Go to:

April 2019
< Mar May >
Leaguer Email Subscription

You are not currently subscribed. Click Subscribe below to receive the Leaguer email.

Texans Won’t be Tapping their Savings to Make Big Purchases in 2013, TCUL Poll Finds
Wednesday, March 20, 2013 7:30 AM


According to a poll from the Texas Credit Union League (TCUL), 13.5 percent of Texans plan to purchase a car this year and 12.2 percent will buy a house. With the majority indicating they will not use savings to make their big purchases, the demand for affordable loans will likely rise.

While the current market offers favorable rates, says the best options are usually only available to borrowers with “tier one” credit, which generally requires a credit score ranging from 760 to 850. Without research and planning, consumers outside of tier one may find themselves paying more than necessary for their loans.

Consumers planning to make a big purchase may want to ask:

  1. What is the average interest rate for auto loans in the U.S.?
  2. Is zero-percent financing always the best option?
  3. Will I pay more in financing costs for a used auto?
  4. How can I improve my credit score to take advantage of more favorable financing rates?

According to Courtney Moran, executive director of the Texas Credit Union Foundation, many consumers make the mistake of focusing solely on the interest rate of a loan.

“People need to consider the overall costs of the loan,” she explains. “Many times there is great variance in the cost of ancillary products like gap insurance and extended warranties. And sometimes dealers will aggressively sell things that people don’t necessarily need or want.”

Moran also cautions homebuyers to ask questions regarding closing costs, discount points, and what prepaid items are required (such as prepaid insurance).

“Often individuals focus on the monthly payment. Even though a monthly payment may be affordable, it’s important to consider overall costs. Fixating on monthly payments is another common mistake which results in paying much

more over the life of the loan.”

Moran advises people to protect their credit rating by paying their bills on time and checking their credit report often. She also cautions that zero-percent financing isn’t always the best deal.

“If you can choose a rebate instead of the zero percent financing, you may do better to forego the zero percent financing and choose a low interest loan elsewhere,” adds Moran. “It’s simple arithmetic and will only take a few minutes to calculate which option is really the best deal.”

TCUL’s survey also found that 65.8 percent of Texans are not planning to purchase a car this year, and another 20 percent are on the fence. Additionally, 87.8 percent said they won’t be buying a home. Moran points out that even if people aren’t planning to make a major purchase this year, they can still save money on their financing.  For example, Moran says it might be advantageous for some homeowners to take advantage of lower interest rates and refinance their home.  Of course Moran says homeowners should consider whether they will live in their current home long enough to recoup closing costs, since they are paid up front out of pocket.

“It’s quite possible that those with a car loan or a mortgage loan could find a cheaper rate than they are currently paying and keep their term the same,” says Moran.

Moran suggests consumers check with their local credit union to explore their options.

TCUL’s latest survey is available online, at TCUL is encouraging Texans to take the short poll that asks questions like:

  • Are you a disciplined saver?
  • How long could you live without a paycheck?
  • Do you have student loan debt?