by Emily Hechler 
Shopping for a car can be an exciting experience that comes with long-term financial costs. As a member at Alltru, you are more than just a customer. You are a valued member and part-owner. We are here to provide you with the best financial solutions and products. This auto loan guide will walk you through what you need to know leading up to buying a car, whether you choose us or another institution.
The car shopping experience comes with many factors to consider. Should I buy a new or used car? How much car can I afford? How will this car affect other areas of my finances? These are great questions that we are here to answer.
No matter your car shopping situation, Alltru offers reachable auto loans that will have you behind the wheel in no time. We offer low rates and flexible terms to suit your financial needs. You can also enjoy your first 90 days payment-free! Plus, you can manage your loan anywhere with online banking.
First-time Car Shopping
Whether you’re buying a car for the first time or the tenth time, there are some basics you’ll want out of your car. It’s important to consider what qualities are essential and what qualities are luxuries. As a first-time car shopper, you can reliably get from Point A to Point B when the essentials but could maybe afford some luxuries. As an experienced car shopper, you likely already know what features you want in your new ride and what features are not necessary.
Here are some questions to ask yourself before looking around at different cars:
- Will I be responsible for regularly driving others or will I be just driving myself? Dig deep into this question. If you will primarily use your car for driving to school or work, a small sedan will suit you well. If you have a partner, children, siblings, or roommates you commute with on the regular, you might want to consider a large sedan or small SUV.
- What is the climate like in my area? Assuming you live in the Greater St. Louis area, a front-wheel drive will be a comfortable pick for your ride since we don’t get a lot of snow every winter. If you’d be more comfortable in an all-wheel drive vehicle, just know that they are usually more expensive.
- How fuel-efficient of a car do I need? A general rule of thumb for fuel efficiency is the larger the vehicle, the less fuel efficient it is. As a result, you’ll be making more stops for gas will a larger and less fuel-efficient vehicle than you will with a smaller one. This might not seem like a big deal, but the cost of gas can add up over time. This is especially true if you have a longer commute to work, school, or where you regularly run errands.
- What safety features am I looking for? As a newer driver, you can never go wrong with finding a car with safety features that you don’t necessarily need with more experience. As they say, practice makes perfect. Evaluate the need of features that can help prevent accidents such as forward collision warning, land departure warning, and blind spot monitoring. Consider features that could keep you more safe if you are in an accident such as extra airbags and stability control. Some of these features vary across trim level for the same model. Make sure you carefully read what features are available in your desired future ride.
Electric or Gas?
Another major consideration when looking for a car to buy is buying an electric vehicle or a gas vehicle. Electric vehicles are on the rise and feature top-of-the-line design appeal. In addition, electric vehicles are becoming more affordable and thus more popular.
There are some upfront costs to keep in mind when considering purchasing an electric vehicle. First, even though prices are going down, electric vehicles on average are more expensive to purchase than gas vehicles. However, this isn’t necessarily true for gas powered sedans.
Second, consider the availability of charging stations in the area where you live. Owning an electric vehicle as the everyday driver is still a newer idea, so charging stations can be few and far in between depending on where you live. With a gas vehicle, you can make a five-minute stop at a gas station to refuel and be on your way. With an electric vehicle, you may need to spend much longer waiting for your ride to recharge before you can get back on the road. Some have resorted to installing a charging station in their garage so their vehicles can charge while parked at home. This probably isn’t a realistic option if you’re renting an apartment or moving to a new home soon.
A third major consideration is the cost of maintenance and repairs. Electric vehicles generally cost less to upkeep since the electrical systems have less parts than the inner workings of gas vehicles. However, when an electric vehicle is in an accident, they are usually more expensive to repair. In the unfortunate situation that you are in an accident, a personal loan from Alltru can get you and your vehicle back on the road in no time.
Car Shopping Terminology
Before heading to the dealership to test drive, do some research about the specs of the cars you are considering buying. When you dig a little deeper, you might be overwhelmed by the amount of jargon or other terminology you aren’t familiar with. The last thing you want is to make an unnecessary purchase because you didn’t fully understand what the salesperson was talking about. While this is just a starting place, you need to familiarize yourself with these car shopping terms.
- The Blue Book value refers to the price of a vehicle as defined by Kelley Blue Book. Kelley Blue Book is a third-party price advisor that reviews cars, pointing out the pros and cons and the value of a car compared to the price often found on a car’s window sticker.
- An extended warranty is a warranty sold by the dealership or a financial institution like Alltru that goes above and beyond the factory warranty. The factory warranty is different for every car. In general, a factory warranty covers basic manufacturing repairs of a vehicle as long as the vehicle is under a certain amount of mileage and age. For example, a Nissan Sentra is covered by a 3-year/36,000 limited warranty but an extended warranty can over up to eight years or 120,000 miles.
- The down payment is how much money you pay toward the cost of the vehicle when you make your purchase. The larger your down payment, the smaller your auto loan. A good rule of thumb is to put down 10% of the car’s price for a used car and 20% for a new car.
- A car title is issued by the Department of Motor Vehicles. A car title proves that you are the owner of the car when you make your purchase. If you finance the car with a credit union or bank, the financial institution will place a lien on the title. This notes that you are still paying off the vehicle.
- The trim level of a vehicle notes the features that come in every car of that model. While other features can be added, the trim level features are the same. Generally, when looking at new cars, the lower the trim level, the cheaper the car.
- MPG stands for Miles Per Gallon. This spec shows how many miles your vehicle can drive per gallon. MPGs are structured to display the highway driving and city driving estimates. A 2025 Toyota Camry LE has a 53/50 MPG, which means you’ll drive 53 miles per gallon if you’re on the highway and 50 miles per gallon if you’re on city roads.
- The MSRP is the Manufacturer’s Suggested Retail Price. This is the price that you see on the sticker of a new car. This is the same price from dealership to dealership. Often, you can negotiate the price of a car down and won’t actually pay the MSRP.
Securing an Auto Loan
Now that you understand the basics you need to know before buying a car, it’ll be tempting to run to the dealership and test drive a few options. Before you know it, you’ll be in the dealership office trying to finance a car but not confident you’re getting the best deal.
You’ll likely need an auto loan to purchase your new ride. But how do you even get an auto loan? At Alltru, we’re here to help. Dealerships often have their own financing options. I’d encourage you to start at The Better Way To Bank before going to the dealership. After all, dealerships want to make a profit from the sale of your car at the expense of a customer. As a credit union, we want to give you access to the financial products you need as a member, not a customer.
We have a five-step process to follow, regardless of whether you have the exact car picked out or not. First, submit your application. You can do this online or by calling us at 636-916-8300. If you aren’t a member yet, we can walk you through that process too. When you apply, we’ll ask some questions about the vehicle you want to buy, your estimated down payment, and credit score.
Next, we’ll work on preapproving the application for your auto loan. This means that we will approve your application before you go to the dealership. Usually, we can do this in one business day.
Now it’s time to go to the dealership! This is when it’s time for you to test drive your desired vehicle and pick out the exact one you want to drive away with. When you go to the dealership, bring your auto loan preapproval with you. Remember, if you’re buying a new car, you can negotiate down from the MSRP. Your preapproval gives you an advantage for negotiating a better price.
When you finalize your deal, send us the purchase agreement back and we’ll finalize your loan documents online. Finally, we’ll send the funds to you or the dealer, depending on the agreements in your loan.
Auto Loan Tips
If you’re somewhere in the auto loan process and feel like you have some obstacles to overcome. Don’t worry! We have options to help.
Your credit score plays a key role in applying for an auto loan anywhere. If you want to raise your credit score before applying for an auto loan, see if you can delay your car shopping by a couple months so you have time to improve. Alltru offers a Credit Builder loan to help you build credit while saving money.
If you’re scratching your head about your potential APR, we have answers. An APR is the Annual Percentage Rate. This is the total interest charged for the loan amount. Credit unions often have lower APRs than what banks or some car dealerships can offer. A lower APR will likely mean lower monthly payment. Plus, you’ll likely save money over time.
Car Financing Options
It’s better to plan ahead than to be caught off guard when you go to buy your first or next vehicle. There are many financing options you can choose for your car. The financing options may even help you choose which car you want to buy.
In addition to the auto loan tips we already discussed, it’s important to take the next few years of your financial status into consideration. Look at your budget and determine how much of a car payment you can afford. Your monthly payment will be different depending on how much of a down payment you put toward your car.
Something else many forget to consider is the cost of car insurance. Before you sign any contract, check with your car insurance company to see how much you will be paying for your insurance. If you just can’t decide between two trim models, the difference in monthly insurance costs may determine your best option. Your insurance company can give you an accurate quote with the vehicle’s VIN number. Since VIN numbers are unique to each car, you’ll get an accurate number for the specific vehicle you’re considering.
Leasing vs Buying
Instead of buying a car through an auto loan, a car lease might be a better option. There are advantages and disadvantages to leasing a car. It’s important to take all of them into consideration before deciding whether leasing a car is a wise decision for you.
For younger individuals, a car lease is appealing because up-front costs can be significantly less than if you are purchasing a car through an auto loan. Leases usually don’t require a down payment. However, you will have to pay a security deposit and other fees up front. These are still likely less than the 20% down payment you’d put toward purchasing a car. Monthly payments toward a lease are often lower than monthly payments toward an auto loan too.
If you don’t have a lengthy commute, a lease could be a great option. Leases often have yearly mileage limitations. Going over your mileage limit will cost you a fine.
When you lease a car, you’re always driving a vehicle from the last couple of model years. Because of this, you can still benefit from the manufacturer’s warranty. When your lease is up, you can start a new lease for the next new vehicle.
A major downside to consider is the long-term cost of leasing a car versus buying a car. If you’re leasing a new car every three years, that’s nine years of monthly payments. Once the lease is up, you have to find a new car again. Plus, newer cars equal higher insurance costs. Once you complete the five years of loan payments, the vehicle belongs to you. If you take care of the car, you can keep it running for another four years monthly-payment free (besides insurance)!
If you’re still undecided, check out our Purchase or Lease a Vehicle Calculator to evaluate your monthly payment.
New vs Used
If you’ve decided to go with purchasing a car rather than leasing it, how do you know if you should buy a new car versus a used car? The main distinction is the long-term effects. We still can’t ignore the short-term considerations though!
As previously mentioned, a good rule of thumb is to put 20% down on a new car versus 10% on a used car. A new car will definitely cost you more up front with a larger down payment. If you compare the same car but one is new and one is used, the new car will cost more anyway. Our Vehicle Payment Calculator can give you a realistic look at how much a down payment will cost.
Just like with any auto loan, you’ll have a monthly payment for your car insurance. Remember to get a quote from your car insurance company for how much your monthly payments will cost. New vehicles usually have higher monthly payments than used vehicles.
Looking at long-term effects, a new vehicle is a great option if you want to rest easy with a manufacturer’s warranty. Many manufacturer’s warranties expire after a certain time frame, such as 3-5 years, or defined mileage, like 36,000-50,000 miles. The warranty will expire when you hit the first benchmark, not both. Depending on how old of a vehicle you purchase and how much mileage is on the vehicle, you may still be under the manufacturer’s warranty for a short period of time. In 2019, I purchased a used 2017 Ford Focus with 24,000 miles which was great because I was still covered by the manufacturer’s warranty for almost a year after I bought the car.
Another factor to consider is the car history. Cars need regular maintenance such as rotating its tires, changing its oil, replacing its brake pads, and more. If you buy a new car, you won’t have to worry about the car’s history because it has none! With a used car, you will want to know if the previous owners took good care of the vehicle. Neglect in car maintenance can cost you a lot of money in the long run. Sites like CARFAX can show you vehicle history reports so you can see how well a car was maintained or if it was in any accidents.
Personal Loan vs Auto Loan
When determining how to finance your future car, still consider the benefits of a Personal loan. You can use a personal loan for anything, not just for purchasing a car. If you need to buy a car soon but have other expenses due at the same time, consider a Personal loan. You can use the funds of your Personal loan toward your vehicle and the other expenses at the same time.
Unlike car loans, personal loans don’t require making a down payment. This means your costs are lower up front. However, Personal loans usually have a higher interest rate than auto loans since no collateral is involved. This means that over time, you will end up paying more toward a personal loan than you will toward an auto loan.
Multiple Car Loans?
Maybe you and your family are well versed in purchasing vehicles since you’ve done it a time or two. What happens when an unexpected or unideal situation leaves you needing to buy another vehicle when you are still paying off another car loan?
There are a few considerations to account before going to the dealership. First, consider your credit. As you know, your credit score plays a major role in determining whether your application for an auto loan will be approved. If it is approved, your credit score will still impact your interest rate. Think back over the course of paying off your current car loan. It doesn’t matter if you have one or five years to go. Have you paid the minimum monthly payments on time? How often did you miss a payment or make a late payment? This impacts your credit score too.
In addition, consider your debt-to-income ratio. Your DTI is calculated by dividing your monthly gross income with your monthly debt payments. Your DTI has changed since you last applied for a car loan since your total monthly debt payments have changed. The DTI is used to determine if a financial institution or dealership will deem you as credible and able to pay back your additional loan on time every month.
Next, take a look at your finances as a whole and determine if you are comfortable adding a few hundred dollars more a month toward a car payment. Categorize your transactions into needs, wants, savings, and giving. How will these buckets be impacted by another car payment?
Refinancing an Auto Loan
Adding a second auto loan could be the way for you to go. If it is, you may want to consider refinancing your first auto loan. Refinancing a car loan with Alltru is easy. If your credit has improved since you first took out your car loan, you have the potential to save you a significant amount of money. When you refinance, your improved credit score can reduce your interest per month, which will save you money every month that you have left on your loan. You might decide to pay off the rest of your loan entirely and save yourself on paying interest. You may be on the other side of the situation and need to lower your monthly payments by spreading out your payment over a longer period of time. We can help with that too!
Check with your current lender and see if they have a prepayment penalty. Some lenders can charge a fee so high that it might not be worth refinancing your current loan. When you apply to refinance your car loan with Alltru, rest assured that we don’t charge a fee to do so.
To start, you’ll need to know your current monthly payment and the remaining balance you still owe. Note how much time you still have to pay off your loan and your current APR. We’ll quickly get back to you with a refinancing offer.
Saving Money on Your Cars
Paying toward two car loans at once can seem daunting. There are several ways that you can cut costs when you are paying off two loans.
In addition to refinancing your first loan, consider the snowball method. When you use the snowball method, you make monthly payments toward each of your loans. When your first loan is paid off, apply the funds that would be going toward the first loan to the remaining loan. This method won’t save you money up front. However, it does allow you to pay off your second loan faster. As a result, you’re saving money on the interest of your loan.
Even if you pay off your loan early and don’t have monthly loan payments anymore, you will still have monthly insurance payments. If you are able, use the same company for both of your car insurance plans. Many companies offer discounts when you bundle several car insurance plans into one payment. Some companies offer discounts for automatic payments and digital statements too. When your insurance coverage is up for renewal, look at the monthly cost versus paying for six months at once. Often the six-month payment at once will cost you more money up front but again save you money over time.
Another strategy to consider is carpooling. While it may seem unnecessary to carpool since you have two vehicles, over time you’ll see how much you can save. If you and your spouse work near the same location, carpool to work. That way, you’re only putting miles and gas on one car rather than on both. Maybe you could carpool with a trusted coworker and take turns driving each week. This will save you both money.
Conclusion
Buying a car is no easy task. After considering these important factors, you’ll be equipped to make wise decisions when you purchase your next vehicle. Finding the perfect fit – whether in the car itself or your financing options – takes time. By following these tips, you can know that you did your research and chose the best options for you. Even if you still aren’t confident, Alltru has a team of financial advisors ready to help you make the next big decision in your life. With an auto loan from Alltru, you will have keys in your hand soon!
