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 choices by offering you interactive tools and financial calculators, publishing original and objective content, by enabling users to conduct research and to compare information at no cost - so that you can make sound financial decisions. Bankrate has partnerships 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 that compensate us. This compensation could affect how 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 products for home loans. This compensation, however, does affect the information we provide, or the reviews that appear on this website. We do not contain the vast array of companies or financial offerings that could be available 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 is a writer, researcher and editor across disciplines who is passionate about personal finance topics. After more than a decade working in libraries for public libraries, she now writes, edits, and studies 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 passionate about helping readers gain the confidence to manage their finances through providing concise, well-studied information that breaks down complicated topics into manageable bites. The Bankrate promise
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You have money questions. Bankrate can help. Our experts have been helping you master your money for more than four decades. We strive to continuously provide our readers with the professional guidance and the tools necessary to make it through life's financial journey. Bankrate follows a strict policy, which means you can be confident that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate information to assist you in making the best financial decisions. The content created by our editorial staff is factual, accurate and is not influenced through our sponsors. We're transparent about how we are in a position to provide quality content, competitive rates and useful tools to you by explaining how we earn our money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the placement of sponsored products and services, or by you clicking on certain links posted on our site. So, this compensation can impact how, where and in what order items are listed and categories, unless it is prohibited by law for our loan products, such as mortgages and home equity, and other home loan products. Other factors, such as our own website rules and whether a product is available in your region or within your self-selected credit score range could also affect the way and place products are listed on this site. We strive to provide an array of offers, Bankrate does not include information about every financial or credit product or service. If you're thinking of buying a used or brand new car it's a good choice for a loan. More than 4,800 federally insured credit unions within the United States, with over 134 million members, according to the National Credit Union Administration (NCUA). National banks have more branches and are generally more quick to introduce innovative technologies. Still, consumers keen on saving money owe it to themselves to research the benefits that credit unions offer. Credit unions usually have more higher rates than online lenders or banks, and they also offer personalized service and a variety of other advantages. Key takeaways
Credit unions are able to offer greater borrower perks than some banks are positioned 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 vehicle, think about these benefits of getting an auto loan from an institution like a credit union. 1. Low interest rates, unlike most banks, credit unions may offer lower rates due to the fact that they're not a profit-making institution. Consequently, they are experiencing exponential growth in car loan originations. "Typically the rate of lending (at the credit unions) is competitive to other lenders under most conditions," says Bill Meyer, former director of public relations manager and content manager at CU Direct, which connects credit unions and auto dealers nationwide. In the final quarter of 2022, the interest rate on a five-year new car loan through a credit union was 4.74 percent according to the NCUA. For banks, it was 5.53 percent. When you borrow $30,000 to finance a car The credit union will save you $327 in interest throughout the term that of the loan. 2. Community ties, personalized service The procedure for getting a car loan isn't too different from bank and credit union. But if you have a lower credit score it is possible that you will be able to qualify for an auto loan through a credit union versus a bank. "Credit unions are more likely to have more flexibility in the underwriting process," says Mike Schenk, vice president of research and policy analysis for the Credit Union National Association (CUNA), a trade association. Credit unions are also more likely to assist those who are going through an upswing and require longer to complete a payment. "You have a distinct story and your story is much better suited to being heard by an institution like a credit union. When you work with big financial institutions they are more likely to have underwriting procedures that are established in stone and executed in some corporate office a few states away. Walk into the credit union and you're more likely to engage in a discussion." 3. An easy loan process Gone are the days of needing 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 through a dealership, "invariably, the dealer can recommend credit union financing and the credit union that you can become a member of," Schenk says, "so it's really an easy procedure." But it is recommended to do your research prior to visiting the dealership. Some dealerships don't cooperate with credit unions and if you're able to join a credit union it is likely that you will be able to get the best rate dealing directly with your credit union. Plus, you will already receive a favorable loan offer when you start your car search and won't need to pay for dealer markup on your rate. 4. Credit unions have many other benefits Members, not shareholders, have their own credit unions and any profits they earn go to the members in the form of dividends. Credit unions can also give back earnings to their members through greater rates on deposit accounts as well as 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 shared by over 40,000 outlets. Credit unions focus on providing education to their members as well, which means you can get advice on the best financial choices for your particular situation. "Credit unions are full-service offering the same services as banks. They're just structured differently which means that they provide significant benefits for the members of credit unions," Schenk says. This focus on the member could mean a more nuanced dialog regarding your financial situation prior to when the credit union either approves or denies your loan. Credit unions may 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 available only to those who work for an industry, company or government entity and that those who are not part of a group can't join. Meyer says this is not the case anymore. "Most credit unions will allow anyone to join." CUNA has credit unions that have community charters, which permit them to serve larger geographic areas. If you seek the nearest credit union go to their website and enter your zip code. "It is a shock to meet a customer who didn't have access to a credit union," Schenk says. 6. Car loans are a huge part of what credit unions do Be prepared if an auto dealer refers the customer to a credit union before a bank. Credit unions for new and used cars alike increased year-over-year by 17.9 percentage and 19.9 percent and 19 percent, respectively, according to 2022 . Credit unions held $166.8 billion worth of loan balances for new cars at the close on the last quarter in 2022's third quarter, and $305.3 billion in used vehicles. What is the procedure to apply for an auto credit from a credit union loan? Financing a car through a credit union is the same to other lenders, with the exception for the membership step. If you are an enrolled member, you may apply for an auto loan online, over the telephone or in an office, depending upon the particular credit union. Most credit unions will review the following to determine the eligibility requirements in the event of an auto loan: Your personal information. Your income and employment information. Your . The vehicle identification number (VIN) and the mileage of the vehicle you want to purchase. Be prepared to provide proof of insurance to the credit union during the application procedure. Note that although you may be able to sign up and get an auto loan the on the same day, certain credit unions require you to wait for a few months or even two before you can apply. What are the main differences between a dealership, bank and credit union auto loan? The primary distinction between a bank and credit union auto loan is the terms of financing. Certain banks may offer promotional offers in particular if you have a solid relationship, a good track record of payment and . Credit unions and banks may offer incentives like autopay discounts if you're an existing customer. However, since credit unions are not-for profit organizations and owned by the members, they typically enjoy better rates and less fees compared to for-profit banks that have shareholders who own. If you take out a auto loan it is because the loan originates from a third party financial institution. Dealers are paid to match you with any of their finance partners. This means that there may be better options than the interest rate you get through the dealer versus a bank or credit union. If there's an issue with the financing company they won't be able to help you -- you'll need to solve the problem yourself. The main thing to remember is that when you purchase a used or new vehicle There are many options to choose from for financing. If you are a member of a credit union, you might benefit from lower interest rates and charges compared to banks with large branches and dealership loans. The application process is identical after you've joined and the benefits could aid in getting approved even if you don't have the highest credit score.
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Written by a contributor to Personal Finance Meaghan Hunt is a research and writer across various disciplines who has a passion for personal finance topics. After a decade of working in public libraries and writing, she now writes, edits, and researches as a full-time freelancer. 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 manage their finances through providing clear, well-researched information that breaks down otherwise complex topics into manageable bites.
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