Auto Loan

Auto Buyer FAQs

Here are the questions we hear most often from members. If you still have questions or would like more information on any of the topics listed here, we’ll be happy to help. Please give us a call at 781.455.6500.



How much will my monthly vehicle payments be?

Your monthly payment will depend on the size and terms of your loan. You can calculate the size of your loan using our calculator.  The monthly payment should be no more than what you can realistically afford. Keep in mind the additional costs associated with owning a vehicle—such as insurance, registration, and maintenance—which are not factored into your monthly payment.

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Should I finance or pay cash?

Many people cannot afford to pay cash up front when purchasing a vehicle, but even for those who can, financing may still be a wiser option. Although you do not pay any direct financing costs when you pay with cash, the money you take out of your savings or investment portfolio has an "opportunity cost." An opportunity cost is the benefit you sacrifice by not using that money for something else—such as the return you would have earned on an investment.  For example, if you take $15,000 out of an investment that earns you an average 8% ever year to pay for a vehicle, the opportunity cost after five years is just over $7,000. Depending on the terms of your loan, that loss could be greater than the interest you would pay on your auto loan. Before making a decision, be sure to weigh out all your options.

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Which is better: a rebate or special financing?

Sometimes, automakers offer special financing to boost sales during economic recessions. For example, in 2004 many automakers offered zero-percent financing, which is an interest-free loan for the life of the loan term. However, zero-percent financing is often only available to qualified buyers with excellent credit histories. If you do not qualify for zero-percent financing, you should ask a lender about acquiring a loan with a low interest rate.  While low interest rate loans and rebates are both designed to boost auto sales, depending on your circumstances, one may turn out to be a better deal. While a rebate is acquired immediately and allows you to take out a lower initial loan, a low interest rate may save you money over the long term. Use our calculator to help evaluate the best option for your purchase. Better yet, try to get the best of both worlds—ask the dealer for a cash rebate and get low rate financing through Direct Federal.

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How much can I borrow?

You can borrow 105% of the value of your car (subject to our maximum auto loan limit of $75,000). This allows you to finance the entire purchase price plus the sales tax.

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How do I use my Direct Check?

Use your Direct Check like any other check. Make it payable to the party you’re buying your car from, and enter the appropriate amount. Endorse the back of the Direct Check and ask the seller to do the same. Make sure the required information is filled in on the back of the Direct Check.

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How long do I have to use my Direct Check?

You have 60 days to use your Direct Check. If, for whatever reason, you do not use the Direct Check during this period and need another one, simply call us at 781.455.6500.

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What happens if interest rates change between the time I apply and the time I use my Direct Check?

You will always receive the lower rate. If rates rise from the time you apply until the time you use your Direct Check, you will get the rate that was in effect when you applied. If rates fall from the time you apply until the time you use your Direct Check, you will get the rate in effect at the time you use your Direct Check.

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What if I need more money?

If you realize you need more money to finance your purchase once you start shopping for your car, simply call us at 781.455.6500. We’ll review your request and send a new Direct Check to you that day.

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What is considered a "New Auto" versus a "Used Auto"?

At Direct Federal, the most recent two model years are considered "new." Model years earlier than the most recent two are considered "used." We add a new model year each year on June 1st. For example, beginning June 1, 2009, the most recent two model years are 2010 and 2009, both of which would be "new." Model years 2008 and earlier are "used." You can finance "used" vehicles as old as eight model years. As of June 1, 2008 this would mean model years back to 2003.

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What types of vehicles can I finance with my Direct Check?

You can finance automobiles, SUVs, pickup trucks, and minivans. You may not use your Direct Check to finance boats, motorcycles, RVs or campers.  You cannot payoff a Direct Federal auto loan with a Direct Check.

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When is my first payment due?

Your first payment is due on the 30th of the month following the month you use your Direct Check. For example, if you use your Direct Check during September, your first payment will be due on October 30.

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