When shopping for a new or used car, smart shoppers consider financing through their credit union instead of going straight to the bank or national lender. A credit union offers several advantages over these other options, including lower interest rates and more personal service. While there are some disadvantages to a credit union car loan, such as lag time and stringent qualification requirements, these should not deter shoppers from taking the time to do their research to find the right lender for their unique circumstances.
A credit union is a financial cooperative, meaning it’s owned and operated by its members. This structure allows it to avoid the profit-making motives of banks and other lenders, which can result in better deals for consumers on everything from mortgage loans to auto loans. Because of this, it is more likely that a credit union will approve an applicant for an auto loan who would not have been approved by a traditional lender, especially if the applicant has bad or no credit.
Obtaining a credit union car loan involves applying for a new or used auto loan and providing the necessary documentation to qualify. Typically, this includes copies of paychecks or tax returns and information on recurring expenses like rent or utilities. In some cases, a credit union may also require proof of auto insurance. Once all the required paperwork is in order, a representative will tell you how much you can borrow, the interest rate and other terms of the loan.
In some cases, a credit union will offer an Auto Purchase Plan, which allows borrowers to buy a car at a dealership and finance it through the dealer. This can be a convenient option for buyers, but it is important to note that you won’t get the best possible interest rate this way. In addition, you will likely have to wait longer to complete the purchase and obtain the loan because the dealership must submit the application and necessary information to the credit union for processing.
While the benefits of a Credit Union Car loan are many, it’s important to shop around to find the best lender. This could mean a big difference in your monthly payments and the total cost of the loan over its term. If convenience and the ability to manage your loan online or through a mobile app is important, you might want to consider a larger bank for your loan instead of a small credit union. In addition, if you’re planning to use the vehicle for business, be sure to select a lender that offers competitive small business loans. This can save you money over the long run by lowering your interest rates and fees. Ultimately, it’s worth the extra effort to get the best deal on an auto loan.