I Savings & Benefits of Buying Used Financing Your New Car

Newsletter Published for the Members/Owner’s
Summer 2014 Edition
Savings & Benefits of
Buying Used
ver wonder why the used-car industry is such
a big hit? The price tag attached to a used vehicle is usually several thousand dollars less than
for new cars. If you buy a new car, it typically
depreciates about 20% in value the minute you drive it off
the lot.
Start looking
for the right used
car by dong some
research. Check
out websites
such as Carfax.com, Edmunds.com, and
These sites help
you find exactly
what you are
looking for, including safety
rating, vehicle condition, and a vehicle history report.
When you’re selecting a used vehicle, keep in mind
that insurance companies base insurance premiums on
your age, year of the car, make, and how likely you are to
get in an accident. In general, the cost of insurance on a
used car is lower because the comprehensive and collision
costs are usually lower.
Many dealerships offer certification programs that can
protect you if any mechanical problems arise after you
purchase your vehicle. Be sure to read the fine print of the
certification to see what it covers.
Buying a certified used car can add on a significant
chunk of money to the price tag but can be money well
spent. On the other hand, if you plan to buy a noncertified
used car, make sure to have a qualified mechanic inspect it
To find the best deal on financing your used vehicle,
make Ulster FCU your first stop. Call or stop in today to
learn more about our low auto-loan rates. We offer the
same low rates on both new and used autos.
Financing Your New Car
f you decide to finance your car, be aware that financing obtained by the dealer, even if the dealer contacts lenders on your
behalf, may not be the best deal you can get. Contact the Ulster FCU directly. Compare the financing that we can offer
you with the financing the dealer offers you. Because offers vary, shop
around for the best deal, comparing the annual percentage rate (APR)
and the length of the loan. When negotiating to finance a car, be wary
of focusing only on the monthly payment. The total amount
you will pay depends on the price of the car you negotiate,
the APR, and the length of the loan.
Sometimes, dealers offer very low financing rates
for specific cars or models, but may not be willing to negotiate on the price of these cars. To qualify for the special rates,
you may be required to make a large down payment. With
these conditions, you may find that it’s sometimes more
affordable to pay higher financing charges on a car that is
lower in price or to buy a car that requires a smaller down
Before you sign a contract to purchase or finance
the car, consider the terms of the financing and evaluate
whether it is affordable. Before you drive off the lot, be sure
to have a copy of the contract that both you and the dealer
have signed and be sure that all blanks are filled in.
Trading in Your Old Car
Discuss the possibility of a trade-in only after you’ve negotiated
the best possible price for your new car and after you’ve researched
the value of your old car. Find out what your current vehicle is worth
before you negotiate the purchase of a new car. Check the National
Automobile Dealers Association’s (NADA) Guides, Edmunds, and Kelley Blue
Book. This information may help you get a better price from the dealer.
Though it may take longer to sell your car yourself, you generally will
get more money than if you trade it in.
Considering a Service Contract
Service Contracts that you may buy with a new car provide for the
repair of certain parts or problems. These contracts are offered by
manufacturers, dealers, or independent companies and may or may
not provide coverage beyond the manufacturer’s warranty. Remember that a warranty is included in the price of the car while a service
Con’td. following page, see: “Service Contract”
Ulster Federal CU is the
Place for Car Insurance
hat’s because the TruStage Auto & Home
Insurance Program is built on the same foundation as we are: Good rates, excellent service
and solid value. With discounts for being a member and easy switching from your existing carrier, it’s worth
a quick phone call to get a quote.
To get started, just call 1-888-380-9287 or visit:
For a quick quote, you’ll need three things:
 Your driver’s license number
 Your vehicle identification number (VIN)
 A bit of personal information
Isn’t it time for car insurance the Credit Union way?
TruStage Auto & Home Insurance Program is made available through
TruStage Insurance Agency, LLC and issued by leading insurance
Money & Credit
oney matters. And using tried and
true strategies for dealing with
money - or the lack of it - can
make a big difference to your present and your future. Whether you are saving, spending,
or borrowing money, this is information you can’t afford to
Shopping & Saving
Realistic budgeting is the key to maintaining a financing
safety net and spending wisely. Whether you’re shopping for
things you buy routinely—or saving for that occasional big
ticket item—planning is key. These shopping tips can help you
save money on everyday purchases, as well as on some products and services you buy once in a while.
Buying & Owning a Car
Having a car can be an expensive proposition. Read tips
on buying vs. leasing, negotiating the best deal, financing, getting the most out of warranties and service contracts, using gas
efficiently, and avoiding repossession.
Credit and Loans
Decisions about credit and loans involve lots of factors,
including how much money you need, what terms you’re offered, and who is behind the offer. If you are choosing a credit
card or wondering whether offers of credit and loans are on the
up and up, these tips can help.
Dealing with Debt
Debt collection, debt management, debt relief, debt settlement...Debt is a four-letter word that’s the subject of some
complex laws. Learn how to exercise your rights under the
Fair Debt Collection Practices Act-and how to recognize debtrelated scams and frauds.
Ulster Federal Credit Union
Board of Directors
Continued, “Service Contract”
contract costs extra.
Before deciding to purchase a service contract, read it
carefully and consider these questions:
 What’s the difference between the coverage under the
warranty and the coverage under the service contract?
 What repairs are covered?
 Is routine maintenance covered?
 Who pays for the labor? The parts?
 Who performs the repairs? Can repairs be made elsewhere?
 How long does the service contract last?
 What are the cancellation and refund policies?
 Is the service contract transferrable should the vehicle be
Mary R. Bishop, Chairperson
Linda Combs Akins, First Vice Chairperson
John Mizerak, Second Vice Chairperson
Richard Moore, Treasurer
Judith Hansen, Secretary
Janet Winter, Recording Secretary,
Patrick Berardi
Henry Gleich
Steven Milton
Dennis Pitcock
Credit Union Offices will be closed for the
following up-coming holidays:
Labor Day, Monday, September 1st
Columbus Day, Monday, October 13th
Veteran’s Day, Tuesday, November 11th
Thanksgiving, Thursday, November 27th
Christmas, Thursday, December 25th
New Year’s Day, Thursday, January 1st
Make wise financial decisions.
Develop effective saving habits.
Protect yourself against future predatory credit offers.
Six Simple Ways to Rev-Up Your Savings
ou can meet your goals with automated deposits
and investments.
Many people starting out in their careers find themselves burdened with lots of debt (perhaps from
student loans, credit cards, and car loans) and very
little savings for future needs. But there are simple strategies
for gradually building small savings or investments into large
sums, even during your school years, and often with the help
of automated services that make it easy.
Here are key examples:
1. Save for specific goals - You should have a savings plan
for large future expenses that you anticipate - perhaps
education costs, a home or car purchase, starting a small
business, or preparing for retirement (even though that
may be many years away). And, young adults just starting
out to be responsible for their own expenses should build
up an emergency fund that would cover at least six
months of living expenses to help get through a difficult
time, such as a job loss, major car repairs, or unexpected
medical expenses not covered by insurance.
2. Commit to saving money regularly - This is important
for everyone, but especially if you are supporting yourself financially.
3. Aim to save a minimum of 10% of any money you earn
or receive - Putting aside a designated amount is known
as “paying yourself first,” because you are saving before
you’re tempted to spend.
4. Put your savings on auto-pilot - Make saving money
quick and easy by having your employer direct-deposit
part of your paycheck into a federally insured savings
account. Your employer or your financial institution may
be able to set this up for you. If you don’t yet have a
steady job, you can still set up regular transfers into a
savings account.
5. Make use of tax-advantaged retirement accounts and
matching funds - Look into all your retirement savings
options at work, which may come with matching contributions from your employer. Chances are your retirement savings will hardly reduce your take-home pay because of what you’ll save in income taxes, and the sooner
you start in your career, the more you can take advantage
of compound growth. If you’ve contributed the maximum
at work or if your employer doesn’t have a retirement
savings program, consider establishing your own IRA
(Individual Retirement Account) with a credit union or
investment firm and make regular transfers into it. Remember that you can set up an automatic transfer from a
checking/share draft account into a savings/investment
account for retirement for any purpose.
Decide where to keep the money intended for certain purposes - For example:
 Consider keeping emergency savings in a separate federally insured savings account instead of a checking/share
draft account so that you can better resist the urge to raid
the funds for everyday expenses. Be sure to develop a plan
to replenish any withdrawals from your emergency fund.
 For large purchases you hope to make years from now,
consider share certificates which generally earn more interest than a basic savings account because you agree to
keep the funds untouched for a minimum period of time.
 For other long-term savings, including retirement savings,
young adults may want to consider supplementing their
insured deposits with low-fee, diversified mutual funds (a
professionally managed mix of stocks, bonds and so on) or
similar investments that are not deposits and are not insured against loss by the NCUA or FDIC. With nondeposit investments, you assume the risk of loss for the
opportunity to have a larger rate of return over many
 For healthcare, find out whether you are eligible for a
health savings account (HSA), a tax-advantaged way for
people enrolled in high-deductible health insurance plans
to save for medical expenses.
Think about ways to cut your expenses and add more to
savings. For your financial services, research lower-cost checking/share draft accounts at your credit union and some competitors. And, if you are paying interest on credit cards or fees for
spending more money than you have available in your checking/share draft account, develop a plan to stop.
More broadly, look at your monthly
expenses for everything from food to phones
and think about ways to save.
Help Saving for A Home
xcept for Veterans Administration loans, it still generally
takes some cash up front to get
into a home. How much cash
you’ll be required to have up front depends on the type of mortgage (whether
FHA or conventional) and your personal
financial situation. The better your
credit, though, the lower the down payment the lender will typically expect.
How much will you need to save? If
you are applying for an FHA loan and
your FICO score is between 500 and
579, plan on a 10 percent down payment
or more. If your score is 580 or better,
you may be able to qualify for a 3.5 percent down mortgage.
Conventional mortgages tend to have somewhat higher down-payment
requirements. You begin to
become competitive for a 5
percent down mortgage
when you have a FICO
score of around 660, though
lenders vary widely in practice. However, to save on
private mortgage insurance
costs (PMI), you may want
to go with a VA loan, if you
qualify, or save up 20 percent.
So what’s the best
way to go about saving that money?
Here are the factors to keep in mind:
Safety. Unless you are planning to wait
years to buy your home, you don’t want
to take a lot of risk with this money.
Hopefully, you will have your down payment saved up within a year or two. It
doesn’t make sense to risk a large market loss and throw your dream of home
ownership off schedule.
Liquidity. You don’t want to lock this
money up for years. You want to be able
to access your money quickly and
Returns. You want to get a reasonable
return, or yield, on your money. But
don’t sacrifice safety for yield if it means
risking your goal of home ownership.
A Guarantee. Investments carry risk.
But some financial vehicles come with
an in-writing guarantee. Examples include balances in checking and savings
accounts and share savings certificates
at credit unions, which come with a
guarantee of up to $250,000 in the event
the credit union becomes insolvent.
Banks have a typical arrangement via the
Federal Deposit Insurance Corporation.
So where should you put your money?
Here are some common options that have
stood the test of time – along with the advantages and disadvantages of each.
Cash. You can stuff cash in a mattress or
coffee can. This is convenient, but not very
secure. Your money is subject to the hazards of theft, flood, fire or loss. It also generates no return whatsoever.
Checking or Savings Accounts. These
generally produce a small return, but at
least it’s something. They are, however,
very convenient, if you are disciplined
about not spending the money that’s
earmarked for your down payment. If
your savings is very small, it may make
sense to keep it here instead of paying
fees to maintain a low balance account.
These are guaranteed against bank failures up to $250,000 per account holder,
either from FDIC (for banks) or the National Credit Union Share Insurance
Fund, or NCUSIF. Because credit unions
are mutually-owned by depositors just
like you, you can frequently get a better
deal in the long run by using a credit
Certificates of Deposit (AKA “Share
Savings Certificates” at Credit Unions).
These typically pay a higher yield than
checking or savings accounts, and also
qualify for federal insurance coverage.
However, they do require you to commit
your money for a specific period of time.
The penalty for early withdrawals is
usually the equivalent of six months of
Money Markets. This is a type of mutual
fund that’s made up of low-risk, shortterm bonds and commercial paper de-
signed to maintain a stable per-share
price of $1 per day. By and large, they
have been able to do so, historically,
though there are no guarantees. They
may offer higher yields than guaranteed accounts, and do not require a
time commitment. However, there is a
possibility that your money market
will lose money. Some financial institutions do offer insured money markets.
Permanent life insurance. If you own a
permanent life insurance policy, such
as a whole life policy, it accumulates
cash value over time. Whole life and
well-funded universal-life insurance
policies can be effective tools for savers – especially since whole life insurance cash value receives a guaranteed
crediting rating and is guaranteed
never to decline in value as long as you
pay premiums as scheduled.
Individual Retirement Arrangements.
You can withdraw up to $10,000 from
your IRA to put a down payment on a
home with no penalty. For traditional
IRAs, you will need to pay income
taxes on any such withdrawals.
Thrift Savings Program. If you are a
federal employee or member of the
United States military, the Thrift Savings Program, or TSP, allows you to
borrow money to make your down
payment on a home on advantageous
terms. For more information, visit
401(k) Loans. Some employers allow
you to borrow from your 401(k). Typically, you will need to repay the loan
within five years or face taxes and penalties on any remaining balance. However,
if you leave your employer, you will have
to repay the loan immediately or face
taxes and penalties on what you’ve
withdrawn. This makes using 401(k)
loans tricky for longer terms – especially
where employment prospects are not
Whatever vehicles you choose to
utilize in accumulating your savings,
Ulster Federal CU is ready to assist.
Come in and speak with one of our lending or financial services professionals for
a no-obligation consultation, or simply
some advice on how to get started. We
want to be part of your home-ownership
Ready to finance your next home?
Still want to learn more?
If you’d like to discuss your home
financing options with a Mortgage
Loan Specialist, call 845-339-5544.