Friday, November 29, 2013

Good Auto Loan Interest Rate Equals Money Earned

At any social gathering, whether a person is buying a Tesla or a used Jetta sedan, people will often gravitate their conversation to auto loans. I recall using Pen Fed's auto buying service which is comparable to a fleet service and obtaining an oral approval for 0.49 percent in September 2012. I checked the rates recently and it was up to a whopping 0.99. I recall that if the PenFed auto loan failed for any reason, Power Toyota had the car guaranteed under its own loan of 4.99 percent. I calculated that the financial charge on my used Sports Trac was only $25 per year. That's less than 2 value meals from McDonald's or Wendy's, and it was great to have a backup car to a car that broken down twice in 6 months prior to buying our second vehicle. If you are not convinced that PenFed offers the best auto loan interest rate, this is my last passing comment, a comparison to USAA Auto Loan. In September 2012, I asked a colleague about USAA Auto loans, which are supposed to be the best since they offer these loans only to military personnels and their families. At that time, the rate was 2.99 percent while mine was 0.49. Granted mine was the military, too, I did notice that Pen Fed Federal Credit Union is member-owned whereas nothing was said about member ownership of USAA Auto loan. And there you have it. If you are not convinced yet, just make sure that you compare the rate of your loan with Pen Fed as a due diligence before closing any auto loan transaction.

PenFed's auto loan also covers refinancing. So, if your existing car loan is terrible, you don't have to feel trapped. It may not be as good as the loan through the auto buying service, but it may still be better than your existing loan. A little homework may save you a bundle of money and that's money you earned for yourself.

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