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 that provide objective and unique content. We also allow you to conduct research and compare data for free and help you make sound financial decisions. Bankrate has partnerships with issuers such as, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The deals that are advertised on this site come from companies that compensate us. This compensation can affect the way and when products appear on the site, such as such things as the order in which they may appear in the listing categories, except where prohibited by law for our mortgage or home equity products, as well as other home loan products. However, this compensation will affect the information we provide, or the reviews you read on this site. We do not cover the entire universe of businesses or financial offers that may be available to you. Emma Turner/Shutterstock.com
5 minutes read Read March 02, 2023
Writer: Meaghan Hunt. Edited by personal finance contributor Meaghan Hunt works as a writer, researcher and editor in a variety of disciplines, with a love of personal finance issues. After 10 years of work in public libraries She now writes, edits, and conducts research as freelancer full-time. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are dedicated to helping their readers gain the confidence to manage their finances by providing precise, well-studied and well-researched data that breaks down complicated topics into manageable bites. The Bankrate promise
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You have money questions. Bankrate has answers. Our experts have been helping you manage your money for over four years. We are constantly striving to provide consumers with the expert advice and tools needed to be successful throughout their financial journey. Bankrate adheres to strict standards , so you can trust that our content is honest and precise. Our award-winning editors and journalists produce honest and reliable content that will help you make the right financial choices. The content we create by our editorial staff is factual, objective, and not influenced from our advertising. We’re open about the ways we’re able to bring quality information, competitive rates and useful tools for our customers by explaining how we earn our money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for placement of sponsored products and services or by you clicking on certain links posted on our website. This compensation could influence the manner, place and in what order items appear within listing categories in the event that they are not permitted by law. We also offer mortgage, home equity and other products for home loans. Other elements, like our own rules for our website and whether the product is offered in your region or within your personal credit score could also affect the manner in which products are featured on this site. Although we try to offer the most diverse selection of products, Bankrate does not include details about every credit or financial product or service. If you’re thinking of buying a new or used car it’s a good option for the loan. More than 4,800 federally insured credit institutions in the United States, with over 134 million members, according to the (NCUA). Banks with national affiliations have more branches, and they are typically quicker to roll out new technologies. However, those who are interested in saving money owe it to themselves to explore the options that credit unions offer. Credit unions usually have more higher rates than online lenders or banks They also provide personalized service and a variety of other advantages. Important takeaways
Credit unions can offer more borrower perks than some banks are positioned to compete with. Lower interest rates, community presence, and a business that is geared towards the borrower model make credit unions stand out.
Six reasons to take out a credit union car loan If you’re shopping for your next car, take into consideration these six benefits of getting an auto loan at the credit union. 1. Lower interest rates . Unlike bank, credit unions are able to provide lower rates since they’re not for profit. Therefore, they’re witnessing an exponential increase in car loan originations. “Typically the lending rate (at credit unions) is competitive to other lenders under most situations,” says Bill Meyer who was a former director of public relations and content manager at CU Direct, which connects credit unions and dealers of all kinds across the country. In the final 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. For example, if you’re borrowing $30,000. to finance a car and the credit union is able to save you $327 in interest over the life that of the loan. 2. Personalized service, community ties The process of getting a car loan isn’t that different between the credit unions and banks. However, if you have an unsatisfactory credit score, you may still be able to qualify for an auto loan through the credit union rather than a bank. “Credit unions will likely have more flexibility in their underwriting processes,” says Mike Schenk, vice president of research and policy analysis at the Credit Union National Association (CUNA) an association for trade. The credit union is also likely to assist you in the event that you go through a rough patch and need longer to complete a payment. “You have a story that is unique and your story is much greater chance of being heard at an institution like a credit union. At big financial institutions, you’re more likely to encounter underwriting that’s written in stone and carried out in some corporate office a few states away. Walk into the credit union and you’re more likely to be in discussion.” 3. A user-friendly loan procedure Gone are the days of having to visit a branch to apply for an auto loan. Most credit unions now let applicants apply online, over the phone, or . If you’re seeking financing at a dealer, “invariably, the dealer will refer you to credit union financing and the credit union that you can join as a member,” Schenk says, “so it’s a simple procedure.” However you must do some research before going to the dealership. Not all dealerships collaborate with credit unions and if you’re able to join a credit union it is likely that you will receive the best price when working directly with the credit union. Plus, you will already have a competitive loan offer before you begin car shopping and won’t be required to pay a markup from the dealer on your rate. 4. Credit unions have many additional benefits. Members, not shareholders, own credit unions. Any profits they earn go to members in the form of dividends. Credit unions can also pass on the profits to their customers through higher rates on deposits and loan products, like auto loans. The majority of credit unions participate in a joint branch and ATM network. Schenk says CUNA’s members have an ATM network shared by over 40,000 outlets. Credit unions are focused on providing education to 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 with the same products that banks offer. They’re just structured differently which means that they provide significant benefits for credit union members,” Schenk says. This member focus could also mean a more nuanced dialog regarding your financial situation prior to when the credit union approves or refuses your loan. Credit unions might be more understanding and flexible than traditional banks when it comes to making lending decisions. 5. It’s easy to join. Some believe credit unions are only open to those who work for the same industry, business or government entity and that anyone not a member of a group cannot join. Meyer claims that this is not the case anymore. “Most credit unions are now allowing anybody to become a member.” CUNA has credit unions that have community charters, which allow them to serve larger geographic areas. If you are looking for an institution near you, visit and type in your zip number. “It is a shock to meet a customer who was not able to access an institution of credit,” Schenk says. 6. Car loans are an integral part of what credit unions do Don’t be shocked when an auto dealer recommends the customer to a credit institution prior to you even go to a bank. Credit unions for both used and new vehicles alike increased year-over-year to 17.9 per cent and 19, respectively, according to 2022 . Credit unions had $166.8 billion of loan balances for new vehicles at the close in the 3rd quarter 2022, and $305.3 billion of used vehicles. How can I apply for a credit union auto loan? The process of financing a car with the credit union is comparable with other lending institutions, except for the membership process. When you’re an enrolled member, you may apply for a car loan on the internet, by telephone or in an office, depending upon the particular credit union. The majority of credit unions will look over the following to determine your eligibility for an auto loan: Your personal information. The information about your income and employment. Your employment and income information . The vehicle identification number (VIN) and the mileage of the vehicle you want to purchase. You must show proof of insurance the credit union as part of the application process. Also, while you might be able to join and apply for an auto loan within the same day, some credit unions will make you wait for a month or two prior to submitting your application. What are the differences between a dealership, bank and credit union car loan? The major difference between a bank or an auto credit union loan is the terms for financing. Certain banks may offer promotional offers in particular if you have a solid relationship, a good track record of payment and . Both banks and credit unions may offer incentives like an autopay discount when you’re an existing customer. However, since credit unions are not for-profit entities and are owned by their members, they typically get better rates and reduced fees compared to for-profit banks that are owned by shareholders. If you take out a auto loan , the loan originates from a third party financial institution. Dealers are paid to match you up with any of their finance partners. Due to this, you may have better options to choose from than the rates you pay through the dealer versus an institution like a credit union or bank. In addition, if there’s any issue with the financing firm and the dealer isn’t able to assist you — you will need to solve the problem by yourself. If you are looking to purchase a new or used car There are many options for financing. If you are a member of the credit union you might be able to enjoy lower interest rates and charges compared to banks with large branches and dealership loans. The process for applying is the same after you’ve joined and the benefits could assist you in getting approval particularly if there’s no best credit score.
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Written by the Personal finance contributor Meaghan Hunt is a research as well as a writer and editor across disciplines , with a love for personal finance-related topics. After more than a decade working in public libraries and writing, she is now writing, editing, and researches as freelancer full-time. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are dedicated to helping readers gain confidence to manage their finances through providing concise, well-studied and well-researched content that break down complex topics into manageable bites.
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