Auto Loans

Buying a car in 2021

The 2021 car market has been tough for those searching for a new or used car. Low dealer inventory, a global microchip shortage, and consumer demand are making it increasingly difficult and expensive to shop for new and used vehicles.

According to Edmunds, used cars are more desirable to customers who either can’t find what they are looking for or want a cheaper option. With lower inventory and spiking demand, dealers have little incentive to offer discounts on any of their cars.

Although finding the perfect car right now can seem challenging, there are still plenty of ways to get behind the wheel of your new ride. Visiting a lot and purchasing directly from the dealer is the traditional way to buy a car, but there are alternative options now. You can even get pre-approved through a local credit and search for the perfect ride online.

Shopping for cars online is a popular choice, especially now. Most credit unions incorporate car buying services with their memberships, which is a helpful member benefit. But if you want a concierge experience, exploring a door-to-door service, like Carvana, can be appealing. Unfortunately, going through a more convenient option could cost quite a bit more when fees are included. According to The Balance, concierge services typically charge an upfront fee, as well as a percentage of the savings found. These extra fees could cost up to an additional $1,000 so weighing the convenience and investment costs is a smart budgeting practice.

No matter how you buy your new or used car this year, set reasonable expectations for the market we are currently in, keep an open mind, and exercise patience during your search.

Car Buying Tips in 2021


With ultra-low dealer inventory and a global microchip shortage, car buying is a challenge this year. Here are some helpful tips from the experts at Edmunds on the best way to plan ahead:


  • Research market prices and realign your expectations – The market has changed, and the killer deals of years past just don’t exist right now. Once you know today’s market price, you can shift your expectations and paying sticker price for your new car won’t come as such a shock.
  • Expand your search – If you aren’t satisfied with the selection in your area, broaden your search to neighboring towns and counties. By casting a wider net, you might find a better car or even a better deal.
  • Be flexible and have a backup – Don’t fixate on one specific car color or brand. If you have narrowed down the model you want, look at equivalent brands and other colors to find the best deal. Also, keep backup models in mind in case your search comes up empty.
  • Consider a sedan – Trucks and SUVs are by far the most popular vehicles on the road today. Consider finding a sedan to buy, which could be easier to find and much less expensive.

  • Don’t rule out a new car – If you’re set on buying used, consider looking for a new car. Similarly, if you’re shopping for a new car, don’t rule out used ones. Keep your options open to find the perfect vehicle for you.

Get the most for your trade-in – Since the market is up, that means your current vehicle is also worth more. If you’re trading in your vehicle, it could go a long way toward a newer, higher-priced vehicle


Housing Market Changes

Big changes in the housing market last year provided good news to existing homeowners while presenting a challenge to consumers in the housing market.

According to a Washington Post interview with the National Association of Realtors (NAR), home sales set records last year, due in part to the pandemic. From small apartments in the city primarily used to offer respite from the hustle and bustle to condos positioned in multi-family buildings, folks are now seeking single-family homes to accommodate lifestyle changes brought on by the pandemic. Final data for 2020 is still pending, but the trade association for real estate agents estimates new home sales rose 20 percent over 2019, and NAR predicts new home sales will increase by 21 percent in 2021.

The increase in consumers looking to purchase a home means a decrease in the supply of houses available to sell. At the same time, rates on mortgage loans reached historical lows in 2020. Those two factors combined to cause a rise in the cost of homeownership.

According to an article by The Ascent, the median price of an existing home in June 2020 was $295,300, or 3.5 percent higher than during the same time period in 2019. This increase in home value is great news for existing homeowners, as it has boosted their wealth accumulation. However, this trend also reveals a decline in housing affordability and could significantly limit achieving the American dream of homeownership for communities of color and young adults if the affordable housing supply is not increased.

Preparing to purchase a home

If you are someone preparing to enter the housing market, here are a few suggestions from The Mortgage Reports to help you prepare for this monumental purchase:

  1. Check your credit – Consumers should check their credit at least 6 to 12 months before they consider purchasing a house to allow time to mediate a low credit score if necessary. Your credit score determines eligibility for a mortgage and influences your rate. Most mortgage programs require a minimum credit score between 580 and 620.
  2. Save money – Common advice is to pay a 20 percent down payment for a home to avoid paying mortgage insurance. But even if you decide to take the mortgage insurance option, most mortgage programs require a down payment of 3 to 5 percent. It is important to remember that the consumer is also responsible for closing costs, or roughly 2 to 5 percent of the loan amount.
  3. Determine your budget – It is important to understand how much house you can reasonably afford before starting to look. Before meeting with a mortgage lender, use an online mortgage calculator to estimate affordability. Once you know how much you can afford, be sure to also calculate how much you will need to have on-hand as a down payment.
  4. Do not rush – Buying a home is a huge decision, and one that should not be rushed. If you move too fast, you could overlook vital steps that could save you money, including home inspection and comparison shopping. Do not end up with a fixer-upper when you thought you were buying a turn-key home!

Planning a Vacation? Make Sure Your Expenses Are Covered

Summer vacation will be here before you know it. And if you’re planning a family trip, you might want to make sure all your financial ducks are in a row so you can relax about money and just enjoy your time away from home.

First, make sure you’re getting the most cost-effective deals. See if you can use credit card rewards to cover part of your family’s air fare or hotel stay – like with our VISA Platinum with ScoreCard® Rewards. And when you’re choosing a hotel, look for one that offers a variety of freebies, such as discounts on food or hotel amenities, so your hotel funds will go farther.

Also check your organization memberships to see if they offer discounts on the activities you want to do on your trip.

Next, if you plan to use a loan to help pay for the vacation, get that taken care of now. You can choose a personal loan with fixed payments or a home equity loan or line of credit. That way you’ll be set with the funds you need when you’re buying your tickets, plus you’ll have what you need when you start your travels. And you’ll have time to decide exactly how much you’ll need to borrow so you will have enough for all the things you want to do. Give us a call at 419.479.4040 to find out more about the options we’ve got to help you fund your vacation.

Finally, decide how you’re going to pay for things while you’re out of town. It can be a good idea to have a mix of cash and credit cards. Some establishments might take cash only, especially if you’re at an open air market or small mom and pop shop, so having a small amount of cash will help you make sure you’re able to pay no matter where you are. But credit cards offer fraud protection, and if they are lost or stolen on the trip, you can call and have them cancelled and replaced — if you lose cash, you’re usually out of luck. Having one or two credit cards also means you’ve got the means to pay if there is an unplanned expense — and you can earn more rewards to use on your next trip.

One important tip — give us a call and let us know what dates you’ll be travelling and where you’re going. That way, we can alert the fraud monitoring serve we use to keep your funds safe so they will allow the charges. (There are certain countries where U.S. credit cards cannot be used, and we can help guide you on payment methods if you plan to travel to one of these.)

Happy travels!

Teen Driver

Breaking News: Parents and Teens Disagree on Auto Ownership

Here’s a finding that will surprise nobody: 76% of teens say they’re ready for a car, while 85% of parents disagree.

This comes from independent research conducted for Junior Achievement & American Honda Finance Corporation.

The discord may lie in the fact that 86 percent of teens feel that parents should help them with automobile expenses such as insurance, repairs and gas, while 91 percent of parents believe assistance is unreasonable.

According to the results, nearly one-fourth of teens expects a car with their cap and gown this graduation season.

At the same time, 61 percent of parents expect their teen to complain about the financial upkeep of a car within 30 days of getting their vehicle.

“When it comes to newly licensed drivers, in addition to important discussions about distractions and curfews, parents should rev up the car talk about the financial aspects of car ownership,” said Jack E. Kosakowski, president and chief executive officer of Junior Achievement USA. “It’s a great way to prepare them for future financial security both on and off the road.”

Interestingly, 61 percent of parents say that a car is a more effective means of teaching kids financial responsibility than a credit card.

To that end, 96 percent of parents say they would only help their teen buy a car if they first demonstrated responsibility, such as by preparing a budget to pay for expected and unexpected expenses, having a certain amount of money saved or explaining what is required to buy a car.

A third JA-AHFC survey conducted among young adults ages 18-25 may reveal the truth about teens’ financial understanding.

According to this more mature cohort, looking in the rearview mirror, 73 percent admit they did not understand the financial responsibilities of owning a car when they were in high school.

And, with age, comes wisdom.

Ninety-three percent of these young adults are confident that they fully understand the financial responsibilities of owning a car, and they turn to a wide variety of sources for information when considering purchasing a vehicle, including financial institutions, car dealers, online forums, magazines and social media.

Car Shopping

Five Ways to Turbo Charge Your Car Shopping Process

More than 23 percent of Ohio consumers are considering purchasing a vehicle this year, and 83 percent are more likely to finance the purchase than pay cash, according to a consumer survey conducted by the Ohio Credit Union League.
When asked what factors respondents considered when vehicle shopping, 67 percent said monthly payment is the biggest influence on their decision. For 61 percent of participants, gas mileage is the most important issue, while 47 percent said consumer reviews are important in their decision-making process. Other aspects considered when shopping for a vehicle included a safety rating, vehicle’s history report, and general aesthetics.

It’s no surprise gas mileage is at the top of consumers’ minds. According to Time Magazine’s Everyday Money, after a slight gas-tax increase (to 31.3 cents per gallon) took effect Jan. 1, the average cost of a gallon of gas in the Buckeye State is $2.03. Up from $1.49 a year ago. The national average for gas sits at $2.29 per gallon, according to AAA. That’s 29 cents more than the national average at this time last year.

In addition to the cost at the pump, here are a few tips when choosing a new vehicle that will have the least effect on your wallet.

• Use your tax refund. The more money you’re able to put down on a car, the smaller the loan and ultimately, the less you pay in interest over the life of the loan.

• Get pre-approved. Before car shopping, get pre-approved. It’s fast, free and online at ProMedica FCU. Pre-approval will give you more power to negotiate on the purchase price of the vehicle. Pre-approval also tells you how much you can afford and what type of monthly payment you will have.

• Budget ahead. As a rule-of-thumb, do not allow a monthly payment for a vehicle to exceed 12 to 16 percent of your gross monthly income.

• Consider the total cost of ownership. When car shopping, consider the cost of insurance and maintenance. Also, keep in mind that a high-end vehicle typically costs more to insure and maintain.

• Check with ProMedica FCU. Rather than purchasing items like a warranty and Guaranteed Asset Protection (GAP) coverage at the dealership, check with a credit union. PFCU offers these items at a lower cost than what you would find at a dealership. 

To learn more about how PFCU can help you afford life, stop into one of our four locations or call 419-479-4040.

*Pre-approval based on individual credit worthiness using ProMedica FCU risk based criteria. Pre-approvals are valid for 30 days. Not all applicants will be pre-approved.