auto loans, auto refinance, used vehicle financing, new vehicle financing.
8 questions to ask before taking out an auto loanBy MSGCU on 11/15/2021

New and used car prices have soared in the last two years, which makes getting a good rate on an auto loan is more important than ever. If you’re not in the market for a new car, current low-interest rates on auto loans can make refinancing your existing vehicle a smart move to save you money.

Whether you’re buying or refinancing, choosing an auto lender is a big decision. Take your time to find one who will work with you and your financial goals; in other words, do your homework. Start by asking these eight questions:

What is the loan rate and the loan term?

Even fractions of a percentage point can save you a lot of money over the life of an auto loan. However, be aware of the loan term as well. Do you want to be paying for this car for 7 to 8 years?

Who is the lender?

If you’re financing your car at a dealership, it may not be clear which financial institution is giving you the loan. What kind of institution is it? Is it completely online, or are there physical branch locations? Is there someone you can call for help if you have a question or problem with your loan? “That personal service, a lot of people don’t realize they’re missing it until they need it,” says Nicole Parnell, Region Manager for Michigan Schools and Government Credit Union (MSGCU). Personal service is one of the biggest reasons MSGCU has maintained a 96% member satisfaction rating for more than 20 years.

What is included in the payment?

Be sure you’re aware of any extras that have been included in your monthly payment, such as a maintenance package with the dealer’s service department. Don’t be afraid to ask questions—it’s your money.

Is this a promotional deal or a standing offer?

Sometimes promotional “limited time only” rates come with a catch, such as a large required down payment. Break out your magnifying glass and read the fine print. Deals on refinancing may also be limited-time-only offers, unlike MSGCU’s Auto Rate Pledge. The Pledge is a standing offer from the credit union that promises a 0.25% savings* on your auto loan rate, or MSGCU’s current rate, whichever is lower. “Our Auto Rate Pledge is a really fantastic offer,” says Parnell. “Most of our members are saving over 2% when they take advantage of it.”

Is there a prepayment penalty?

Suppose you get a raise or inherit money and decide to pay off your loan early. Some lenders charge a prepayment penalty for not going the distance on your loan term. (MSGCU does not.)

Can I get preapproved?

Some lenders, such as MSGCU, will preapprove you for an auto loan of a certain amount and give you a preapproval letter you can take with you when you shop for a vehicle. This gives you—and the dealer—an accurate idea of what you can afford.

Do you offer Guaranteed Asset Protection (GAP) coverage or Mechanical Repair Coverage?

GAP coverage protects you if your vehicle is totaled in an accident or stolen and not recovered, and your insurance payout is less than what you owe on the loan. GAP coverage can also help you purchase a replacement vehicle. “I personally have had it on all three of the cars I’ve had financed at MSGCU because it’s that good,” says Parnell. “And it’s very, very affordable.” MSGCU’s GAP coverage can also cover your deductible for accidents in which your vehicle is not totaled.

MSGCU also offers Mechanical Repair Coverage, which pays labor and parts costs for covered repairs. A variety of coverage levels are available, all very affordable, to help you keep your vehicle in great shape long after it’s paid off.

What does the application process look like?

Can you apply online? How long will it take to get approved? Get the full details so you won’t be unpleasantly surprised when it’s time to apply. “We make the process really, really easy,” says Parnell from MSGCU. “We can do so much of it online, then all you need to do is stop and pick up the check on the way to the dealership.”

The more questions you ask, the better your chances of finding an auto lender who champions your goals. You’ll not only get the best deal on your auto loan; you may even find a new bank or credit union for all your finances.

Michigan Schools and Government Credit Union (MSGCU) makes auto financing and refinancing easier with personalized guidance, market-leading rates and our Auto Rate Pledge. Feel free to contact us or stop into any branch office.


*Discount of 0.25% off current rate available on auto loans currently held with another financial institution. Discounted rate cannot be lower than MSGCU cost of funds. All loans subject to approval. APR may be higher, based on term of loan, credit score, collateral, and loan to value. MSGCU as low as rate requires Automatic Loan Payment transfer. Current MSGCU auto loans not eligible. Loan terms up to 84 months, depending on model year. New money only. Rates are subject to change at any time. Same-day approval on most vehicle applications. Contact Member Service Representative for more details.

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