If you’ve been thinking about buying a new car, you’ve probably already decided that financing is the best way to do it. Once you make that decision, it’s time to decide who you want to make money from. While most people prefer to get a loan from a bank, you may decide that you want car loans from a credit union.
Credit unions are more popular today than in the past, but many Americans are not members of one. Being a member of a credit union can be a great way to get car loan financing. Members of the church often have something in common, whether it’s where they live or where they work. You may also find that you qualify to join credit unions you’ve never heard of. This can help you get a higher rate on a car loan.
If you’re looking for the best deal on a car loan, consider one from a credit union. In fact, your credit union may offer better rates than your bank or car dealership. Before you get a loan for a new car, it’s worth your time to check out the deals your credit union is offering.
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What is a Credit Union?
A credit union is an organization that offers banking services. You can do many of the same transactions at a credit union as you would at a bank, such as making a deposit, applying for a loan, or withdrawing cash. A credit union is a non-profit organization. Every credit union member is truly a member and a member, not just a customer.
When you deposit money at a credit union, they combine the money with money from other members of the credit union. When the credit union makes money from investments and interest on loans, the money goes back to the members of the credit union.
This is good news for car buyers because it means the credit union is not trying to make a profit. You will usually get a lower interest rate on your car loan as a result. Also, it means you may be able to qualify for a loan that you wouldn’t qualify for through your bank.
Is a Credit Union Different from a Bank?
The main difference between a credit union and a bank is that the bank is owned by shareholders rather than members. Banks earn a profit from their transactions, and shareholders receive these profits.
Banks make a profit from customers, and this is why car loans you get from banks may come with high fees. Checking your options with a bank isn’t a bad idea, especially if you already have a checking or savings account, but you may not get the best rates.
What Are the Benefits of Auto Loans from a Credit Union?
A credit union is a great place for people to find cheap car loans. If you’re trying to figure out where to get your auto loan, a credit union is a good place to start your search. Here are some of the benefits of using a credit union for your next car loan:
The most popular reason to get your loan from a credit union is so that you can pay a lower interest rate. You can pay a lower interest rate than you would through your bank or financing you get at the store. Some credit unions offer rates that are 2 percent lower than other lenders. This means you can save hundreds of dollars on financing your car.
It’s easy to see the benefits of getting a car loan from a credit union when you consider the interest rates. For example, you can apply for a conventional car loan and get approved with an interest rate of 6.5 percent. You can use the same information to apply for a car loan through the credit union and get an interest rate of 3.88 percent. Of course, that’s not taking into account the other reduced fees you can get thanks to the credit union.
Total low low
When you get a loan from a credit union, you can get a lower loan amount than you would get from a bank or dealer. For example, the bank may require you to take out a loan for at least $7000, but your credit union may only allow you to borrow $4000. As a result, you will save money on loan interest.
When you apply for a loan at your credit union, you can trust that they will look at more than just your credit score when making a decision. If you have a long-standing relationship with your credit union, they may do more than look at the facts.
You may not need to get perfect credit if you have built a strong relationship with your credit union. In addition, you will benefit from special services because you are a part owner of the organization. You can ask questions about your personal situation and get feedback or advice about your loan options.
If you are not a member of a credit union, you may be able to easily join one. You do not need to work for a specific company or government agency to apply for membership. Many credit unions are open for membership and have broad membership requirements. You can start this relationship by looking for credit unions in your area.
The process of applying for a car loan is usually easier when you apply through a credit union. You don’t need to visit a branch to apply, as you can usually complete all the steps online. Apply before you visit the dealership so you have the best loan in hand when you shop for a car.
How do you apply for a Credit Union Car Loan?
Applying for a car loan through a credit union is similar to applying to any other organization. If you applied for a loan through a bank, the main difference you will notice is that you must apply for membership.
Yes, you can skip the membership sign-up process if you already have a relationship with the credit union. If you have not applied for membership, there may be a waiting period between the date you apply for membership and the date you can apply for a car loan.
If you are already a member of the credit union, applying is easy. Apply for the loan online or call or visit your branch if you want someone to walk you through the process. You fill out a form that requires information about your personal information and income.
You may have to answer some questions about your expenses, especially housing. The credit union will also evaluate your credit score and the type of car you want to buy. Proof of insurance is also a requirement.
Once you’re approved, you can start shopping for cars. If you haven’t chosen a car yet, now is a good time to visit a car dealership and see what cars you can afford. Your loan works the same way you get it from a bank. You can buy a new car or use it with your credit union loan.
Is A Car Loan The Right Choice?
One of the challenges you may face is deciding whether a credit union loan is the right choice for you. If you meet the membership requirements, there is nothing to gain from joining a credit union.
The savings you can get from joining a credit union can make your membership worthwhile, even with benefits beyond your car loan. In addition, the loan application process is very simple and requires only a few personal details, so there no reason not to allow it first.
What are your other car loan options?
While credit union car loans may be a good option, you may want to compare rates to loans from other institutions, including businesses beyond banks. For example, some lenders only offer loans, instead of checking and depositing money.
These financial companies usually do not have a physical branch that you can visit, but you can apply for a loan online. These loans are usually for-profit organizations, so you can be more flexible with your terms.
You can also get a loan when you buy a car at the dealership. Our sales team will provide you with information and help you find the best financing options. This is an easy option because you don’t have to visit the credit union or submit paperwork ahead of time, but you may not get the best interest rate.
How Do You Choose the Right Car Loan?
If you’re trying to decide between auto loans from a credit union or an auto loan from another organization, it’s a good idea to know your options. You may qualify for multiple car loans, but it’s important that you compare each one. This is why it is approved by many customers.
One of the first signs you’ve got a credit union auto loan is a low interest rate. Yes, your credit score depends on how low your interest rate is. You’ll have a better chance of getting a lower interest rate if you apply through the credit union, even if you have a lot of debt.
Next, you can see your monthly payment amount. You can use these figures to determine if monthly payments seem reasonable. If the monthly payment is not appropriate, you can change the loan period or put money down to see a difference in your monthly payments.
Total Cost of Car
Finally, you should consider the total cost of owning a car, whether you choose a loan from a bank or credit union. By the time you pay off your car loan, how much money will you be spending? If you do the math on each option allowed, you will be able to see the total amount you will pay at the end of your loan.
Getting a car loan from a credit union has its advantages, including smaller lenders and lenders willing to work with you to help you get a car you love to drive. While a loan from a credit union may not be the best option for all consumers, it is an option that offers many benefits.
Director of Finance & Insurance
Elizabeth Rivelli is a freelance writer with over three years of experience covering personal finance and insurance. He has extensive knowledge of various insurance lines, including auto insurance and property insurance. His byline has been featured in several online financial publications, such as The Balance, Investopedia, Reviews.com, Forbes, and Bankrate.