Banks vs Credit Unions

• THIS ASSIGNMENT IS HARD
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Banks vs. Credit Unions

Which one is right for you?  First lets check out credit unions, click HERE to open a search page on mycreditunion.gov.  Now enter our school's address in the window and click the blue 'search' button.  You can just copy and paste the school's address: 450 Masten Ave., Buffalo 14209

Notice that the second entry to come up is Kaleida Health?  Click on that.  Scrolling down a bit you will see the contact information for Kaleida's credit union and a web address.  Click the web address (if you can't find it THIS link will take you directly)

Now, across the top there is a navigation bar.  The first entry is Accounts and Services, then Loans, then Rates.  Click Rates.

Notice that if you wanted a loan for a new car the rate is 2%?  That means that for every dollar you borrow to buy a new car, you will have to repay 2 cents in interest per year.

Now lets look at a bank.  Click HERE to open M&T's site.  We will look for an auto loan, so look to the left where it says: Open an account and click the dropdown menu, select auto and click "go".  Now it will say

Auto Loan1 – Find out more information about auto loans from M&T Bank

Click where it says auto loans in blue.  Here it gives you all kinds of information, but you want what's in the green box.  Find where it says: Fixed rates in blue and click that.  Now it will ask you for four things.  Enter New York for your state.  Enter fixed rate for the interest type.  Enter Auto (2017 - 2015 New/Used/Demo) for the loan type and enter 17000 for the amount borrowed.

Now, if you want a 5 year loan (5 year=60 months) this bank's regular rate is 3.740% and if you have all the possible discounts available its still 3.24%.  The credit union's rate for any term (for any amount of months) is 2%.  Lets see just what that means:  a 2016 Chevrolet Cruze is about $17,000 so we used that number.

Click HERE and enter this information

Auto loan amount: 17,000

Auto loan in years: 5

interest rate per year: 3.74%

Click Calculate.  Then click "Show Amortization Schedule".  Look for the total interest collum and scroll to the bottom.  If your numbers are correct it should say $1,665.41.  This means in addition to the principal (the $17,000 you borrowed) this loan will cost you $1,665.41 in interest.  Now scroll back up to the top and enter 2% as the interest rate and keep the rest the same.  Click "Show Amortization Schedule" and again look to the bottom of the total interest column.  You should see $878.32.  What does it all mean?!?

It means, at M&T Bank, you will pay $1,665.41 in interest over the life of the loan and at Kaleida Health credit union you will only pay $878.32 in interest.  That's over $787 MORE the SAME car will cost you if you use M&T bank versus Kaleida Health's credit union.  At minimum wage ($9.00) that's 87 hours less that you have to work to earn the SAME car.  Is shopping for financial products worth it?  Well in 45 mins you saved over 2 weeks of full time work... you decide.

Now that you know the procedure, you will be ready to do tomorrow's assignment!

Finally click HERE to complete this activity!