Why you should get your car loan at a credit union Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content. We also allow you to conduct your own research and compare data for free and help you 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 Make Money The deals that are advertised on this website are provided by companies that pay us. This compensation may impact how and when products are featured on this site, including such things as the sequence in which they appear in the listing categories and other categories, unless prohibited by law. This applies to our mortgage, home equity and other home lending products. This compensation, however, does affect the information we provide, or the reviews you read on this site. We do not contain the universe of companies or financial offers that may be open to you. Emma Turner/Shutterstock.com
5 minutes read Read March 02, 2023.
Written by Meaghan Hunt. Edited by Personal financial contributor Meaghan Hunt is a researcher, writer and editor across disciplines who is passionate about personal finance issues. After more than a decade working in public libraries, she now writes, edits, and researches as freelancer for full-time. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are dedicated to helping their readers gain the confidence to control their finances through providing precise, well-studied and well-researched data that breaks down complex issues into digestible chunks. The Bankrate guarantee
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If you have questions about money. Bankrate can help. Our experts have helped you understand your money for more than four years. We are constantly striving to provide our readers with the professional advice and tools needed to make it through life’s financial journey. Bankrate follows a strict policy, which means you can be confident that our content is honest and accurate. Our award-winning editors, reporters and editors create honest and accurate content that will help you make the right financial choices. Our content produced by our editorial team is objective, factual and uninfluenced from our advertising. We’re open about how we are capable of bringing high-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 the promotion of sponsored goods and services or by you clicking on specific links on our site. This compensation could affect the way, location and when products are listed in the event that they are not permitted by law. We also offer loan products, such as mortgages and home equity and other home loan products. 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 can also impact the way and place products are listed on this site. We strive to provide an array of offers, Bankrate does not include information about every financial or credit product or service. If you’re looking to purchase a new or used car then a credit union is an excellent choice for the loan. There are more than 4800 federally insured credit unions within the United States, with over the 134 million members that belong to the National Credit Union Administration (NCUA). The national banks are more diverse and generally faster to adopt innovative technology. But, people who are keen on saving money owe it to themselves to investigate the benefits that credit unions provide. Credit unions typically have more benefits than banks and online lenders as well as individual service and a host of other advantages. The most important thing to remember is
Credit unions can offer more advantages to the borrower than other banks can rival. Lower interest rates, community presence, and a borrower-focused business model distinguish credit unions from other banks.
6 reasons to get credit union auto loan If you’re in the market for your next car, consider these benefits of getting an auto loan at an institution like a credit union. 1. Lower interest rates . Unlike financial institutions, credit unions are able to provide lower rates since they’re not a profit-making institution. Consequently, they are seeing an exponential rise in car loan originations. “Typically, the rate of lending (at credit unions) is competitive to other lenders under most conditions,” says Bill Meyer who was the former public relations and content manager at CU Direct, which connects credit unions to auto dealers across the nation. In the last quarter of 2022, the interest rate on a five-year , new automobile loan at a credit union averaged 4.74 percent as per the NCUA. For banks, it was 5.53 percent. If you’re borrowing $30,000 to purchase a car The credit union will save you $327 in interest over the course of your loan. 2. Community ties, personalized service The procedure for getting a car loan isn’t much different between banks and credit unions. But if you have less credit however, you might still be able to get an auto loan with a credit union versus one with a bank. “Credit unions will likely have more flexibility in the underwriting process,” says Mike Schenk Vice President of Research and policy analysis at the Credit Union National Association (CUNA) which is a trade organization. They are more likely also to work with you if you hit the rough spots and require longer to complete a payment. “You have a distinct story and it’s much better suited to being heard at a credit union. In large financial institutions, you’re more likely to experience underwriting that is written in stone and carried out in a corporate office couple of states away. If you visit the credit union and you’re more likely to be in discussion.” 3. User-friendly loan process Long gone are the days of having to visit a branch 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 dealer, “invariably, the dealer may direct you to credit union financing as well as an institution that you could become a member of,” Schenk says, “so it’s an easy procedure.” However 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 can become a member, you will likely receive the best price when dealing directly with your credit union. Additionally, you’ll be offered a competitive loan offer at the time you start buying a car — and you won’t need to pay for dealer markup on the rate you are offered. 4. Credit unions have many additional benefits. Members, not shareholders, own credit unions, and any profits they make go back to the members in the form of dividends. Credit unions can also transfer profits to their members via higher rates on deposit accounts as well as on loan products, such as auto loans. Most credit unions also participate in a shared branch as well as ATM network. Schenk says CUNA’s members have an ATM network that is shared with over 40,000 outlets. Credit unions focus on educating their members, too, so you can get advice on the best financial choices for your situation. “Credit unions are full-service offering the same financial products as banks. They’re just structured differently, which results in substantial benefits for credit union members,” Schenk says. This member focus could also result in a more precise discussion about your financial status before the credit union decides whether or not to approve or refuses your loan. Credit unions might be more understanding and lenient than traditional banks with regards to lending decisions. 5. Membership is simple. Some believe credit unions are only open to employees of an industry, company or government agency, and that anyone not a member of a group cannot join. Meyer says this is no longer the case. “Most credit unions will allow anybody to become a member.” CUNA has credit unions with community charters which allow them to serve more geographical areas. If you’re looking for an institution near you, visit and type in your ZIP code. “It would be shocking to meet a customer that didn’t have access the credit union,” Schenk says. 6. Car loans are an integral part of the work that credit unions perform. Be prepared to hear that an auto dealer will refer the customer to a credit union prior to you even go to a bank. Credit unions for both used and new vehicles alike increased by 17.9 percent and 19 percent and 19 percent, respectively, according to 2022 . Credit unions had $166.8 billion of loan balances for new vehicles at the end in the 3rd quarter 2022, and $305.3 billion of used cars. What is the procedure to apply for a credit union auto loan? A car loan with a credit union is similar with other lending institutions, with the exception for the membership process. If you are a member, you can apply for a car loan online, over the phone or at an office, depending upon the particular credit union. A majority of credit unions review the following information 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 number of your vehicle’s identification (VIN) and the miles for the vehicle you plan to purchase. You must provide proof of insurance to the credit union during the application process. Also, while you may be able to enroll and request an auto loan on the next day, some credit unions will make you wait a month or two before you can apply. What is the difference between a dealership, bank and credit union auto loan? The primary distinction between a bank and an auto credit union loan is the terms of financing. Some banks offer discounts, especially in the case of a long-term relationship, a good track record of payment and a . Both banks and credit unions might offer incentives such as an autopay discount when you are an existing customer. However, since credit unions are not-for profit organizations and are owned by their members, you are able to receive better rates and lower charges compared with for-profit banks that have shareholders who own. If you take out a car loan and you are approved, the loan comes from a third-party financial entity. Dealers are paid to connect you to any of their finance partners. Because of this, there may be better options than the interest rate that you receive from the dealership versus a bank or credit union. In addition, if there’s an issue with the financing company, the dealer won’t help the customer — you’ll be required to resolve the issue 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 belong to an institution like a credit union, then you may benefit from low interest rates and lower fees compared to large banks as well as dealership loans. The application process is identical once you’ve gained membership, and the benefits may aid in getting approved, especially if there’s no highest credit score.
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Written by a contributor to Personal Finance Meaghan Hunt is a researcher, writer, and editor across disciplines with a passion for personal finance-related topics. After more than a decade working in libraries that were open to the public She now writes, edits, and researches as freelancer full-time. Edited by Rhys Subitch Editored by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to control their finances with precise, well-studied information that break down complex topics into manageable bites.
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