If you’re in the market for a new car, you can look for an auto loan from a variety of lenders. Getting a car loan from a credit union could potentially yield lower interest rates, smaller minimum-loan requirements and better chances of loan approval than some other lenders offer. But is a car loan from a credit union right for you? Let’s explore some of those benefits to find out.
1. Low interest rates
Credit unions are not-for-profit organizations that reinvest profits into their members. Because of this, credit unions are often able to offer their members lower interest rates on loans than other types of lenders. In fact, auto loan rates at credit unions can be as much as 1% to 2% lower than the average rates offered by banks. You’re unlikely to find a better rate at a car dealership either. That’s because dealers may work with multiple lenders who review loan applications and determine whether to finance a loan, as well as what interest rate they’ll offer.
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2. Potential for better approval odds
One of the perks of credit union membership is that credit unions may be more willing to work with members with less-than-perfect credit. Credit unions often look a little bit beyond just credit score. If the relationship is strong, we’ll try to find ways to help our members, even if there are a couple of issues with their credit. You may find that as a member of a credit union, you could have better odds for approval without perfect credit.
3. Lower loan minimums
Credit unions may also offer lower minimum-loan amounts than banks. In fact, it’s not unusual for a credit union to have no minimum required loan amount, while banks often do. If you’re not buying an expensive car, or you have a large down payment and only need to finance a small portion of your purchase, a low loan minimum could be useful.
4. Lower fees
When you become a credit union member, you can enjoy a variety of benefits beyond your auto loan. Since credit unions are set up to give back to their members, you may be able to get lower interest rates on other types of loans. You can typically receive reduced fees and higher interest rates on deposit products, too.
Taking advantage of the credit union difference
Getting a car loan through a credit union can come with a variety of benefits. As a member, you may find lower interest rates, smaller loan minimums, and maybe even a lender more willing to work with you even if your credit has taken some hits.
And whether you’re already a member or not, you may want to consider refinancing your existing car loan to reduce your interest rate and monthly payments, saving you money in the long term. An auto loan refinance involves taking out a new secured loan to pay off the existing one, transferring the title to the new lender. Ideally, the new loan conditions will be improved, and it helps to talk to an expert about your situation.
- View our to see what rate and term might best suit your financial needs.
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- Talk to Member Services to find out what your options are. They will help you make the best decision and save you money in the end.