Why you should get your car loan at a credit union Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial decisions by offering you interactive financial calculators and tools as well as publishing impartial and original content. We also allow users to conduct research and to compare information at no cost to help you make informed financial decisions. Bankrate has agreements with issuers, including but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The products that appear on this site come from companies who pay us. This compensation could affect how and where products appear on the site, such as for instance, the order in which they may be listed within the categories of listing in the event that they are not permitted by law. This applies to our mortgage home equity, mortgage and other home lending products. But this compensation does not influence the information we publish, or the reviews appear on this website. We do not cover the entire universe of businesses or financial offerings that could be available to you. Emma Turner/Shutterstock.com
5 minutes read Read March 02, 2023.
The article was written by Meaghan Hunt. Edited by personal financial contributor Meaghan Hunt, a researcher, writer and editor in a variety of disciplines who is passionate about personal finance topics. After a decade of working in public libraries She now writes, edits, and conducts research as freelancer for full-time. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are committed to helping readers to manage their finances through providing concise, well-studied information that breaks down otherwise complex topics into manageable bites. The Bankrate promises
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You have money questions. Bankrate can help. Our experts have been helping you master your money for more than four years. We are constantly striving to provide our readers with the professional advice and tools needed to succeed throughout life’s financial journey. Bankrate adheres to a strict code of conduct standard of conduct, which means that you can trust that our content is honest and precise. Our award-winning editors and reporters create honest and accurate content that will help you make the right financial decisions. Our content produced by our editorial staff is objective, factual and uninfluenced by our advertisers. We’re transparent regarding how we’re capable of bringing high-quality content, competitive rates and useful tools for our customers by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for the placement of sponsored products and services or through you clicking certain hyperlinks on our site. Therefore, this compensation may impact how, where and in what order products are listed, except where prohibited by law for our loan products, such as mortgages and home equity and other home loan products. Other factors, like our own proprietary website rules and whether or not a product is offered in your region or within your self-selected credit score range may also influence the manner in which products are featured on this website. Although we try to offer a wide range offers, Bankrate does not include details about each financial or credit item or service. If you’re thinking of buying an automobile, whether used or new it’s a good choice for the loan. The number of credit unions is more than 4,800 federally insured credit institutions in the United States, with over the 134 million members that belong to the (NCUA). National banks have more branches and are generally quicker to roll out new technology. Still, consumers keen on saving money owe it themselves to explore what credit unions have to provide. Credit unions typically have more benefits greater advantages than online lenders and banks, and they also offer personalized service and a variety of other advantages. The most important thing to remember is
Credit unions are able to offer greater borrower perks than some banks are positioned to be able to compete with. Lower interest costs, a community presence, and a borrower-focused business model distinguish credit unions from other banks.
Six reasons to take out credit union auto loan If you’re in the market for your next car, consider the following benefits of obtaining an auto loan at a credit union. 1. Low interest rates, unlike most financial institutions, credit unions may offer lower rates due to the fact that they’re not a profit-making institution. Therefore, they’re seeing an exponential rise in car loan originations. “Typically, the rate of lending (at credit unions) is extremely competitive when compared to other lenders in most circumstances,” says Bill Meyer who was a former public relations and content manager for CU Direct, which connects credit unions and auto dealers nationwide. In the last quarter of 2022, the rate for a five-year new vehicle loan from a credit union was 4.74 percent, according to the NCUA. For banks they were 5.53 percent. If you’re borrowing $30,000 for an automobile The credit union will save you $327 in interest over the course of the loan. 2. Personalized service, community connections The procedure for getting an auto loan isn’t much different between banks and credit unions. If you’ve got less credit however, you might still be able to get an auto loan with an institution like a credit union instead of banks. “Credit unions are more likely to have more flexibility when it comes to underwriting,” says Mike Schenk Vice President of Research and policy analysis for the Credit Union National Association (CUNA) which is a trade organization. Credit unions are also more likely to cooperate with you in the event that you go through a rough patch and need longer to complete an installment. “You have a unique story and it’s much greater chance of being heard at the credit union. When you work with big financial institutions there is a greater chance that you will experience underwriting that is established in stone and executed in a corporate office few states away. If you visit a credit union, and you’re likely to engage in a discussion.” 3. A user-friendly loan procedure Gone are the days when you had to visit a branch to apply for a car loan. Many credit unions are now letting you apply online, on the phone, or . If you’re seeking financing at a dealership, “invariably, the dealer may recommend credit union financing as well as a credit union you can become a member of,” Schenk says, “so it’s an easy process.” However it is recommended to do your research prior to visiting the dealership. Not all dealerships collaborate with credit unions and if you are able to become a member and be able to get the best rate working directly with the credit union. Plus, you will already be offered a competitive loan offer before you begin car shopping and you will not need to pay for dealer markup on the rate you are offered. 4. Credit unions offer a variety of other benefits Members, not shareholders, have their own credit unions and any profits they earn are returned to members in the dividends. Credit unions also can give back the profits to their customers through higher rates on deposit accounts and on loan products, such as auto loans. Most credit unions also participate in a shared branch as well as ATM network. Schenk says CUNA’s members have an ATM network shared by more than 40,000 locations. Credit unions are focused on educating their members as well, which means you can get advice regarding the best options for financial planning to suit your needs. “Credit unions are full-service offering the same financial products like banks. They’re structured differently which results in substantial benefits for credit union members,” Schenk says. The focus on members could be a more thorough discussion about your financial status before the credit union approves or declines your loan. Credit unions might be more understanding and accommodating than traditional banks with regards to lending decisions. 5. It’s easy to join. Some believe credit unions are available only to employees of the same industry, business or government agency, and that anyone not a member of a particular group isn’t able to join. Meyer says this is no longer the case. “Most credit unions are now allowing anybody to become a member.” CUNA has credit unions that have community charters, which enable them to service more geographical areas. If you’re looking for the nearest credit union go to their website and enter your zip code. “It is a shock to find a consumer who was not able to access an institution of credit,” Schenk says. 6. Car loans are a huge part of what credit unions do Don’t be surprised when an auto dealer recommends the customer to a credit union before a bank. Credit union for used and new cars alike increased year-over-year to 17.9 percent and 19 percent and 19 percent, respectively, according to 2022 . Credit unions held $166.8 billion in loan balances for new vehicles at the close of the third quarter of 2022, and $305.3 billion in used cars. How can I apply for an auto loan? A car loan with a credit union is similar as other loan providers, except for the membership step. Once you qualify as an active member, you are able to apply for a car loan online, over the phone , or at an office, depending upon the particular credit union. Most credit unions will review the following information to determine the eligibility requirements for an auto loan your personal information. Your income and employment information. Your employment and income information . The VIN number for your vehicle. (VIN) and the mileage of the vehicle you want to purchase. You must show proof of insurance the credit union in the application procedure. Note that although you might be able to enroll and request an auto loan the same day, some credit unions will make you wait a month or two before you apply. What are the differences between a bank, dealer and credit union car loan? The main distinction between a bank and credit union auto loan is the terms for financing. Some banks offer discounts in particular in the case of a long-term relationship, a solid payment history and . Credit unions as well as banks can offer incentives, such as autopay discounts if you’re a current customer. Because credit unions are not for-profit entities and run by members, you can usually enjoy better rates and less charges compared with for-profit banks that have shareholders who own. If you take out a car loan it is because the loan originates from a third party financial institution. Dealers are paid to connect you to one of their financing partners. Because of this, you may have better options to choose from than the rates you pay through the dealership versus the interest rates offered by a credit union or bank. In addition, if there’s an issue with the financing firm and the dealer isn’t able to assist the customer — you’ll need to solve the problem by yourself. The main thing to remember is that when you purchase an used or new car there are a variety of options for financing. If you’re a member of the credit union you may benefit from lower interest rates and costs compared to big banks as well as dealership loans. The application process is identical once you’ve gained membership, and the benefits may aid in getting approved particularly in the event that there’s no best credit score.
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Written by Personal finance contributor Meaghan Hunt is a researcher and writer across disciplines with a passion for personal finance topics. After 10 years of work in public libraries, she now writes, edits and conducts research as freelancer full-time. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain the confidence to control their finances with clear, well-researched information that break down complex topics into manageable bites.
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