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 as well as publishing impartial and original content, by enabling you to conduct your own 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 Earn Money The products that appear on this site come from companies that compensate us. This compensation may impact how and when products appear on this site, including such things as the order in which they may be listed within the categories of listing and other categories, unless prohibited by law for our mortgage or home equity products, as well as other home loan products. This compensation, however, does affect the information we provide, or the reviews that you see on this site. We do not cover the entire universe of businesses or financial offerings that could be open to you. Emma Turner/Shutterstock.com
5 minutes read Read March 02, 2023
Writer: Meaghan Hunt. Edited by personal finance contributor Meaghan Hunt is a researcher, writer and editor across disciplines, with a love of personal finance subjects. After more than a decade working in public libraries and writing, she now edits, and researches 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 by providing concise, well-studied information that breaks down otherwise complex subjects into bite-sized pieces. The Bankrate promise
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You have money questions. Bankrate can help. Our experts have helped you understand your money for more than four years. We are constantly striving to give our customers the right advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict standard of conduct, which means that you can trust that our information is trustworthy and precise. Our award-winning editors and journalists produce honest and reliable information to assist you in making the best financial decisions. Our content produced by our editorial team is factual, objective, and not influenced by our advertisers. We’re open about the ways we’re capable of bringing high-quality content, competitive rates and useful tools to our customers by explaining how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated 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 in what order items appear within listing categories and categories, unless it is prohibited by law. We also offer loan products, such as mortgages and home equity and other products for home loans. Other factors, such as our own website rules and whether or not a product is offered in the area you reside in or is within your self-selected credit score range could also affect the manner in which products are featured on this site. We strive to provide a wide range offers, Bankrate does not include information about each financial or credit item or service. If you’re thinking of buying an automobile, whether used or new then a credit union is an excellent choice for a loan. The number of credit unions is more than 4800 federally insured credit unions within 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 more quick to introduce the latest technology. However, those who are interested in saving money owe it to themselves to explore the options that credit unions provide. Credit unions frequently have higher rates than online lenders or banks, and they also offer personalized service and a variety of other benefits. Key takeaways
Credit unions are able to offer greater advantages to the borrower than other banks are in a position to rival. Lower interest rates, a community presence and a borrower-oriented business model make credit unions stand out.
6 reasons to get a credit union car loan If you’re shopping for your next car, take into consideration these benefits of getting an auto loan from a credit union. 1. Lower interest rates Unlike most banks, credit unions can offer lower rates because they’re not for profit. Therefore, they’re witnessing an exponential increase in auto loan originations. “Typically the lending rate (at the credit unions) is extremely competitive when compared to other lenders in most conditions,” says Bill Meyer who was a former director of public relations and content manager for CU Direct, which connects credit unions to auto dealers across the nation. In the final quarter of 2022, the rate for a five-year , new car loan at a credit union averaged 4.74 percent according to the NCUA. For banks, it was 5.53 percent. If you’re borrowing $30,000 to finance an automobile The credit union will save the borrower $327 over the life of your loan. 2. Personalized service, community ties The process of getting an auto loan isn’t too different from the credit unions and banks. If you’ve got a lower credit score, you may still be eligible for an auto loan with a credit union versus one with a bank. “Credit unions will likely offer more flexibility when it comes to underwriting,” says Mike Schenk Vice President of Research and policy analysis for the Credit Union National Association (CUNA) which is a trade organization. The credit union is also likely to cooperate with you in the event that you go through the rough spots and require longer to complete a payment. “You have a story that is unique and your story is much greater chance of being heard at a credit union. When you work with big financial institutions there is a greater chance that you will encounter underwriting that’s set in stone and done in some corporate office a couple of states away. Visit a credit union, and you’re likely to have a discussion.” 3. A user-friendly loan process Long gone are the days when you had visiting a branch to apply for a car loan. The majority of credit unions let you apply online, over the phone, or . If you’re seeking financing at a dealer, “invariably, the dealer will recommend credit union financing as well as an institution that you could become a member of,” Schenk says, “so it’s a simple process.” However it is recommended to do your research prior to visiting the dealership. Not all dealerships cooperate with credit unions and if you are able to become a member, you will likely be able to get the best rate working directly with the credit union. In addition, you’ll have a competitive loan offer when you start car shopping and you will not need to pay for dealer markup on your rate. 4. Credit unions also have other advantages. Members, and not shareholders, are the owners of credit unions. Any profits they earn are returned to the members in the dividends. Credit unions also can pass on the profits to their customers through more favorable rates for deposit accounts as well as on loan products, like auto loans. A majority of credit unions are also part in a shared branch as well as ATM network. Schenk says CUNA’s members have a shared ATM network with more than 40,000 ATMs. Credit unions are focused on providing education to their members and educating them on how they will be able to receive advice on the best financial choices for your particular situation. “Credit unions offer full-service offering the same financial products as banks. They’re just structured differently which results in substantial advantages for members of credit unions,” Schenk says. The focus on members could mean a more nuanced dialog about your financial status before the credit union approves or refuses your loan. Credit unions might be more understanding and lenient than traditional banks when it comes to making lending decisions. 5. It’s easy to join. Many believe that credit unions are available only to employees of an industry, company or government organization, and that anyone not a part of a group can’t join. Meyer states that this is not the case anymore. “Most credit unions will allow anybody to become a member.” CUNA has credit unions that have community charters, which enable them to service greater geographic areas. If you seek an institution near you, visit and type in your ZIP code. “It would be shocking to see a person who was not able to access a credit union,” Schenk says. 6. Car loans make up a large portion of what credit unions do Don’t be surprised when an auto dealer recommends customers to credit institution prior to the bank. Credit unions for both used and new vehicles alike grew year-over-year to 17.9 per cent and 19 in each case, as per 2022 . Credit unions had $166.8 billion in loan balances for new cars at the close of the third quarter of 2022 and $305.3 billion for used cars. How do I apply for an auto credit from a credit union loan? The process of financing a car with a credit union is the same with other lending institutions, with the exception the membership requirement. When you’re an active member, you are able to apply for an auto loan via the internet, over the telephone or in a branch, depending upon the particular credit union. The majority of credit unions will look over the following to determine your eligibility to get an auto loan: Your personal information. The information about your income and employment. Your . The VIN number for your vehicle. (VIN) and the mileage of the car you wish to purchase. Make sure you submit proof of insurance to the credit union during the application process. Also, while you may be able join and apply for an auto loan within the next day, some credit unions will make you wait for a few months or even two prior to submitting your application. What are the main differences between a bank, dealership and credit union car loan? The main distinction between a bank and the credit union car loan is the financing terms. Certain banks may offer promotional offers particularly if you have a solid relationship, good payment history and a . Both banks and credit unions can offer incentives, such as autopay discounts if you’re an existing customer. However, since credit unions are not-for profit organizations and owned by the members, you are able to enjoy better rates and less costs compared to banks that are for profit, which shareholders own. When you apply for a car loan and you are approved, the loan originates from a third party financial institution. Dealers are paid to match you up with one of their financing partners. This means that you may have better alternatives to the rate you get through the dealer versus an institution like a credit union or bank. In addition, if there’s any 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 new or used car, you have several options for financing. If you’re a member of the credit union you may benefit from lower interest rates and fees compared to large banks as well as dealership loans. The application process is identical once you’ve gained membership, and the benefits may help you get approved even in the event that your credit score isn’t the best credit score.
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Written by the Personal finance contributor Meaghan Hunt, a researcher, writer, and editor across disciplines with a passion for personal finance-related topics. After more than a decade working in public libraries She is now writing, editing and conducts research as a full-time freelancer. Written by Rhys Subitch Editored by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are passionate about helping readers gain confidence to control their finances through providing concise, well-studied and well-researched content that breaks down complicated topics into manageable bites.
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