Yes you are beautiful Consider buying a new or used car, a checkout is a great choice for a loan. There are more than 4,900 federally insured credit unions in the United States with over 128 million members. National banks have more branches and are generally faster to deploy new technologybut consumers looking to save money should explore what credit unions have to offer.
What is a credit union auto loan?
Yes you are beautiful shopping for your next car, consider these six benefits of getting an auto loan from a credit union before borrowing from a big bank or online lender.
6 reasons to get a car loan from a credit union
If you’re shopping for your next car, consider these six benefits of getting a car loan from a credit union
1. Lower interest rates
Credit unions can offer lower rates because they are not for profit, unlike most banks. Consequently, they are experiencing exponential growth in car loans.
“Generally, the loan rate (at credit unions) is very competitive with other lenders in most circumstances,” says Bill Meyer, public relations and content manager at CU Direct, which connects co-ops. credit to car dealerships across the country.
In the third quarter of 2021, the average rate for a five-year new car loan from a credit union was 2.83%, according to the National Credit Union Administration (NCUA). In banks, it was 4.73%. If you borrow $30,000 for a car, the credit union saves you $1,538 in interest over the life of the loan.
2. Community links, personalized service
The process of taking out an auto loan is not that different between banks and credit unions. But if you have a lower credit score, you may still be able to qualify for a car loan from a credit union versus a bank.
“Credit unions will likely have more flexibility in the underwriting process,” said Mike Schenk, deputy advocacy director for policy analysis and chief economist at the Credit Union National Association (CUNA), a trade association.
Credit unions are also more likely to work with you if you’re going through a tough time and need more time to make a payment.
“You have a unique story and your story is much more likely to be heard at a credit union. At larger financial institutions, you are more likely to experience underwriting set in stone and done in a seat social located a few states away Walk into a credit union and you’re more likely to have a conversation.
3. User-friendly loan process
Gone are the days when you had to go to an agency to apply for a car loan. Most credit unions now allow you to apply online, by phone, or at the dealership.
If you apply for dealership financing, “invariably the dealership may refer you to credit union financing and to a credit union that you can join as a member,” Schenk explains, “that’s really is an easy process.”
Nevertheless, you must first apply to the credit union before going to the dealership. Not all dealerships work with credit unions, and if you can become a member, you’ll likely get the best deal working directly with the credit union. Plus, you’ll already have a competitive loan offer in hand when you start shopping for a car.
4. Credit unions have many other benefits
Credit unions are owned by their members – not their shareholders – and all the profits they make go back to the members in the form of dividends. Additionally, credit unions can pass income on to their members through higher rates on deposit accounts and lower rates on loan products, including mortgages, home equity loans, unsecured personal and credit cards.
Most credit unions also participate in a shared network of branches and ATMs. Schenk says CUNA members have a shared ATM network with more than 40,000 outlets.
Credit unions also focus on educating their members, so you can get advice on which financial options are best for your situation. “Credit unions offer a full service, with the same products as banks. They’re just structured differently, which translates into significant benefits for credit union members,” Schenk says.
5. Becoming a member is easy
Some are under the impression that credit unions are only open to people who work for a certain company, industry or government entity, and that anyone not part of a group cannot join. Meyer says that is no longer the case. “Most credit unions will allow anyone to join.”
CUNA has credit unions with community charters that allow them to serve larger geographic areas. If you are looking for a credit union near you, visit ASmarterChoice.org and type in your postal code. “It would be shocking to find a consumer who doesn’t have access to a credit union,” Schenk says.
6. Car loans are a big part of what credit unions do
Don’t be surprised if a car dealership refers you to a credit union before a bank.
Credit union borrowing for new cars fell 0.3% in the third quarter of 2021, but used car loans jumped 8.5%, for an overall increase of 5.1%, according to the NCUA data. Credit unions had $141.5 billion in new car loan balances at the end of the third quarter of 2021 and $256.6 billion in used car loan balances.