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 providing you with interactive financial calculators and tools, publishing original and objective content, by enabling users to conduct research and to compare information at no cost - so that you can make financial decisions with confidence. 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 website are provided by companies who pay us. This compensation may impact how and when products appear on the site, such as for instance, the sequence in which they be listed within the categories of listing, except where prohibited by law. This applies to our mortgage home equity, mortgage and other home loan products. However, this compensation will have no impact on the information we provide, or the reviews that you read on this site. We do not contain the vast array of companies or financial offers that may be accessible to you. Emma Turner/Shutterstock.com
5 min read Published March 02, 2023.
Written by Meaghan Hunt. Written by Personal financial contributor Meaghan Hunt, a writer, researcher and editor in a variety of disciplines who is passionate about personal finance subjects. After a decade of working in public libraries, she now writes, edits, and studies as freelancer 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 committed to helping readers to take control of 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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If you have questions about money. Bankrate can help. Our experts have been helping you manage your money for over four years. We are constantly striving to give our customers the right advice and tools required to make it through life's financial journey. Bankrate adheres to strict standards , so you can trust that our information is trustworthy and accurate. Our award-winning editors and reporters 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 from our advertising. We're open about the ways we're in a position to provide quality content, competitive rates, and useful tools to our customers by explaining how we earn our money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for the promotion of sponsored goods and services or through you clicking certain hyperlinks on our website. Therefore, this compensation may affect the way, location and when products are listed in the event that they are not permitted by law. This is the case for our loan products, such as mortgages and home equity and other products for home loans. Other elements, like our own proprietary website rules and whether a product is available within your region or within your own personal credit score can also impact the way and place products are listed on this website. We strive to provide an array of offers, Bankrate does not include specific information on every credit or financial product or service. If you're considering buying a used or brand new car it's a good option for a loan. There are more than 4,800 federally insured credit unions in the United States, with over one hundred million members, according to the National Credit Union Administration (NCUA). Banks with national affiliations have more branches, and they are typically quicker to roll out innovative technology. Still, consumers keen on saving money should owe it to themselves to explore the benefits that credit unions provide. Credit unions frequently have than banks and online lenders, and they also offer personal service as well as a range of other benefits. The most important thing to remember is
Credit unions can offer more advantages to the borrower than other banks are positioned to compete with. Lower interest rates, community presence, and a business that is geared towards the borrower model distinguish credit unions from other banks.
6 reasons to apply for a credit union car loan If you're shopping for your next vehicle, think about these six benefits of getting an auto loan at an institution like a credit union. 1. Lower interest rates . Unlike bank, credit unions are able to offer lower rates because they're not a profit-making institution. They're also experiencing exponential growth in auto loan originations. "Typically the rate of lending (at the credit unions) is extremely competitive when compared to other lenders in most conditions," says Bill Meyer, former director of public relations and content manager at CU Direct, which connects credit unions with auto dealers nationwide. In the final quarter of 2022, the interest rate on a five-year new vehicle loan at a credit union averaged 4.74 percent as per the NCUA. At banks the rate was 5.53 percent. For example, if you're borrowing $30,000. to purchase a car, the credit union saves you $327 in interest over the course of your loan. 2. Personalized service, community connections The process of getting an auto loan isn't that different between banks and credit unions. But if you have an unsatisfactory credit score it is possible that you will be able to qualify for an auto loan through an institution like a credit union instead of one with a bank. "Credit unions will likely be more flexible in their underwriting processes," says Mike Schenk, vice president of research and policy analysis at the Credit Union National Association (CUNA), a trade association. The credit union is also likely to assist you if you hit the rough spots and require longer to complete payments. "You have a unique story and it's much more likely to be heard at an institution like a credit union. When you work with large financial institutions, you're more likely to experience underwriting that is set in stone and done in a corporate office couple of states away. Walk into an institution like a credit union, and you're more likely be in conversation." 3. An easy loan process Long gone are the days when you had to go to a branch in order to get an auto loan. Many credit unions are now letting you apply online, over the phone, or . If you are applying for financing through a dealership, "invariably, the dealer may direct you to credit union financing as well as a credit union you can become a member of," Schenk says, "so it's a simple process." 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 join a credit union, you will likely be able to get the best rate working directly with the credit union. Plus, you will already be offered a competitive loan offer when you start car shopping -- and you won't be required to pay a markup from the dealer on the rate you are offered. 4. Credit unions offer a variety of other advantages. Members, and not shareholders, are the owners of credit unions. Any profits they earn go to the members in form of dividends. Credit unions also can give back earnings to their members through higher rates on deposits and loan products, like auto loans. The majority of credit unions participate in a shared branch as well as ATM network. Schenk states that CUNA's members are part of an ATM network shared by more than 40,000 ATMs. Credit unions are focused on educating their members, too, so you can get advice on the best financial choices for your particular situation. "Credit unions are full-service with the same products like banks. They're structured differently which results in substantial benefits for the members of credit unions," Schenk says. The focus on members could mean a more nuanced dialog about your financial status before the credit union either approves or refuses your loan. Credit unions are often more understanding and lenient than traditional banks with regards to the decision to lend. 5. It's easy to join. Many believe that credit unions are only open to people who work for the same industry, business or government organization, and that anyone not a member of a particular group isn't able to join. Meyer claims that this is no longer the case. "Most credit unions are now allowing anyone to join." CUNA has credit unions with community charters that permit them to serve larger geographic regions. If you are looking for an institution near you then go to the website and enter your zip number. "It would be shocking to see a person 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 to hear that an auto dealer will refer customers to credit union prior to you even go to a bank. Credit union for both used and new vehicles alike increased year-over-year by 17.9 percentage and 19.9 percent in each case, as per 2022 . Credit unions held $166.8 billion worth of loan balances for new cars at the end in the 3rd quarter 2022 and $305.3 billion of used cars. How can I apply for an auto credit from a credit union loan? Financing a car through a credit union is similar as other loan providers, with the exception the membership requirement. If you are an active member, you are able to apply for an auto loan online, over the telephone or in a branch, depending of the institution. A majority of credit unions review the following to determine your eligibility for an auto loan The information you provide about yourself. The information about your income and employment. Your employment and income information . The vehicle identification number (VIN) and the miles for the vehicle you plan to purchase. Make sure you provide proof of insurance to the credit union as part of the application process. And note that while you may be able to join and apply for an auto loan the same day, some credit unions will make you wait for a few months or even two before you can apply. What are the differences between a bank, dealership and credit union auto loan? The main difference between a bank or an auto credit union loan is the financing terms. Some banks offer discounts, especially in the case of a long-term relationship, a solid payment history and . Credit unions and banks may offer incentives like autopay discounts if you're an existing customer. But because credit unions are not-for profit organizations and are owned by their members, you are able to enjoy better rates and less fees compared to for-profit banks that are owned by shareholders. If you take out a auto loan , the loan is provided by a third-party financial entity. Dealers get paid to connect you to the financing partner of one. Due to this, there are more alternatives to the rate you get through the dealership versus an institution like a credit union or bank. If there's an issue with the financing company they won't be able to help you -- you will need to solve the problem yourself. The main thing to remember is that when you purchase a used or new vehicle, you have several choices to select from when it comes to financing. If you're a member of the credit union you might have access to lower interest rates and charges compared to banks with large branches or dealership loans. The process for applying is the same once you've gained membership and the advantages could aid in getting approved, especially if your credit score isn't the highest 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 a decade of working in public libraries, she is now writing, editing and conducts research as freelancer full-time. Written by Rhys Subitch Edited by Auto loans Editor Rhys has been writing and editing for Bankrate since late 2021. They are enthusiastic about helping readers gain confidence to manage their finances by providing precise, well-studied information that break down complex subjects into bite-sized pieces.
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