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 better financial decisions by providing you with interactive tools and financial calculators that provide objective and unique content. This allows you to conduct research and to compare information at no cost to help you make informed financial decisions. 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 offers that appear on this site come from companies who pay us. This compensation may impact how and when products appear on this site, including for instance, the order in which they appear within the listing categories, except where prohibited by law for our mortgage home equity, mortgage and other home lending products. This compensation, however, does affect the information we publish, or the reviews you read on this site. We do not cover the vast array of companies or financial deals that might be open to you. Emma Turner/Shutterstock.com
5 minutes read. Published March 02, 2023
Written by Meaghan Hunt. Edited by Personal financial contributor Meaghan Hunt is a writer, researcher and editor in a variety of disciplines, with a love of personal finance subjects. After more than a decade working in libraries that were open to the public She now writes, edits, and conducts research 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 committed to helping readers to control their finances through providing precise, well-studied and well-researched data that breaks down complex issues into digestible chunks. The Bankrate promises
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You have money questions. Bankrate can help. Our experts have helped you understand your money for more than four decades. We strive to continuously provide our readers with the professional advice and tools needed to be successful throughout their financial journey. Bankrate adheres to strict standards standard of conduct, which means that you can trust that our content is truthful and accurate. Our award-winning editors and reporters produce honest and reliable information to assist you in making the best financial decisions. The content created by our editorial team is factual, accurate and uninfluenced through our sponsors. We’re honest regarding how we’re capable of bringing high-quality content, competitive rates, and useful tools for 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 certain hyperlinks on our website. Therefore, this compensation may affect the way, location and in what order items are listed and categories, unless it is prohibited by law. This is the case for our credit, mortgage and other home lending products. Other elements, like our own proprietary website rules and whether or not a product is offered in your area or at your personal credit score could also affect the manner in which products are featured on this site. Although we try to offer a wide range 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 it’s a good option for the loan. More than 4,800 federally insured credit unions within the United States, with over the 134 million members that belong to the (NCUA). The national banks are more diverse and typically faster to adopt the latest technology. Still, consumers keen on saving money owe it themselves to investigate the benefits that credit unions provide. Credit unions usually have more higher rates than online lenders or banks as well as personal service as well as a range of other benefits. Important takeaways
Credit unions offer more borrower perks than some banks are in a position to compete with. Lower interest costs, a community presence and a borrower-oriented business model distinguish credit unions from other banks.
Six reasons to take out credit union auto loan If you’re looking for your next car, take into consideration these benefits of getting an auto loan at the credit union. 1. Low interest rates, unlike most banks, credit unions may offer lower rates due to the fact that they’re not 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 very competitive compared to other lenders in most conditions,” says Bill Meyer, former director of public relations manager and content manager at CU Direct, which connects credit unions to auto dealers nationwide. In the final quarter of 2022, the on a five-year new car loan through a credit union was 4.74 percent as per the NCUA. For banks they were 5.53 percent. For example, if you’re borrowing $30,000. to finance an automobile and the credit union is able to save you $327 on interest over the course of the loan. 2. Community ties, personalized service The process for taking out an auto loan isn’t that different between banks and credit unions. But if you have an unsatisfactory credit score, you may still be eligible for an auto loan from a credit union versus one with a bank. “Credit unions will likely have more flexibility when it comes to underwriting,” says Mike Schenk who is vice president of research and policy analysis at the Credit Union National Association (CUNA) an association for trade. Credit unions are also more likely to work with you in the event that you go through a rough patch and need longer to complete payments. “You have a story that is unique and your story is much more likely to be heard by a credit union. At big financial institutions there is a greater chance that you will have underwriting procedures that are established in stone and executed in some corporate office a couple of states away. Walk into a credit union, and you’re more likely be in discussion.” 3. An easy loan process Long gone are the days of having to go to a branch in order to get a car loan. Most credit unions now let you apply online, on the phone, or . If you are applying for financing at a dealership, “invariably, the dealer will recommend credit union financing and 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 cooperate with credit unions and if you can be a member, you will likely be able to get the best rate working directly with the credit union. Plus, you will already receive a favorable loan offer at the time you start buying a car and won’t need to pay for dealer markup on your rate. 4. Credit unions offer a variety of additional benefits. Members, not shareholders, own credit unions and any profits they earn go to members in the form of dividends. Credit unions can also transfer earnings to their members through more favorable rates for deposit accounts and on loan products, like auto loans. Most credit unions also participate in a joint branch and ATM network. Schenk says CUNA’s members have an ATM network shared by more than 40,000 ATMs. Credit unions are focused on providing education to 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 financial products like 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 result in a more precise discussion regarding your financial situation prior to when the credit union approves or denies your loan. Credit unions might be more understanding and lenient than traditional banks with regards to lending decisions. 5. Becoming a member is easy Some believe credit unions are available only to people who work for an industry, company or government agency, and that any person who is not part of a group can’t join. Meyer states that this is no longer the case. “Most credit unions are now allowing any person to sign up.” CUNA has credit unions that have community charters, which allow them to serve more geographical areas. If you seek the nearest credit union, visit and type in your zip code. “It would be shocking to find a consumer who was not able to access the credit union,” Schenk says. 6. Car loans are a huge part of the work that credit unions perform. Be prepared to hear that an auto dealer will refer you to a credit union before 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 of the third quarter of 2022 and $305.3 billion of used cars. How can I apply for an auto credit from a credit union loan? Financing a car through a credit union is similar 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 via the internet, over the phone or at branches, based on the credit union. A majority of credit unions review the following to determine your eligibility in the event of an auto loan The information you provide about yourself. The information about your income and employment. Your employment and income information . The VIN number for your vehicle. (VIN) and the miles for the vehicle you want to purchase. Make sure you provide proof of insurance to the credit union as part of the application procedure. And note that while you may be able sign up and get an auto loan on the on the same day, certain credit unions require you to wait a month or two prior to submitting your application. What is the difference between a bank, dealership and credit union auto loan? The primary difference between a bank and credit union auto loan is the terms for financing. Some banks offer discounts, especially in the case of a long-term relationship, a solid payment history and . Credit unions and banks can offer incentives, such as autopay discounts if you’re a current customer. Because credit unions are not for-profit entities and owned by the members, you can usually get better rates and reduced fees compared to for-profit banks that have shareholders who own. When you get a car loan and you are approved, the loan comes from a third-party financial entity. Dealers are paid to match you with one of their financing partners. Due to this, you may have better options to choose from than the rates that you receive from the dealer versus a bank or credit union. Plus, if there is an issue with the financing firm, the dealer won’t help you — you’ll have to sort it out by yourself. If you are looking to purchase a used or new vehicle There are many options to choose from for financing. If you belong to the credit union you may have access to lower interest rates and fees compared to large banks or dealership loans. The application process is similar after you’ve joined and the advantages could aid in getting approved particularly in the event that your credit score isn’t the greatest credit score.
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Written by the Personal finance contributor Meaghan Hunt is a researcher and writer across various disciplines who has a passion for personal finance-related topics. After 10 years of work in libraries that were open to the public, she is now writing, editing, and researches as freelancer full-time. Editor: Rhys Subitch Edited and written by Auto loans Editor Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to manage their finances with precise, well-studied information that breaks down complicated topics into digestible chunks.
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