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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 goal is to help you make smarter financial decisions by providing you with interactive financial calculators and tools that provide objective and unique content. This allows you to conduct your own research and compare information for free to help you make financial decisions with confidence. Bankrate has agreements with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The products that appear on this site are from companies that pay us. This compensation can affect the way and when products appear on this site, including, for example, the order in which they may appear in the listing categories in the event that they are not permitted by law for our mortgage, home equity and other products for home loans. This compensation, however, does affect the content we publish or the reviews that you see on this site. We do not contain the entire universe of businesses or financial offers that may be open to you. Emma Turner/Shutterstock.com

5 minutes read Read March 02, 2023.

The article was written by Meaghan Hunt. Edited by personal Finance Contributor Meaghan Hunt works as a writer, researcher, and editor across disciplines, with a love of personal finance topics. After 10 years of work in libraries for public libraries She now writes, edits, and researches as freelancer for full-time. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers to control their finances through providing precise, well-studied and well-researched data that breaks down complicated subjects into bite-sized pieces. The Bankrate promises

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If you have questions about money. Bankrate has answers. Our experts have been helping you manage your money for over four decades. We continually strive to give our customers the right guidance and the tools necessary to succeed throughout life’s financial journey. Bankrate adheres to strict standards standard of conduct, which means that you can trust that our content is honest and accurate. Our award-winning editors and reporters produce honest and reliable content that will help you make the best financial decisions. Our content produced by our editorial staff is factual, objective, and not influenced by our advertisers. We’re honest about the ways we’re in a position to provide quality information, competitive rates and useful tools to you , by describing how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the promotion of sponsored goods and services, or by you clicking on specific links on our website. This compensation could influence the manner, place and in what order products are displayed within the categories of listing, except where prohibited by law for our mortgage, home equity and other home lending products. Other factors, like our own proprietary website rules and whether or not a product is offered in your region or within your personal credit score could also affect the way and place products are listed on this site. Although we try to offer a wide range offers, Bankrate does not include specific information on each financial or credit item or service. If you’re thinking of buying a used or brand new car it’s a good option for the loan. More than 4,800 federally insured credit unions within the United States, with over one hundred million members, according to the (NCUA). National banks have more branches and are typically more quick to introduce new technology. But, people who are keen on saving money should owe it to themselves to investigate the options that credit unions offer. Credit unions frequently have higher rates than online lenders or banks, and they also offer personalized service and a variety of other advantages. Important takeaways

Credit unions offer more advantages to the borrower than other banks are positioned to compete with. Lower interest rate, a community presence and a borrower-oriented business model make credit unions stand out.

Six reasons to take out a credit union car loan If you’re in the market for your next vehicle, think about these benefits of getting an auto loan at the credit union. 1. Low interest rates, unlike most banks, credit unions are able to provide lower rates since they’re not a profit-making institution. Therefore, they’re experiencing exponential growth in car loan originations. « Typically the rate of lending (at the credit unions) is competitive to other lenders under most conditions, » says Bill Meyer who was the former director of public relations manager and content manager at CU Direct, which connects credit unions to auto dealers across the nation. In the quarter that ended in 2022, the interest rate on a five-year new vehicle loan through a credit union was 4.74 percent as per the NCUA. In banks, it was 5.53 percent. If you’re borrowing $30,000 for automobile The credit union will save the borrower $327 over the course that of the loan. 2. Community ties, personalized service The procedure for getting an auto loan isn’t too different from bank and credit union. But if you have less credit, you may still be able to get an auto loan from the credit union rather than banks. « Credit unions are likely to have more flexibility in the underwriting process, » says Mike Schenk who is vice president of research and policy analysis for the Credit Union National Association (CUNA) which is a trade organization. Credit unions are also more likely to assist you if you hit a rough patch and need longer to complete an installment. « You have a unique story and your story is much more likely to be heard at the credit union. In large financial institutions they are more likely to have underwriting procedures that are established in stone and executed at a corporate headquarters a couple of states away. Visit the credit union and you’re likely to engage in a conversation. » 3. A user-friendly loan process Long gone are the days when you had to go to a branch in order to get an auto loan. The majority of credit unions let you apply online, over the phone, or . If you’re seeking 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 it is recommended to do your research prior to visiting the dealership. There are a few dealerships that cooperate with credit unions and if you’re able to join a credit union, you will likely get the best deal when you work directly with the credit union. Plus, you will already have a competitive loan offer when you start car shopping and won’t have to pay dealer markup on the rate you are offered. 4. Credit unions offer a variety of additional benefits. Members, not shareholders, are the owners of credit unions. Any profits they make go back to members in the form of dividends. Credit unions can also give back the profits to their customers through greater rates on deposit accounts as well as on loan products, like auto loans. A majority of credit unions are also part in a shared branch and ATM network. Schenk says CUNA’s members have an ATM network shared by more than 40,000 ATMs. Credit unions focus on educating their customers as well, which means you will be able to receive advice on the best financial options for your situation. « Credit unions are full-service offering the same financial products like banks. They’re structured differently which means that they provide significant benefits for credit union members, » Schenk says. This member focus could also mean a more nuanced dialog about your financial situation before the credit union either approves or denies your loan. Credit unions are often more understanding and lenient than traditional banks with regards to lending decisions. 5. Membership is simple. Many believe that credit unions are available only to those who work for the same industry, business or government agency, and that anyone not a member of a particular group isn’t able to join. Meyer claims that this is no longer the case. « Most credit unions will allow anybody to become a member. » CUNA has credit unions with community charters that enable them to service greater geographic areas. If you are looking for the nearest credit union then go to the website and enter your ZIP code. « It would be shocking to meet a customer who didn’t have access to the credit union, » Schenk says. 6. Car loans make up a large portion of the work that credit unions perform. Don’t be shocked when an auto dealer recommends customers to credit union before a bank. Credit unions for both used and new vehicles alike increased in 17.9 percent and 19 percent, respectively, according to 2022 . Credit unions had $166.8 billion of loan balances for new vehicles at the end on the last quarter in 2022’s third quarter, and $305.3 billion for used vehicles. How can I apply for an auto loan? A car loan with a credit union is the same as other loan providers, with the exception the membership requirement. Once you qualify as an enrolled member, you may apply for an auto loan online, over the telephone or in a branch, depending upon the particular credit union. Most credit unions will review the following to determine your eligibility to get an auto loan: Your personal information. Your income and employment information. Your . The vehicle identification number (VIN) and the mileage of the vehicle you plan to purchase. Make sure you show proof of insurance the credit union in the application process. Note that although you may be able to enroll and request an auto loan within the same day, some credit unions may require you to wait for a few months or even two before you can apply. What is the difference between a dealership, bank and credit union auto loan? The major difference between a bank or credit union auto loan is the financing terms. Some banks offer discounts, especially if you have a solid relationship, good payment history and a . Both banks and credit unions may offer incentives like an autopay discount when you’re an existing customer. But 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, which shareholders own. If you take out a auto loan , the loan originates from a third party financial institution. Dealers are paid to match you with any of their finance partners. This means that there are more options than the interest rate you get through the dealership , compared to an institution like a credit union or bank. Plus, if there is an issue with the financing company and the dealer isn’t able to assist you — you will have to sort it out yourself. The bottom line When purchasing a new or used car There are many options for financing. If you are a member of an institution like a credit union, then you might benefit from low interest rates and lower costs compared to big banks as well as dealership loans. The process for applying is the same when you join and the advantages could assist you in getting approval particularly if there’s no highest credit score.


Written by a contributor to Personal Finance Meaghan Hunt, a researcher as well as a writer and editor across various disciplines who has a passion for personal finance-related topics. After more than a decade working in libraries for public libraries and writing, she is now writing, editing and conducts research as freelancer full-time. Edited by Rhys Subitch Edited and written by Auto loans Editor Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain the confidence to manage their finances by providing precise, well-studied information that break down complex topics into digestible chunks.

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