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Loan Advice

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What Is Prime?

The U.S. Prime Rate is an index comprised of rates offered by the top financial institutions (FIs) of the U.S.  While each FI sets its own prime rate, it is generally based on the Federal Funds Target Rate.  The Fed Funds Target Rate is essentially a bank’s cost of funds.  Traditionally U.S. Prime Rate has been 3.00 percentage points (300 basis points) over the Fed Funds Target Rate.  Southern Security bases its consumer loan rates on the U.S. Prime Rate as published on the last day of the month in the Wall Street Journal.


Is Refinancing Your Car a Good Option for You?

Why should I consider refinancing my auto loan?
If you financed through a dealership you are likely paying a higher rate than necessary. Reducing a 10% rate down to 6% could save you several hundred dollars in the first year alone.

What information do I need to determine if refinancing my vehicle is worth it?
You'll need to let us know your pay-off amount, current interest rate and information on your current lender. Also, you need to know the details of your current auto (make, model, year, accessories, etc.)

Are there any fees involved with refinancing?
There may be pre-payment penalties tied to your existing loan. These vary and are completely dependent on your current loan.

Who should not refinance?

  • If you have less than a year left on your current loan, it will likely not benefit you to refinance.
  • If your credit has not improved or gotten worse, you are likely better off staying with your current lender.
  • If you're looking to sell the vehicle soon, refinancing will not be an economical move.
  • If you have more than 100,000 miles on the vehicle or its model year is earlier than 2003, refinancing could likely result in higher payments than your current loan.

Who should refinance?
If your credit has improved since you purchased the vehicle, and you have more than a year left on your current term, refinancing would likely benefit you.  You’ll be rewarded with a lower qualifying rate and lower monthly payments. If you didn’t fall into any of the categories above for “who should NOT refinance” you will likely be helped by refinancing.

Contact a loan officer at any Southern Security location to learn more about refinancing an existing auto loan.


Why 0% Financing Isn't Always your Best Option

Yes, 0% financing does sound great.  But very few can qualify for this rate and even fewer grasp how to avoid paying more in the end.  The old adage, “If it sounds too good to be true, it probably is” applies.  Let’s face it.  Dealerships are for-profit businesses.  They have to make money somewhere.  If they cannot make it on the financing, they’ll make it on the price of the car and the “extras.”  But, you say, “0% equals free money!  What’s wrong with that?”  While 0% is enticing, most consumers still end up paying more for the vehicle.  A better price with a low interest rate typically costs less than a deal including 0% interest.

Here’s how it works: Statistics show that a low percentage of car buyers actually qualify for 0% financing.  So, the low financing is a ploy designed to get you to their lot and select your car.  If you have an average or below average credit score, you won’t qualify for the lowest rate.  The dealership then offers you another, higher rate.  If you had been pre-approved from Southern Security you’d already know which offer is better, and it’s very likely to be the credit union’s rate. 

Additionally, not all models offer 0% financing.  This is a feature generally reserved for new – not pre-owned autos.  You may find the car of your dreams, work out the price with the salesperson, then move on to financing.  Here, you may find out your car does not qualify for the 0% financing, the dealer offers you another, higher rate.  Again, if you get pre-approved from Southern Security you will know which offer is better.  It’s very likely the one at the credit union.

Southern Security FCU, as a not-for-profit financial cooperative, is here to provide you with the best rate and term for you.  We will help you compare “apples” to “apples” as you go through the process to determine who is offering you the better deal.  Bring the offer from the dealership in writing to the location nearest you.  If we determine you’re getting a better deal by financing elsewhere, we’ll tell you.  Our goal is to help you make the best financial decisions possible.

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