April is Financial Literacy Month—and Dupaco Credit Union is celebrating with a weeklong press series designed to empower and inform. From April 14-18, we’ll be releasing a new topic each day focused on helping take control of your personal finances. This five-part series will cover timely, relevant insights from the experts at Dupaco. Follow the series and catch up anytime at dupaco.com/newsroom.
Dubuque, Iowa—Vehicle prices are soaring. As of December 2024, the average cost of a new car in the U.S. has reached $49,740, according to Kelley Blue Book. With monthly payments for a 60-month loan potentially exceeding $900, being informed before making a purchase is more important than ever. Dupaco’s Consumer Lending Strategy Specialist, Ben Wagner, offers key insights and advice to help consumers confidently navigate the car-buying process.
Affordability
Before making an offer on any vehicle, know how much you can afford and how to spot a fair price. Don’t forget to factor in additional expenses that could come along with a vehicle, including auto insurance, tax, license, extended warranty, regular maintenance, fuel and parking.
“A good rule of thumb is to keep all vehicle expenses below 20% of your gross monthly income,” said Wagner. “This helps ensure your car fits comfortably within your budget and doesn’t interfere with other important financial goals.”
Wagner recommends using tools offered at your financial institutions, like online calculators to help calculate a monthly payment. “These calculators can help you see how your loan term, interest rate and down payment affect what you’ll pay each month—so you can plan with confidence.”
Credit score and loan lingo
When it comes to financing a vehicle, your credit score matters—a lot. The bottom line: the higher your credit score, the more likely you are to qualify for a lower interest rate. This could save you hundreds—or even thousands—over the life of your loan. If you’re unsure of your credit score, use a tool like Dupaco’s Bright Track Credit Monitoring to monitor your score and ensure its accuracy.
Wagner recommends if your credit score is below 650 and you’re not in need of a vehicle immediately, it may be in your best interest to build up your credit first before making a purchase.
When you know you’ll need to finance your vehicle, it’s smart to familiarize yourself with key lending terms before visiting a dealership or financial institution.
“You’ll be making a significant monthly payment for years to come,” said Wagner. When you start talking financing, you’ll want to make sure you fully understand what you’re getting into so you can make informed decision and avoid surprises.”
Here are few important terms Wagner recommends you know:
- Principal: The amount of money you borrow.
- Interest rate: What the lender charges you to borrow money. It’s typically expressed by a percentage of the principal.
- APR (Annual Percentage Rate): The yearly cost of your loan, including fees and interest, shown as a percentage.
- Term: The length of time you agree to repay your loan. Typically, represented in months.
- Liability: Financial obligations or debt you already owed.
- Default: Failing to repay a loan.
- Co-Signer: A person who agrees to take on the responsibility of the loan, if the primary borrower fails to repay.
Buying Used Do’s and Don’ts
Buying a used vehicle can be both rewarding and cost-effective, but it’s important to do your homework! Wagner shares key tips to keep in mind before deciding on a vehicle:
- Don’t rush the purchase. Take your time to thoroughly inspect the vehicle and gather the necessary information, like requesting a vehicle history report.
- Don’t overlook issues. If you notice problems, speak up! Ask the seller to address them. If the seller won’t fix them and you’re still interested in the vehicle, negotiate a lower price to reflect the needed repairs.
- Don’t buy unseen. Always view the vehicle in-person. Photos can be misleading.
- Don’t listen to music during the test drive. Music can mask suspicious noises and rattles in the vehicle.
- Don’t ignore your instincts. If something doesn’t feel right, trust your gut. It’s okay to walk away—there will also be other options.
“When test driving a vehicle, make sure you use your visual cues,” said Wagner. “Look for signs of water damage, verify that the mileage on the odometer aligns with the car’s condition and inspect the tires and wheels. Pop the hood and check that the coolant is clear and that the oil, transmission fluid and brake fluid are all the correct colors.”
If you’re unsure what to look, Wagner suggests bringing along a knowledgeable family member or trusted friend.
Resources
Doing your homework includes making sure you’re paying a fair price for the vehicle you’re considering. Wagner recommends checking these free resources to compare data points to ensure you’re making an informed decision:
- Kelley Blue Book: Offers price estimates, photos, expert reviews and other important data.
- Edmunds: Helps understand the five-year ownership cost of a vehicle, including depreciation, fuel and insurance.
- CARFAX: Check for a clean title, verify mileage accuracy and review the vehicle’s valuation.
- Safercar.gov: Find out if the vehicle has any outstanding recalls—and whether recall work has already been completed.
As vehicle prices continue to rise, preparation is more important than ever. Whether you’re buying new or used, financing or paying cash, understanding your budget, credit and total ownership costs can make all the difference. With the right tools and guidance from a trusted financial partner like Dupaco, buyers can make smart, confident choices that support their long-term financial goals.
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ABOUT DUPACO COMMUNITY CREDIT UNION
Dupaco Community Credit Union is a not-for-profit, member-owned financial cooperative headquartered in Dubuque, Iowa. It is dedicated to the financial well-being of its members, and specializes in personalized financial counseling, money advice and education. It offers savings, loans, investments, insurance and wealth management products for individuals and businesses. Dupaco serves residents in 118 counties throughout Iowa, northwest Illinois and southwest Wisconsin. Founded in 1948 by ten Dubuque Packing Company employees, membership has grown to more than 173,000 with assets exceeding $3.5 billion. It has over 600 employees and 23 branch office locations. It is a Forbes Best-in-State Credit Union, Forbes America’s Best Small Employer, and a Des Moines Register Top Workplace. Learn more at www.dupaco.com.
