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 providing you with interactive tools and financial calculators as well as publishing impartial and original content. This allows you to conduct research and to compare information at no cost – so that you can make financial decisions with confidence. Bankrate has agreements with issuers such as, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn 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 be listed within the categories of listing and other categories, unless prohibited by law. Our mortgage, home equity and other home loan products. This compensation, however, does affect the information we publish, or the reviews that you see on this site. We do not cover the universe of companies or financial deals that might be open to you. Emma Turner/Shutterstock.com
5 minutes read. Published March 02, 2023.
The article was written by Meaghan Hunt Written by Personal financial contributor Meaghan Hunt works as a writer, researcher and editor across disciplines with a passion for personal finance issues. After a decade of working in libraries that were open to the public, she now writes, edits, and researches as freelancer for 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 committed to helping readers to take control of their finances through providing precise, well-studied and well-researched data that breaks down complex subjects into bite-sized pieces. The Bankrate promise
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You have money questions. Bankrate has the answers. Our experts have helped you understand your money for over four decades. We strive to continuously provide our readers with the professional advice and tools needed to be successful throughout their financial journey. Bankrate adheres to a strict code of conduct , so you can trust that our content is honest and precise. Our award-winning editors, reporters and editors provide honest and trustworthy content that will help you make the right financial decisions. The content we create by our editorial team is objective, factual and uninfluenced by our advertisers. We’re honest regarding how we’re in a position to provide quality content, competitive rates, and helpful tools to you , by describing how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and services, or by you clicking on certain hyperlinks on our website. So, this compensation can influence the manner, place and when products appear within listing categories in the event that they are not permitted by law. This is the case for our credit, mortgage and other home loan products. Other factors, such as our own rules for our website and whether a product is offered in your area or at your self-selected credit score range can also impact the manner in which products are featured on this site. We strive to provide an array of offers, Bankrate does not include specific information on each financial or credit item or service. If you’re thinking of buying an automobile, whether used or new, a is a great choice for the loan. More than 4,800 federally insured credit institutions within the United States, with over the 134 million members that belong to the (NCUA). National banks have more branches and are usually more quick to introduce new technology. Still, consumers keen on saving money owe it to themselves to explore what credit unions have to provide. Credit unions typically have more benefits greater advantages than online lenders and banks They also provide individual service and a host of other advantages. Important takeaways
Credit unions can offer more borrower perks than some banks are in a position to be able to compete with. Lower interest costs, a community presence and a borrower-oriented business model set credit unions apart.
6 reasons to get credit union auto loan If you’re shopping for your next car, take into consideration these six benefits of getting an auto loan at an institution like a credit union. 1. Low interest rates, unlike most banks, credit unions can offer lower rates because they’re not for profit. Consequently, they are seeing an exponential rise in auto loan originations. “Typically the lending rate (at the credit unions) is extremely competitive when compared to other lenders in the majority of situations,” says Bill Meyer who was a former director of public relations and content manager at CU Direct, which connects credit unions and auto dealers nationwide. In the final quarter of 2022, the rate for a five-year , new car loan from a credit union was 4.74 percent as per the NCUA. At banks, it was 5.53 percent. If you’re borrowing $30,000 for a car and the credit union is able to save the borrower $327 over the life of the loan. 2. Personalized service, community ties The process of getting an auto loan isn’t too different from bank and credit union. But if you have a lower credit score, you may still be able to qualify for an auto loan from a credit union versus a bank. “Credit unions will likely offer more flexibility in the underwriting process,” says Mike Schenk who is vice president of research and policy analysis at the Credit Union National Association (CUNA) which is a trade organization. The credit union is also likely to work with you if you hit the rough spots and require more time to make a payment. “You have a distinct story and your story is much better suited to being heard at an institution like a credit union. In large financial institutions, you’re more likely to experience underwriting that is written in stone and carried out in some corporate office a couple of states away. Visit the credit union and you’re likely to be in conversation.” 3. An easy loan process Gone are the days when you had to visit a branch to get the car loan. The majority of credit unions let you apply online, on the phone, or . If you’re applying for financing at a dealer, “invariably, the dealer can recommend credit union financing as well as a credit union you can join as a member,” Schenk says, “so it’s really an easy procedure.” Still it is recommended to do your research prior to visiting the dealership. Some dealerships don’t work with credit unions, and if you’re able to join a credit union, you will likely receive the best price when dealing directly with your credit union. In addition, you’ll have a competitive loan offer at the time you start car shopping and won’t have to pay dealer markup on your rate. 4. Credit unions have many additional benefits. Members, not shareholders, have their own credit unions. Any profits they make go back to the members in the form of dividends. Credit unions are also able to transfer the profits to their customers through greater rates on deposits and loan products, like auto loans. Most credit unions also participate in a shared branch and ATM network. Schenk says CUNA’s members have an ATM network that is shared with over 40,000 outlets. Credit unions are focused on educating their customers and educating them on how they can get advice regarding the best options for financial planning for your situation. “Credit unions offer full-service offering the same financial products as banks. They’re just structured differently, and that results in significant advantages for members of credit unions,” Schenk says. This focus on the member could be a more thorough discussion about your financial status before the credit union decides whether or not to approve or denies your loan. Credit unions are often more understanding and lenient than traditional banks with regards to making lending decisions. 5. Membership is simple. There are those who believe credit unions are available only to people who work for a certain company, industry or government entity and that those who are not part of a group can’t join. Meyer claims that this is not the case anymore. “Most credit unions allow any person to sign up.” CUNA has credit unions with community charters which enable them to service greater geographic regions. If you seek an institution near you go to their website and enter your zip number. “It is a shock to find a consumer who didn’t have access to the credit union,” Schenk says. 6. Car loans are a huge part of the work of credit unions. Don’t be surprised when an auto dealer recommends you to a credit union prior to a bank. Credit unions for used and new cars alike grew year-over-year in 17.9 percent and 19 percent, respectively, according to 2022 . Credit unions had $166.8 billion worth of loan balances for brand new cars at the end in the 3rd quarter 2022, and $305.3 billion for used cars. How do I apply for an auto loan? Financing a car through the credit union is comparable with other lending institutions, with the exception for the membership step. Once you qualify as an enrolled member, you may apply for a car loan via the internet, over the phone , or at a branch, depending on the credit union. The majority of credit unions will look over the following 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 mileage for the vehicle you want to purchase. You must submit proof of insurance to the credit union as part of the application procedure. And note that 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 before you apply. What is the difference between a bank, dealer and credit union car loan? The main difference between a bank and credit union auto loan is the terms of financing. Some banks offer discounts particularly when you have a good relationship, a good track record of payment and . Credit unions as well as banks might offer incentives such as an autopay discount when you’re an existing customer. However, since credit unions are not-for-profit organizations and are owned by their members, you are able to receive better rates and lower fees compared to for-profit banks that are owned by shareholders. When you apply for a car loan and you are approved, the loan originates from a third party financial institution. Dealers receive compensation to match you with the financing partner of one. Because of this, there may be better options to choose from than the rates you get through the dealership versus a bank or credit union. Plus, if there is any issue with the financing firm and the dealer isn’t able to assist the customer — you’ll have to sort it out your own. If you are looking to purchase an used or new car there are a variety of options to choose from for financing. If you’re a member of the credit union you may have access to lower interest rates and fees compared to large banks or dealership loans. The application process is similar when you join and the benefits could help you get approved, especially when your credit score isn’t the greatest credit score.
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Written by a contributor to Personal Finance Meaghan Hunt is a researcher, writer, and editor across disciplines with a passion for personal finance-related topics. After more than a decade working in public libraries and writing, she is now writing, editing, and researches as a full-time freelancer. Written by Rhys Subitch Editored by Auto loans Editor Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers gain the confidence to take control of their finances with concise, well-studied and well-researched content that break down complex topics into digestible chunks.
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