio Credit Union.
Telhio Credit Union is open to anyone who lives, works, worships or goes to school in Franklin, Fairfield, Delaware, Licking, Madison, Pickaway, Union, Hamilton, Warren, Butler and Preble counties. Founded in 1934, originally as the credit union for the Columbus Telephone Co., Telhio is a not-for-profit financial cooperative where its members are also its owners. Driven by its philosophy that members come first, Telhio is committed to the highest standards of responsibility and conduct. Telhio offers a variety of innovative programs, services and products to support its members’ financial needs. Telhio offers 9 branching offices throughout Central and Southwestern Ohio and nearly 4,000 shared branching locations nationwide. Federally insured by NCUA. Equal Housing Lender. NMLS #251831