Your source for auto buying know-how >>

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1 Auto Buying Guide Your source for auto buying know-how >> Find the right car or truck new or used Budget for your monthly auto loan payment Prepare for your auto purchase and negotiate your best deal Insure your vehicle, quickly and easily

2 Welcome Ladies and gentlemen, start your engines RIGHT AFTER YOU READ THIS AUTO BUYING GUIDE! Congratulations on your search for a vehicle. Whether you re getting a basic set of wheels for the daily commute or a dream machine with all the options, having the right car is an important part of your life. Having the right plan to purchase your next vehicle is important too. That s where Los Angeles Police Federal Credit Union (LAPFCU) comes in. We re your source of auto buying know-how. We ve created this auto buying guide to help you: Find the right car or truck new or used 2 Budget for your monthly auto loan payment Prepare for your auto purchase negotiate the best deal Insure your vehicle, quickly and easily LAPFCU will put you on the road in the right car with the right financing. Enjoy the ride!

3 Next to housing, your vehicle may represent your largest monthly expense. LAPFCU recommends that your monthly car payment not exceed 20% of your monthly income after taxes and other expenses have been paid. Use the following budget worksheet to determine your target monthly payment. The first part of the worksheet lets you tally your monthly items to show what you have available after taxes and expenses. The second part is where you calculate the 20% figure based on your remaining monthly income. Calculate monthly post-tax income in the first section. Add applicable expenses in the second section and subtract the subtotal from post-taxes income. The remainder will be an estimate of the amount of money you have available for a monthly auto loan payment. Monthly Income: Monthly Income After Taxes $ Monthly Expenses: Housing (Mortgage or Rent) $ Utilities $ 3 Food $ Transportation (Gas, Parking Fees, Etc.) $ Insurance (Home, Auto, Life) $ Clothing $ Entertainment $ Education $ Credit Card Payments $ Other Creditor Payments $ Other Vehicle Payments $ Child/Spousal Support $ Miscellaneous $ Amount available for your auto payment $ Multiply your post-tax and expenses monthly income by 0.20 to determine the 20% figure that would be the recommended maximum monthly auto loan payment. $ x 0.20 = $ post-tax and expense monthly income recommended maximum monthly auto loan payment.

4 Use the following worksheet to identify your preferences in make/model and options. Remember that options will add to the cost of the vehicle. Also note that many manufacturers create option packages, with certain options commonly bundled with others. It may be easier and more cost-effective to choose an option package that contains most or all of the extra features you want. Vehicles: Vehicle Choice 1 Vehicle Choice 2 Vehicle Choice 3 Make Model Style Year Base Price Options Yes/No Notes Engine (e.g., larger displacement, turbo, hybrid, diesel, flex fuel) Transmission (e.g., automatic, increased number of gears) Suspension (e.g., sport package, towing package) q No q No q No 4 Traction Control AWD (All Wheel Drive) 4WD (Four Wheel Drive) Power Accessories (e.g., seats, windows) q No q No q No q No Wheels and Tires Leather Seating Stereo Navigation System Trim Package Sunroof/Moonroof Trailer Towing Package q No q No q No q No q No q No q No

5 New Car Versus Used Car A major decision when purchasing a vehicle is whether to go new or used. Like other fundamental choices in your car-buying strategy, it depends on personal needs and preferences. Points to consider: Cost: A used vehicle typically costs less than a new one. Down payments and monthly payments will be correspondingly lower. A vehicle will also experience its greatest depreciation during its first three years, potentially giving the purchaser of a used vehicle better pricing. A used vehicle can also be an effective strategy for purchasing a more expensive model within your budget. Incentives: A new vehicle may come with financial incentives, such as a rebate, that make its more cost-competitive with used vehicles. Study available incentives carefully to identify such deals. Warranty: Many manufacturers offer lengthy and comprehensive warranties on new cars. Such warranties may lower or eliminate certain maintenance and repair expenses, in turn reducing your total cost of vehicle ownership. Also, many dealers sell extended warranties on new cars. Used cars may come with warranties too, either a continuation of the original warranty if permissible under the manufacturer s agreement or a specific warranty issued by the dealer. The length of time you plan to own your vehicle and the likelihood of repairs will help you determine if a new car with its original or extended warranty will save you money in the long run. It may also be beneficial to investigate third-party Mechanical Breakdown Insurance for cost savings versus dealer extended warranties and additional protection against costly repairs. GAP insurance is another option, and it can protect you from being upside down in a total loss should the value of what you owe on your vehicle exceed the vehicle s value. LAPCUSO Insurance Services, Inc., can help you determine which coverage is right for you. 5 Taxes, Fees and Insurance: Taxes, fees and insurance may be less on a used car due to its lower value versus a new model. Determine any difference in such expenses between new and used models when calculating your total cost of ownership. Features: In today s competitive automotive market, manufacturers are upgrading vehicles frequently to win customers. A new car may have certain features not available on a comparable model that is only a few years older. Confirm your must have options and find out if they are only available on new models.

6 Like other financing programs, such as mortgages and credit cards, auto loans come in a wide variety with different payment options and terms. Major points to consider in an auto loan include: Interest rate: The fee for borrowing money, a stated percentage of the amount being borrowed. Interest rates can be fixed a set percentage for the lifetime of the loan or adjustable changing during the loan within a stated range and under designated conditions. Term: The length of time for the loan to be paid back. The term can affect the dollar amount of each monthly payment and the total amount paid in finance charges by the end of the loan period. Typically, the longer the term, the less paid monthly. Be sure to see how much will be paid in total finance charges costs over the course of the loan. Fees: Any additional charges assigned to the auto financing. These fees may be factored into the monthly payment, becoming part of the effective APR (annual percentage rate), the final rate charged on a loan. Your credit score plays a large role in your eligibility for different loan programs. A better score generally entitles you to more favorable loan conditions such as lower interest rates and fees. As part of the application procedure, your LAPFCU loan consultant will check your credit report and discuss the results with you. Some tips for maintaining and improving your credit score: 6 Keep bill payments current Keep debt loads reasonable; don t run up credit cards to the limit while making minimum monthly payments Don t take on additional debt like new credit cards and charge accounts Show a consistent work history. Your LAPFCU loan consultant will explain auto loans thoroughly and work hard to get you the best loan possible. LAPFCU has some of the lowest interest rates available. Compare our loans with other programs using our online calculator:

7 : The First Step in Buying Your Car Question: What is the right vehicle for me? Answer: Buy the best car you can afford. What is the best car? That s up to you, based on your transportation needs and personal tastes. How much can you afford? That s where the auto loan experts at LAPFCU can help. We ll help determine the loan amount, down payment and monthly payments that fit your budget. We ll explain all our available loan programs and show you the right choices to finance your next car. We ll pre-approve your auto loan so that you and the dealer know your purchasing power. Once you re pre-approved at LAPFCU, you can focus on the fun part finding and buying the best car for you. Auto loan pre-approval is fast at LAPFCU... Phone: 877-MY-LAPFCU ( ), press 3. 7 Web: CUFFS Online Loan Pre-Approval. Visit

8 : Which is Right for You? Buying versus leasing. These are the two big choices when financing a car. And you do have choices. Whether you buy or lease depends on your financial needs and driving habits. Some points to consider Costs: A lease may have lower initial costs than a loan due to the lack of a traditional down payment (although you should know that LAPFCU provides up to 125% financing, including tax and license); however, a lease may include other types of upfront fees. A lease may also have lower monthly payments than a loan, which makes it attractive to many people. But a lease can bring end-of-term fees for excessive mileage and wearand-tear. There are no such fees when you buy a car. Once you make your final loan payment, you own the vehicle outright. Depreciation: Depreciation is a factor in leasing or buying a car. When you lease a car, you are essentially renting it for the duration of the lease. The lease holder determines what the car will be worth at the end of the term (residual value) and calculates your lease amount and monthly payments based on this depreciation. This is why seemingly similar cars from different manufacturers can have different lease payments. A car whose value depreciates by a relatively greater amount during the lease term can incur higher monthly lease payments. 8 When you buy a car, it may depreciate to a value that is less than your loan balance, much like a home that is underwater. The type of vehicle, the type of loan, and the size of your down payment will all affect whether your loan balance will exceed your car s value. Equity: Equity is your ownership stake in the vehicle, the portion of the principal you have paid down through your down payment and subsequent monthly payments. When you buy a vehicle, you build up equity and will have 100% equity when you pay off the loan. When you lease, you have no equity. This can be important if you ever want to use a vehicle as a trade-in for another. Taxes and Insurance: Leasing can have certain tax benefits if you use the vehicle for business. Your tax professional can advise you on this strategy, including any restrictions on how such a business vehicle must be used and driven to justify any write-offs. Insurers may charge different rates for a purchased or leased car, with possible higher rates for leasing. Check with your insurance professional for specifics. New Car Rebates and Incentives: Many new cars come with rebates and incentives from the manufacturer. These financial rewards combined with the right auto loan program can create your most affordable means to acquire a car. Discuss rebates/incentives with your LAPFCU loan consultant. Remember, the positive factors you find in either leasing or buying will likely have tradeoffs. Is the benefit of particular monthly payments for a leased car worth the mileage restrictions? Is the benefit of equity in a purchased car worth its monthly payments? Only you can answer these questions. Your LAPFCU loan consultant can help you decide between buying or leasing. We even have the POLEASE program which combines the best features of both in one financing solution.

9 Too Good to Be True? In recent years, zero percent financing has become a common promotion in the auto industry. At first glance, it looks good monthly payments that only go toward the cost of the car, all principal, no interest. Like many things that sound appealing, zero percent financing may have some catches: Vehicle Price: The ability to negotiate the final price of the vehicle may be limited if you opt for zero percent financing. A lower negotiated price financed with an interestbearing loan may save you money in the long run. Vehicle Availability: Zero percent financing may not be available on the vehicle you want, or only available on particular models. Choosing another type of loan may give you the freedom to choose the exact vehicle you want. Loan Time Period: The zero percent payment phase may only be for a limited time during your total loan time period. In other scenarios, zero percent financing may only be available for a relatively short loan term, potentially increasing your monthly payment amounts. 9 Additional Charges: Zero percent financing may only be available with additional charges at the beginning or end of the loan. If such charges are part of the financing, calculate if you are truly saving money versus other types of loans. Special Offers: By choosing zero percent financing, you may exclude yourself from special offers and rebates that come with other loan programs. Check if other loans with such offers will save you money versus a zero percent financing deal. Buyer Eligibility: Some buyers may not qualify for zero percent financing or may have to pay additional fees to be approved. Zero percent financing can be tricky. Speak with an LAPFCU Loan Consultant before you choose this option. Use our online calculator to compare 0% financing with LAPFCU loan programs that incorporate dealer rebates and incentives. Let the real numbers do the talking. Visit:

10 Trading in Your Existing Vehicle Trading in your existing vehicle can give you a head start in the purchase of your new vehicle, providing part or all of the down payment. The value of your existing vehicle is largely based on industry guidelines for a vehicle s make, model and age. Mileage, options/features and condition also affect value. Kelley Blue Book is the premier source of auto pricing information. You can access Kelley Blue Book online at through LAPFCU s Vehicle Loans page (see in this guide for more information). The actual amount you receive for your trade-in is up to the dealer. This figure can be negotiated like other aspects of a vehicle transaction. The dealer must be able to realize a profit on your trade-in upon resale. If the dealer has a large number of cars similar to your existing vehicle already on the lot, it could lower the amount he/she is willing to offer on the trade-in. Your LAPFCU loan consultant can discuss the trade-in of your existing vehicle and provide an estimate of its value. 10

11 : Auto Research Eliminating Negotiation Hassles Buying Your Vehicle Trading in Your Existing Vehicle Auto Insurance Buying a vehicle is a big decision which requires preparation and careful attention. Narrowing your choices depends on personal preferences and practical considerations: What impact will gas and insurance costs have on your decision? Special Benefits for LAPFCU Members How many miles will you drive in a typical week? How many people will you have to transport? How much cargo space will you need on a regular basis? Will you have special requirements like towing? Once you have answered the above, finding, buying and insuring the right vehicle becomes the priority. Fortunately, LAPFCU has online resources for completing your vehicle purchase, all available within our website s Vehicle Loans section. Low Monthly Payment Guarantee If you get caught up in the car-buying frenzy and obtain a loan through the dealership, call us immediately. LAPFCU has a low monthly payment guarantee. We ll beat the payment on the dealer s loan program, or we ll give you $ Go to to find: Autoland : A free membership concierge buying service which allows you to purchase a new vehicle, conveniently and hassle-free. Autoland lets you work with a local dealership or designated consultant to avoid unpleasant negotiations and sales games. Your vehicle can be delivered to your home or any LAPFCU branch. CUDL (Credit Union Direct Lending): A program that extends your LAPFCU purchasing power to a statewide network of participating dealers. Tell the dealer you want to CUDL, and you ll get a loan at LAPFCU rates. CUDL loans are processed quickly no matter where you are in the state, with no need to contact LAPFCU or pick up a loan check. CUDL s Autosmart website also lets you view new and used vehicles, locate vehicles and participate in online auctions.

12 (cont.): Enterprise Car Sales: Offering a large selection of used vehicles, all with no haggle pricing. Kelley Blue Book : The online home of the auto industry s leading source for pricing information on new and used vehicles. Kelley Blue Book is a valuable reference to help you estimate the value of your trade-in and determine the best deal on your next vehicle. Autoland Advocar: An online marketplace where you can sell or trade-in your existing vehicle. LAPFCU Auto Loan Services: From the Vehicle Loans page, you can apply for an auto loan and get pre-approved. Insurance: Don t forget the final accessory on your new vehicle: insurance! We present insurance services through LAPCUSO Insurance. Call Los Angeles Police Credit Union Service Organization (LAPCUSO, Inc.) at 877-MY-LAPFCU ( ), press 7 to obtain your complimentary quote. Our partnering insurance agency, Bichlmeier Insurance Services, is a local, family-owned business headed by Jerry Bichlmeier, a 25-year veteran of LAPD. Bichlmeier Insurance Services offers: 12 Auto Insurance GAP Insurance (covering the difference between what your vehicle is worth and what you still owe on the loan) MBI (Mechanical Breakdown Insurance)

13 Today Buying a car should be simple. Owning a car should be enjoyable. LAPFCU is here to make both a reality. Keep this guide handy as your reference on auto loans. Visit Vehicle Loans on our website frequently for information on finding and buying the right vehicle. Contact us today, by phone or online. Now...ladies and gentlemen start your engines! Auto Loans 877-MY-LAPFCU ( ), press 3 info@lapfcu.org 13 * Datatrac Great Rate Awards certify that the interest rate on a financial institution s deposit or lending product has outperformed their local market average during a quarterly or annual period. Datatrac monitors deposit and lending= rates for over 90,000 financial institutions nationwide. The information contained in this booklet is designed to serve as general car buying information and is for example purposes only. Please speak with an LAPFCU Loan Consultant for additional details regarding your specific car buying and auto loan situation. All information is subject to change at any time without notice and restrictions may apply. Ask for complete details.

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16 Auto Buying Guide Academy Branch Los Angeles Police Academy 1880 N. Academy Drive Los Angeles, CA am - 5 pm, M - F Manchester Branch Ahmanson Recruit Training Center 5651 W. Manchester Ave. Los Angeles, CA am - 5 pm, M - F Jesse Brewer Branch 3650 Martin Luther King Jr. Blvd. Suite #185 Los Angeles, CA am - 5 pm, M - F Van Nuys Branch Sherman Way PO Box Van Nuys, CA am - 5 pm, M - F 9 am - 1 pm, Saturday Closed Sunday Communications Department Sherman Way PO Box Van Nuys, CA Available 24 Hours a Day, 7 Days a Week 877-MY-LAPFCU ( ) Auto Loans 877-MY-LAPFCU ( ), press 3 info@lapfcu.org