Getting a car loan from a credit union could offer you more favorable terms than other lending options, like lower interest rates and a higher chance of loan approval. So how do you know where the best credit unions for car loans are?
With just a little research, you’ll find credit unions everywhere. The World Council of Credit Unions states there are over 82,000 credit unions with more than 400 million members.
Before you consider what car brand to buy or choose your favorite color, consider how you’ll finance your new vehicle. Narrow down your choices, find a credit union near you, and start reaping the rewards.
What Are Credit Unions?
Credit unions aren’t much different than banks. You can do many of the same transactions, such as make a deposit, withdraw cash, or apply for a loan. Yet, where banks are for-profit entities, credit unions take a different approach. Credit unions are not-for-profit and make every member a part-owner, not just a customer.
When you open an account and deposit money at a credit union, the cash is pooled together with the money of all other credit union members to be used for issuing loans. When a credit union makes money through investments or interest on loans, the money is returned to members in the form of more competitive interest rates.
Credit unions are focused on their members instead of on their profits. This means they can keep car loan rates lower and often qualify buyers who might not qualify with other financial institutions. They work to benefit every member on board.
5 Tips for Choosing a Credit Union
Does a credit union sound like the right choice for you? There are a few things to keep in mind as you look for the best credit union for your next auto loan.
1. Membership Requirements
Because credit unions are not-for-profit, member-owned institutions, they have requirements for membership eligibility. All members typically share a common bond, such as living, working, or going to school in a particular community, working for a specific company, or joining a certain organization.
Before you fill out an application, check the eligibility requirements. Some have broad requirements, while others tend to be more exclusive. Capital Credit Union, for example, offers accounts to anyone who works, attends school, lives or owns property in, or owns or operates a business in one of 12 counties in northeast Wisconsin. Often, relatives of current members are also eligible for credit union membership.
2. Consider Products and Services
While credit unions are built around standard products like checking and savings accounts, many offer additional financial products to help you with your finances. You’ll find credit cards, mortgages, investment options, car loans, and more.
If your main goal is to find a car loan, make this your starting point. But it doesn’t hurt to look at your other options too.
3. Fees and Requirements
What attracts many members to a credit union is the lower fees when compared to traditional banks. As we’ve mentioned, this is because profits are redistributed back to members. Lower and fewer fees could save you hundreds or even thousands of dollars on your auto loan.
Keep in mind that doesn’t make every credit union equal. It’s still important to review various fees, including closing costs, late fees, monthly maintenance fees, ATM fees especially if you frequently are outside the credit union’s network, overdraft fees, and so on.
4. Dividends
Because all profits are redistributed back to members, you’ll receive dividends on all savings products. This can be especially important as you build toward the future and want accounts outside the typical savings. Look for a credit union that offers retirement services, investment products, and so on when you’re striving to achieve your big goals.
5. Customer Service
If you’re tired of being a number, you’ll love the personalized service of a credit union. Credit unions work hard to develop strong relationships with their members. They are part of the community, and it shows.
You should still look toward convenience. Do they have branches near you? Do they offer banking conveniences, such as online banking or mobile apps? Do they offer online bill pay, mobile check deposit, and easy access to all your accounts? Can you make your auto loan payments online? You might even check online reviews to discover what others in the community are saying. It’s a great way to feel comfortable even before you walk through the door.
Benefits of Car Loans From a Credit Union
Whether you’re in the market for a new or used car or have your eye on a new snowmobile or boat, a credit union is the perfect solution for getting a vehicle loan with the terms you desire.
We know what’s important to you.
- Low Interest Rates: You’ll find lower interest rates than you would through more traditional banks or dealership financing. It pays to stop at your credit union before you shop and go in with a pre-approved loan.
- Low Minimum Amount: Banks care about making money and sometimes establish minimum loan amounts to ensure higher rates and fees throughout the loan. Credit unions are more likely to give you only the amount you want and need.
- Easy to Apply: If you’re already a member, you can apply quickly online or in person at a branch. The application is still easy to complete. And with a pre-approved loan in hand, it’ll make your car-buying experience that much easier. Even if you’re not a member, the loan application is still easy to complete, and you can become a member at the same time.
It’s Time to Apply
It’s easier than ever to apply. Just provide a few details about your demographics, including a Social Security number and approval to run a credit check. You will be applying for credit union membership, so you’ll need something to prove you meet the qualifications. Of course, it’s even easier if you’re already a member. Apply online or stop by a branch.
If you have questions about your expenses or about the loan itself, credit unions are known for their customer service. Find a team that can get everything answered, let you know what you qualify for, and have you on your way in no time.
You’ll have the car of your dreams, with a car loan in place, and suitable payment plans to meet your needs.
