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Why you should get your car loan at a credit union Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make better financial decisions by offering you interactive tools and financial calculators as well as publishing impartial and original content. We also allow you to conduct your own research and compare data for free to help you make financial decisions with confidence. Bankrate has partnerships with issuers including, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The offers that appear on this site are from companies who 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, except where prohibited by law. Our mortgage or home equity products, as well as other products for home loans. However, this compensation will affect the information we publish, or the reviews you read on this site. We do not cover the entire universe of businesses or financial deals that might be available to you. Emma Turner/Shutterstock.com
5 min read Published March 02, 2023.
Writer: Meaghan Hunt. Written by personal financial contributor Meaghan Hunt works as a writer, researcher and editor in a variety of disciplines with a passion for personal finance subjects. After a decade of working in libraries for public libraries, she now writes, edits, and studies as a full-time freelancer. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping their readers feel confident to control their finances with concise, well-studied information that breaks down complex subjects into bite-sized pieces. The Bankrate promise
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You have money questions. Bankrate has the answers. Our experts have helped you understand your finances for more than 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 standard of conduct, which means that you can trust that our content is truthful and reliable. Our award-winning editors and reporters create honest and accurate content that will help you make the best financial decisions. The content created by our editorial team is factual, accurate and uninfluenced through our sponsors. We’re honest about the ways we’re in a position to provide quality information, 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 receive compensation for placement of sponsored products and services, or when you click on specific links on our site. So, this compensation can influence the manner, place and when products appear within listing categories in the event that they are not permitted by law. We also offer mortgage, home equity and other home lending products. Other elements, like our own rules for our website and whether the product is available in your region or within your own personal credit score can also impact how and where products appear on this site. Although we try to offer an array of offers, Bankrate does not include details about every financial or credit product or service. If you’re looking to purchase a new or used car, a is a great choice for an loan. More than 4,800 federally insured credit institutions within the United States, with over 134 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 the latest technologies. However, those who are interested in saving money owe it to themselves to explore the benefits that credit unions offer. Credit unions frequently have higher rates than online lenders or banks They also provide personal service as well as a range of other benefits. Important takeaways
Credit unions offer more benefits to the borrower than banks are positioned to rival. Lower interest costs, community presence and a borrower-oriented business model distinguish credit unions from other banks.
Six reasons to take out a credit union car loan If you’re looking for your next vehicle, think about these benefits of getting an auto loan at the credit union. 1. Lower interest rates Unlike most bank, credit unions can offer lower rates because they aren’t a profit-making institution. Consequently, they are witnessing an exponential increase in car loan originations. “Typically, the rate of lending (at the credit unions) is competitive to other lenders in the majority of circumstances,” says Bill Meyer who was a former director of public relations and content manager at CU Direct, which connects credit unions to dealers of all kinds across the country. In the final quarter of 2022, the rate for a five-year , new car loan through a credit union was 4.74 percent according to the NCUA. At banks, it was 5.53 percent. When you borrow $30,000 to purchase a car and the credit union is able to save you $327 on interest throughout the term of your loan. 2. Community ties, personalized service The procedure for getting a car loan isn’t too different from the credit unions and banks. However, if you have a lower credit score, you may still 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 offer more flexibility in their underwriting processes,” says Mike Schenk, vice president of research and policy analysis at the Credit Union National Association (CUNA) which is a trade organization. The credit union is also likely to cooperate with those who are going through the rough spots and require longer to complete payments. “You have a unique story and it is more likely to be heard at a credit union. In large financial institutions there is a greater chance that you will experience underwriting that is written in stone and carried out in some corporate office a couple of states away. If you visit a credit union, and you’re likely to have a discussion.” 3. An easy loan process Long gone are the days of needing to go to a branch in order to get an auto loan. Many credit unions are now letting applicants apply online, over the phone, or . If you are applying for financing at a dealership, “invariably, the dealer will refer you to credit union financing as well as the credit union that you can join as a member,” Schenk says, “so it’s really an easy procedure.” Still it is recommended to do your research prior to visiting the dealership. Some dealerships don’t cooperate with credit unions and if you can join a credit union, you will likely receive the best price when working directly with the credit union. Additionally, you’ll receive a favorable loan offer at the time you start buying a car and you will not have to pay dealer markup on the rate you are offered. 4. Credit unions also have other advantages. Members, and not shareholders, are the owners of credit unions and any profits they earn are returned to the members in the dividends. Credit unions can also pass on the profits to their customers through more favorable rates for deposits and loan products, like auto loans. A majority of credit unions are also part in a joint branch and ATM network. Schenk states that CUNA’s members are part of an ATM network shared by more than 40,000 locations. Credit unions are focused on providing education to their members, too, so you can get advice on the best financial options for your situation. “Credit unions are full-service, offering the same services that banks offer. They’re structured differently which results in substantial benefits for credit union members,” Schenk says. The focus on members could result in a more precise discussion about your financial status before the credit union either approves or denies your loan. Credit unions are often more understanding and flexible than traditional banks in making lending decisions. 5. Membership is simple. Some believe credit unions are available only to employees of the same industry, business or government organization, and that those who are not member of a group cannot 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 enable them to service more geographical regions. If you seek the nearest credit union go to their website and enter 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 are an integral part of what credit unions do Be prepared when an auto dealer recommends you to a credit union prior to you even go to a bank. Credit unions for new and used cars alike increased year-over-year in 17.9 percent and 19 percent and 19 percent, respectively, according to 2022 . Credit unions held $166.8 billion in loan balances for new cars at the end in the 3rd quarter 2022. They also had $305.3 billion of used cars. What is the procedure to apply for an auto credit from a credit union loan? The process of financing a car with the credit union is comparable as other loan providers, with the exception for the membership step. When you’re a member, you can apply for an auto loan on the internet, by telephone or in an office, depending on the credit union. The majority of credit unions will look over the following information 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 miles for the vehicle you want to purchase. Make sure you submit proof of insurance to the credit union during the application procedure. And note that while you may be able to enroll and request an auto loan within the same day, some credit unions will make you wait for a few months or even two prior to submitting your application. What is the difference between a bank, dealer and credit union auto loan? The primary difference between a bank or credit union auto loan is the terms of financing. Some banks can offer promotions, especially in the case of a long-term relationship, a solid payment history and a . Credit unions and banks may offer incentives like autopay discounts if you’re an existing customer. Because credit unions are not-for profit organizations and are owned by their members, you are able to enjoy better rates and less costs compared to banks that are for profit that are owned by shareholders. If you take out a auto loan , the loan comes from a third-party financial institution. Dealers are paid to connect you to the financing partner of one. This means that there are more options than the interest rate that you receive from the dealership , compared to a bank or credit union. In addition, if there’s an issue with the finance company, the dealer won’t help you — you will have to sort it out by yourself. The main thing to remember is that when you purchase a new or used car There are many options for financing. If you’re a member of the credit union you could have access to lower rates of interest and costs compared to big banks and dealership loans. The application process is identical once you’ve gained membership and the advantages could aid in getting approved, especially when you don’t have the best credit score.
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Written by the Personal finance contributor Meaghan Hunt is a researcher and writer across disciplines , with a love for personal finance issues. After 10 years of work in public libraries, she now writes, edits and conducts research as freelancer full-time. Written by Rhys Subitch Edited and written by Auto loans Editor Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to manage their finances through providing concise, well-studied and well-researched content that breaks down otherwise complex topics into digestible chunks.
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