Why you should get your car loan at a credit union Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial choices by providing you with interactive financial calculators and tools that provide objective and unique content, by enabling you to conduct research and compare information for free – so that you can make sound 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 Earn Profit The offers that appear on this site come from companies that compensate us. This compensation may impact how and when products appear on the site, such as for instance, the order in which they may appear within the listing categories, except where prohibited by law. Our mortgage, home equity and other products for home loans. However, this compensation will not influence the information we provide, or the reviews that you read on this site. We do not include the vast array of companies or financial deals that might be available to you. Emma Turner/Shutterstock.com
5 minutes read. Published March 02, 2023
Writer: Meaghan Hunt. Edited by personal financial contributor Meaghan Hunt, a researcher, writer and editor in a variety of disciplines with a passion for personal finance subjects. After more than a decade working in public libraries and writing, she now edits, and conducts research as freelancer for full-time. Editor: 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 control their finances through providing concise, well-studied information that breaks down otherwise complex topics into manageable bites. The Bankrate promises
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If you have questions about money. Bankrate has answers. Our experts have been helping you manage your money for more than four years. We continually strive to provide our readers with the professional advice and tools needed to make it through life’s financial journey. Bankrate adheres to a strict code of conduct , so you can trust that our information is trustworthy and reliable. Our award-winning editors and reporters create honest and accurate content that will help you make the right financial decisions. The content we create by our editorial staff is factual, accurate, and not influenced by our advertisers. We’re transparent about how we are capable of bringing high-quality content, competitive rates and useful tools to you , by describing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for the placement of sponsored products and, services, or by you clicking on certain links posted on our site. This compensation could influence the manner, place and in what order items are displayed within the categories of listing and categories, unless it is prohibited by law for our loan products, such as mortgages and home equity, and other home lending products. Other elements, like our own rules for our website and whether or not a product is available in your area or at your personal credit score could also affect the way and place products are listed on this site. Although we try to offer a wide range offers, Bankrate does not include information about every credit or financial product or service. If you’re thinking of buying a new or used car, a is a great option for a loan. There are more than 4800 federally insured credit unions in the United States, with over the 134 million members that belong to the (NCUA). The national banks are more diverse and generally faster to adopt the latest technology. But, people who are keen on saving money owe it to themselves to explore the benefits that credit unions offer. Credit unions typically have more benefits higher rates than online lenders or banks They also provide individual service and a host of other benefits. The most important thing to remember is
Credit unions offer more borrower perks than some banks can compete with. Lower interest rate, community presence, and a business that is geared towards the borrower model make credit unions stand out.
6 reasons to apply for credit union auto loan If you’re looking for your next car, take into consideration these six benefits of getting an auto loan from a credit union. 1. Low interest rates, unlike most financial institutions, credit unions can offer lower rates because they’re not for profit. Consequently, they are witnessing an exponential increase in car loan originations. “Typically the rate of lending (at credit unions) is extremely competitive when compared to other lenders in the majority of circumstances,” says Bill Meyer, former director of public relations and content manager at CU Direct, which connects credit unions with dealers of all kinds across the country. In the quarter that ended in 2022, the on a five-year , new automobile loan at a credit union averaged 4.74 percent, according to the NCUA. In banks the rate was 5.53 percent. When you borrow $30,000 for a car The credit union will save the borrower $327 over the life that of the loan. 2. Personalized service, community ties The procedure for getting an auto loan isn’t much different between banks and credit unions. However, if you have an unsatisfactory credit score, you may still be able to get an auto loan through the credit union rather than one with a bank. “Credit unions are more likely to offer more flexibility in the underwriting process,” says Mike Schenk Vice President of Research and policy analysis at the Credit Union National Association (CUNA), a trade association. Credit unions are also more likely to cooperate with you in the event that you go through a rough patch and need more time to make a payment. “You have a unique story and it is better suited to being heard by a credit union. At large financial institutions they are more likely to experience underwriting that is set in stone and done at a corporate headquarters a few states away. Walk into an institution like a credit union, and you’re more likely be in conversation.” 3. User-friendly loan process Gone are the days when you had to visit a branch to apply for the car loan. Most credit unions now let you apply online, over the phone, or . If you’re applying for financing through a dealership, “invariably, the dealer may recommend credit union financing and a credit union you can become a member of,” Schenk says, “so it’s an easy procedure.” Still it is recommended to do your research prior to visiting the dealership. There are a few dealerships that work with credit unions, and if you’re able to be a member, you will likely get the best deal when you work directly with the credit union. Plus, you will already be offered a competitive loan offer when you start car shopping and won’t have to pay dealer markup on the rate you are offered. 4. Credit unions have many additional benefits. Members, not shareholders, own credit unions. Any profits they earn go to the members in the dividends. Credit unions also can pass on the profits to their customers through greater rates on deposit accounts and on loan products, including auto loans. The majority of credit unions participate in a joint branch and ATM network. Schenk claims that CUNA’s members use an ATM network that is shared with more than 40,000 locations. Credit unions are focused on educating their members, too, so you can get advice on the best financial choices for your situation. “Credit unions are full-service, offering the same financial products as banks. They’re just structured differently, which means that they provide significant benefits for the members of credit unions,” Schenk says. The focus on members could be a more thorough discussion regarding your financial situation prior to when the credit union decides whether or not to approve or refuses your loan. Credit unions are often more understanding and flexible than traditional banks when it comes to lending decisions. 5. Becoming a member is easy There are those who believe credit unions are open only to those who work for a certain company, industry or government entity and that any person who is not part of a group can’t join. Meyer says this is no longer the case. “Most credit unions are now allowing any person to sign up.” CUNA has credit unions with community charters which enable them to service more geographical areas. If you’re looking for an institution near you, visit and type in your ZIP number. “It would be shocking to find a consumer who didn’t have access to an institution of credit,” Schenk says. 6. Car loans are an integral part of what credit unions do Don’t be surprised to hear that an auto dealer will refer customers to credit union before a bank. Credit unions for used and new cars alike increased year-over-year to 17.9 percentage and 19.9 percent and 19 percent, respectively, according to 2022 . Credit unions held $166.8 billion of loan balances for new cars at the end of the third quarter of 2022 and $305.3 billion for used vehicles. What is the procedure to apply for an auto loan? Financing a car through a credit union is the same as other loan providers, except the membership requirement. Once you qualify as a member, you can apply for an auto loan on the internet, by telephone or in branches, based on the credit union. The majority of credit unions will look over the following to determine the eligibility requirements in the event of an auto loan: Your personal information. Your income and employment information. Your . The VIN number for your vehicle. (VIN) and the miles for the vehicle you want to purchase. Be prepared to provide proof of insurance to the credit union in the application procedure. Note that although you may be able join and apply for an auto loan within the next day, some credit unions require you to wait a month or two before you can apply. What are the differences between a bank, dealership and credit union car loan? The primary difference between a bank or credit union auto loan is the financing terms. Some banks can offer promotions particularly if you have a solid relationship, a solid payment history and a . Credit unions as well as banks can offer incentives, such as an autopay discount when you are an existing customer. But because credit unions are not-for profit organizations and owned by the 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 entity. Dealers are paid to match you with one of their financing partners. Due to this, you may have better alternatives to the rate that you receive from the dealership versus a bank or credit union. Plus, if there is any issue with the finance company they won’t be able to help the customer — you’ll have to sort it out by yourself. The bottom line When purchasing an used or new car There are many choices to select from when it comes to financing. If you belong to an institution like a credit union, then you may benefit from low interest rates and lower fees compared to large banks and dealership loans. The application process is similar when you join and the advantages could aid in getting approved particularly when there’s no greatest credit score.
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Written by the Personal finance contributor Meaghan Hunt is a research, writer, and editor across disciplines with a passion for personal finance issues. After a decade of working in libraries for public libraries She is now writing, editing, and researches as freelancer for full-time. Editor: Rhys Subitch Editored by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are enthusiastic about helping readers gain confidence to manage their finances with clear, well-researched information that break down complex subjects into bite-sized pieces.
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