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What Is The Right Auto Loan For You?


By: Alicia Bauman - Woodland Bank Loan Processor

Buying a car can be a very exciting experience. The new car smell… driving a vehicle with less mileage… the reassurance that a new set of wheels will for sure get you to your destination. But with all this eagerness, don’t lose sight of how to pay for it.

Prior to being a loan officer for Woodland Bank, Kevin Zubke spent over 21 years in auto sales and knows first-hand what car buyers go through.

“Buying a car can be one of the most stressful undertakings a person will experience during their lifetime,” Zubke said. “Don’t be afraid to go out and use whatever sources are available to reduce this stress.”

For instance, Zubke mentioned it’s smart to sit down with your banker and determine what kind of payment you can afford prior to shopping for a car.

“Many times the bank will pre-approve you for a purchase. But before you go shopping, know what type of vehicle will meet your needs,” Zubke said. “Stick to the plan so that you don’t end up buying the wrong vehicle. Find a dealer or private party that you can trust and don’t make quick decisions.”

Another key point? “Know that it’s right BEFORE you sign on the dotted line,” said Zubke. For example, does the vehicle you are looking at meet the needs of you and your family?

“It makes no sense to buy a two door sports car if you have a baby car seat that you are going to need to get in and out of the back seat. A big new truck might look nice, but if you are going to be driving to Duluth every day for work, it doesn’t make a lot of sense,” Zubke said. “A vehicle should fall into the category of a ‘need’. If it was a ‘want’, the minivan would never have been produced.”

According to an FDIC Consumer News release, don’t allow anyone to steer you toward a larger purchase and a bigger loan than you will be able to comfortably pay. And once you get to the financing table, keep in mind the longer the loan, the more interest you will pay. Longer loans can lower your monthly payment, but you will pay more in interest over the life of the loan.

“Dealers do have the ability to obtain auto financing at some very good interest rates. However, the option that dealers do not have is to consolidate loans together to make the budget affordable,” Zubke said. “Dealers are limited to only being able to use the collateral being purchased at their dealership as the collateral to secure the loan. However, Woodland Bank has the ability to consolidate a customer’s debt and structure their loan file to meet their financial budget.”

Zubke explained, “Let’s say my budget allows for $700 in loan payments, and I want to buy a new car but I currently have a boat loan that I am paying $400 a month. If I finance through a dealer, I only have a budget of $300 available. If I finance through Woodland Bank, they may be able to put the boat and car loan together on one payment. Assuming there is equity in the boat loan, Woodland Bank would be able to allow the customer to buy a more expensive car and still keep the total monthly payment at $700.”

And, don’t forget that besides paying for your monthly loan payment, you’ll have to budget for the cost of auto insurance, licensing fees and taxes.

At Woodland Bank, the loan officers look at more than just the customer’s credit score to decide if they can approve the loan.

“We look at income, total debt, vehicle being purchased, pay history with our bank, etc,” Zubke said. “A full analysis is completed on every customer to see if there is any way we can approve the loan.”

Kevin Zubke in Hill City, Randy Swenson in Deer River, Kurt Werner in Cohasset or Dave Wangen in Grand Rapids would be happy to discuss auto financing options with you. Call Kevin at (218) 697-8116, Randy at (218) 246-2444, Kurt at (218)328-5432 or Dave at (218) 327-4000.