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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 smarter financial decisions by offering you interactive tools and financial calculators that provide objective and unique content. We also allow you to conduct research and compare data for free — so that you can make financial decisions with confidence. Bankrate has partnerships with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this site are from companies who pay us. This compensation could affect how and when products appear on this website, for example for instance, the sequence in which they appear within the listing categories and other categories, unless prohibited by law for our mortgage, home equity and other home loan products. But this compensation does not influence the information we publish, or the reviews that appear on this website. We do not cover the entire universe of businesses or financial offerings that could be accessible to you. Emma Turner/Shutterstock.com
5 minutes read. Published March 02, 2023.
Writer: Meaghan Hunt. Edited by personal Finance Contributor Meaghan Hunt, a writer, researcher and editor across disciplines with a passion for personal finance subjects. After more than a decade working in libraries for public libraries She now writes, edits, and studies as freelancer for full-time. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are dedicated to helping their readers gain the confidence to control their finances by providing clear, well-researched information that breaks down complex topics into manageable bites. The Bankrate guarantee
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There are money-related questions. Bankrate can help. Our experts have helped you understand your money for more than four decades. We are constantly striving to provide our readers with the professional advice and tools required to make it through life’s financial journey. Bankrate adheres to strict standards , so you can trust that our content is truthful and reliable. Our award-winning editors, reporters and editors create honest and accurate information to assist you in making the right financial choices. The content created by our editorial staff is factual, objective and is not influenced by our advertisers. We’re honest about how we are in a position to provide quality content, competitive rates and helpful tools to you , by describing how we earn our money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the placement of sponsored products and services or when you click on specific links on our site. Therefore, this compensation may impact how, where and when products are displayed within the categories of listing in the event that they are not permitted by law. We also offer mortgage, home equity, and other home loan products. Other factors, such as our own rules for our website and whether a product is available in the area you reside in or is within your own personal credit score could also affect the way and place products are listed on this site. Although we try to offer the most diverse selection of products, Bankrate does not include information about every financial or credit product or service. If you’re considering buying a new or used car then a credit union is an excellent choice for the loan. The number of credit unions is more than 4800 federally insured credit unions within the United States, with over the 134 million members that belong to the National Credit Union Administration (NCUA). Banks with national affiliations have more branches, and they are usually quicker to roll out the latest technology. But, people who are keen on saving money owe it themselves to research the options that credit unions provide. Credit unions typically have more benefits greater advantages than online lenders and banks, and they also offer personal service as well as a range of other benefits. Important takeaways
Credit unions can offer more advantages to the borrower than other banks are in a position to rival. Lower interest rates, community presence, and a business that is geared towards the borrower model set credit unions apart.
6 reasons to apply for a credit union car loan If you’re shopping for your next car, consider these benefits of getting an auto loan from the credit union. 1. Lower interest rates . Unlike financial institutions, credit unions can offer lower rates because they’re not a profit-making institution. They’re also seeing an exponential rise in auto loan originations. «Typically, the rate of lending (at credit unions) is competitive 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 dealers of all kinds across the country. In the quarter that ended in 2022, the on a five-year new automobile loan from a credit union was 4.74 percent as per the NCUA. At banks they were 5.53 percent. For example, if you’re borrowing $30,000. to purchase a car The credit union will save you $327 on interest over the course of the loan. 2. Personalized service, community ties The procedure for getting an auto loan isn’t that different between the credit unions and banks. If you’ve got less credit, you may still be able to qualify for an auto loan from a credit union versus banks. «Credit unions are 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) which is a trade organization. The credit union is also likely to work with you in the event that you go through an upswing and require more time to make a payment. «You have a unique story and it is better suited to being heard by an institution like a credit union. When you work with big financial institutions there is a greater chance that you will encounter underwriting that’s established in stone and executed in a corporate office few states away. Visit an institution like a credit union, and you’re more likely to have a discussion.» 3. User-friendly loan process Gone are the days of needing to go to a branch in order to get the car loan. Many credit unions are now letting you apply online, over the phone, or . If you’re applying for financing through a dealership, «invariably, the dealer will refer you to credit union financing and an institution that you could become a member of,» Schenk says, «so it’s really an easy process.» Still it is recommended to do your research prior to visiting the dealership. Some dealerships don’t collaborate with credit unions and if you are able to be a member and receive the best price when you work directly with the credit union. Additionally, you’ll be offered a competitive loan offer when you start car shopping and won’t need to pay for dealer markup on your rate. 4. Credit unions have many additional benefits. Members, not shareholders, are the owners of credit unions and any profits they earn go to the members in the form of dividends. Credit unions also can transfer profits to their members via more favorable rates for deposit accounts as well as on loan products, such as auto loans. The majority of credit unions participate in a joint branch and ATM network. Schenk states that CUNA’s members are part of a shared ATM network with over 40,000 outlets. Credit unions focus on educating their customers, too, so you can get advice on the best financial choices for your situation. «Credit unions are full-service offering the same financial products like banks. They’re structured differently which results in substantial benefits for the members of credit unions,» Schenk says. This focus on the member could be a more thorough discussion about your financial situation before the credit union decides whether or not to approve or declines your loan. Credit unions might be more understanding and lenient than traditional banks with regards to lending decisions. 5. It’s easy to join. There are those who believe credit unions are available only to people who work for an industry, company or government agency, and that any person who is not member of a group cannot join. Meyer claims that this is no longer the case. «Most credit unions will allow anybody to become a member.» CUNA has credit unions that have community charters, which allow them to serve greater geographic areas. If you’re looking for the nearest credit union then go to the website and enter your zip number. «It would be shocking to see a person who didn’t have access to a credit union,» Schenk says. 6. Car loans make up a large portion of the work of credit unions. Be prepared if an auto dealer refers the customer to a credit union prior to you even go to a bank. Credit union for both used and new vehicles 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 in loan balances for new vehicles at the close on the last quarter in 2022’s third quarter, 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 to other lenders, except the membership requirement. Once you qualify as an enrolled member, you may apply for a car loan online, over the telephone or in branches, based on the credit union. Most credit unions will review the following information to determine the eligibility requirements to get an auto loan: Your personal information. Your income and employment information. Your employment and income information . The number of your vehicle’s identification (VIN) and the miles for the vehicle you want to purchase. Make sure you submit proof of insurance to the credit union in the application process. And note that while you might be able to join and apply for an auto loan within the next day, some credit unions will make you wait for a month or two before you can apply. What are the main differences between a dealership, bank and credit union auto loan? The primary difference between a bank or an auto credit union loan is the terms of financing. Some banks can offer promotions particularly if you have a solid relationship, a good track record of payment and a . Credit unions as well as banks may offer incentives like an autopay discount if you are an existing customer. However, since credit unions are not-for profit organizations and are owned by their members, they typically get better rates and reduced fees compared to for-profit banks, which shareholders own. When you apply for a auto loan , the loan comes from a third-party financial entity. Dealers receive compensation to connect you to the financing partner of one. Due to this, you may have better alternatives to the rate that you receive from the dealership , compared to 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’ll be required to resolve the issue your own. The bottom line When purchasing a used or new vehicle, you have several options to choose from for financing. If you belong to an institution like a credit union, then you may be able to enjoy lower interest rates and charges compared to banks with large branches or dealership loans. The application process is similar once you’ve gained membership, and the benefits may aid in getting approved even when there’s no highest credit score.
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Written by Personal finance contributor Meaghan Hunt, a researcher as well as a writer and editor across disciplines with a passion for personal finance topics. After more than a decade working in libraries for public libraries, she is now writing, editing, and researches as a full-time freelancer. Edited by Rhys Subitch Edited and written by Auto loans Editor Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping readers gain the confidence to manage their finances through providing concise, well-studied and well-researched content that breaks down complicated topics into manageable bites.
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