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 to compare information at no cost to help you make financial decisions with confidence. Bankrate has partnerships with issuers such as, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Profit The deals that are advertised on this site come from companies that pay us. This compensation could affect how and when products are featured on the site, such as such things as the order in which they appear within the listing categories in the event that they are not permitted by law for our mortgage, home equity and other home lending products. This compensation, however, does not influence the information we provide, or the reviews you read on this site. 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 Read March 02, 2023
Writer: Meaghan Hunt. Edited by Personal financial contributor Meaghan Hunt, a researcher, writer, and editor across disciplines who is passionate about personal finance subjects. After 10 years of work in public libraries She now writes, edits, and conducts research as a full-time freelancer. Editor: Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are dedicated to helping their readers to manage their finances with clear, well-researched information that breaks down complex issues into digestible chunks. The Bankrate promises
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If you have questions about money. Bankrate has the answers. Our experts have helped you understand your money for more than four years. We continually strive to give our customers the right advice and tools required to succeed throughout life's financial journey. Bankrate follows a strict policy, which means you can be confident that our content is truthful and accurate. Our award-winning editors, reporters and editors create honest and accurate content to help you make the right financial choices. Our content produced by our editorial staff is objective, factual, and not influenced through our sponsors. We're honest regarding how we're able to bring quality content, competitive rates and useful tools for our customers by explaining how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for placement of sponsored products and services, or through you clicking specific links on our site. So, this compensation can impact how, where and when products are displayed within the categories of listing, except where prohibited by law. We also offer loan products, such as mortgages and home equity and other home lending products. Other elements, like our own rules for our website and whether the 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. While we strive to provide an array of 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 then a credit union is an excellent option for the loan. The number of credit unions is more than 4,800 federally insured credit institutions in the United States, with over 134 million members, according to the (NCUA). National banks have more branches and are generally faster to adopt new technologies. Still, consumers keen on saving money owe it themselves to investigate what credit unions have to provide. Credit unions frequently have greater advantages than online lenders and banks They also provide personalized service and a variety of other advantages. Key takeaways
Credit unions offer more advantages to the borrower than other banks are in a position to compete with. Lower interest costs, community presence, and a business that is geared towards the borrower model make credit unions stand out.
6 reasons to get a credit union car loan If you're in the market for your next vehicle, think about the following benefits of obtaining an auto loan from the credit union. 1. Low interest rates, unlike most financial institutions, credit unions may provide lower rates since they're not a profit-making institution. Consequently, they are witnessing an exponential increase in car loan originations. "Typically, the lending rate (at the credit unions) is very competitive compared to other lenders under most conditions," says Bill Meyer who was the former public relations and content manager for CU Direct, which connects credit unions with auto dealers nationwide. In the final quarter of 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. If you're borrowing $30,000 to purchase automobile and the credit union is able to save you $327 on interest over the course of the loan. 2. Personalized service, community ties The procedure for getting a car loan isn't much different between banks and credit unions. However, if you have a lower credit score, you may still be eligible for an auto loan from the credit union rather than banks. "Credit unions are likely to have more flexibility in their underwriting processes," 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 you if you hit the rough spots and require longer to complete payments. "You have a distinct story and it is more likely to be heard at an institution like a credit union. When you work with large financial institutions they are more likely to have underwriting procedures that are written in stone and carried out in some corporate office a couple of states away. Walk into the credit union and you're more likely to engage in a discussion." 3. User-friendly loan process Long gone are the days of having to go to a branch in order to apply for the car loan. The majority of credit unions let applicants apply online, over the phone or . If you're applying for financing at a dealer, "invariably, the dealer will refer you to credit union financing as well as an institution that you could join as a member," Schenk says, "so it's really an easy procedure." However you must do some research before going to the dealership. There are a few dealerships that collaborate with credit unions and if you are able to be a member, you will likely receive the best price when you work directly with the credit union. In addition, you'll have 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 offer a variety of 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 transfer profits to their members via greater rates on deposit accounts as well as on loan products, like auto loans. The majority of credit unions participate in a shared branch and ATM network. Schenk says CUNA's members have an ATM network shared by more than 40,000 locations. Credit unions are focused on educating their members as well, which means you can get advice regarding the best options for financial planning to suit your needs. "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 be a more thorough discussion about your financial status before the credit union approves or denies your loan. Credit unions might be more understanding and accommodating than traditional banks with regards to the decision to lend. 5. Becoming a member is easy Many believe that credit unions are only open to people who work for the same industry, business or government agency, 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 are now allowing anybody to become a member." CUNA has credit unions with community charters that allow them to serve larger geographic regions. If you're looking for a credit union near you then go to the website and enter your ZIP number. "It is a shock to meet a customer that didn't have access an institution of credit," Schenk says. 6. Car loans make up a large portion of what credit unions do Don't be shocked to hear that an auto dealer will refer customers to credit union prior to you even go to a bank. Credit unions for new and used cars alike increased in 17.9 percent and 19 percent, respectively, according to 2022 . Credit unions held $166.8 billion in loan balances for brand new cars at the close on the last quarter in 2022's third quarter, and $305.3 billion for used cars. How do I apply for a credit union auto loan? Financing a car through a credit union is the same with other lending institutions, with the exception for the membership process. If you are an active member, you are able to apply for a car loan online, over the phone , or at an office, depending of the institution. The majority of credit unions will look over the following information to determine the eligibility requirements to get an auto loan The information you provide about yourself. The information about your income and employment. Your . The number of your vehicle's identification (VIN) and the miles for the vehicle you plan to purchase. Make sure you provide proof of insurance to the credit union in the application procedure. Note that although you may be able to join and apply for an auto loan within the on the same day, certain credit unions will make you wait for a few months or even two prior to submitting your application. What are the differences between a dealership, bank and credit union car loan? The major difference between a bank or an auto credit union loan is the terms for financing. Some banks offer discounts particularly if you have a solid relationship, a solid payment history and a . Credit unions as well as banks might offer incentives such as an autopay discount if you're a current customer. However, since credit unions are not-for-profit organizations and are owned by their members, they typically 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 comes from a third-party financial entity. Dealers are paid to match you up with any of their finance partners. This means that there are more options to choose from than the rates you get through the dealer versus the interest rates offered by a credit union or bank. Plus, if there is an issue with the financing firm, the dealer won't help the customer -- you'll have to sort it out yourself. The main thing to remember is that when you purchase a new or used car There are many options for financing. If you are a member of the credit union you could be able to enjoy lower interest rates and costs compared to big banks or dealership loans. The application process is similar when you join, and the benefits may aid in getting approved even in the event that there's no best credit score.
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Written by a contributor to Personal Finance Meaghan Hunt is a researcher as well as a writer and editor across disciplines , with a love for personal finance-related topics. After more than a decade working in libraries that were open to the public and writing, she is now writing, editing, and researches as a full-time freelancer. Editor: Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping readers gain the confidence to take control of their finances through providing concise, well-studied and well-researched content that breaks down complicated topics into digestible chunks.
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