Posts Tagged 'auto loan'

Save (virtually) nothing with Bank of America’s auto loan

Susan Tompor had a great article in the Detroit Free Press about banks getting back into the auto lending business. She noted that Bank of America was offering a stellar-sounding rate on vehicles:

Bank of America has a low rate of 2.89% in Michigan on new car loans of up to 60 months. The loan has a $200 fee and the borrower must have excellent credit.

Now, that 2.89% “low” rate does sound great. But how does the math work?

Here’s an example. Let’s say we take a plain old car loan, with no money down and no trade-in, for $20,000. Pay Bank of America’s $200 fee and the rate, and you end up with a monthly payment of $383.38. In the end, you’ll pay $21,400 for that new car when the loan is paid off (we’re using our handy auto loan calculator for these numbers).

Now, take that same $20,000 auto loan to American 1, where you pay no fees but you pay a slightly higher interest rate of 3.49% at our low end. That leads to a montly payment of $385.57 – two whole dollars more expensive than BoA’s payment. In the end? You’ll pay $21,200 for that vehicle, which is exactly $200 – or the cost of that BoA fee – less in total.

Isn’t that something?

Tompor quotes a BoA representative who sounds giddy to get back into auto lending:

Doug Melton, direct-to-consumer underwriting manager for Bank of America, said the bank is optimistic about car lending in 2011 and is aiming to offer competitive rates for loans on new and used vehicles and lease buyouts.

“There are a lot of great customers out there looking for new cars, used cars and looking for financing,” he said.

“Competitive” being the operative word. The most you’ll save is $2 a month, no matter how competitive that rate looks compared with ours or anyone else’s.

Isn’t it better to do business with a local institution who charges no fees and is a phone call away when you need service?

Credit life takes care of payments

When Ralph Fiebig’s wife Mary retired, the couple decided that taking a bigger pension payment instead of more benefits seemed the right thing to do. After all, any bit of extra income helps.

But when Mary passed away last year, so did her pension income. That left Ralph with a mortgage, car payment, and Visa payment. Luckily, The Fiebigs decided to opt for credit life on both their auto loan and Visa card with American 1 Federal Credit Union.

“Everything was taken care of,” Ralph says. “I didn’t have to worry about my car payment or my Visa payment anymore.”

Because Ralph and his wife put credit life insurance on both loans, a total of $11,000 was paid off in full after Mary died. Now, with Ralph facing more medical costs and less income, paying off his auto loan and Visa balance leaves him with two less things to worry about.

He says credit life isn’t that expensive, and pays for itself when the unexpected happens.

“And I was surprised and how smooth it all went,” Ralph says. “It wasn’t a bunch of haggling and phone calls. I just went to the branch and they took care of everything for me.”

Ralph now has his own American 1 Visa, and he chose credit life on that card, too, so his children won’t be burdened when he dies.

American 1 Federal Credit Union