For most, buying a car can be an exciting yet stressful milestone. And, with 107 million Americans with auto loans, it seems an essential element to the car-buying process involves securing and agreeing to an auto loan. The excitement of car buying often puts the type of car – rather than the terms of the loan and the lender – on the forefront, leaving the loan itself as a necessary afterthought.
Well, with 6.3 million Americans late on their payments, and many, many more agreeing to bad loan terms on a whim, it’s time to be more conscious consumers of both cars and the loans we use to purchase them.
The two main avenues for auto loans come from the auto manufacturers themselves and from consumers’ main (or only) bank. However, there is a lesser-known lending option: the Credit Union.
Though Credit Unions are a formidable, growing force with great benefits, they are still a less often considered option for auto loans, especially to those who do not bank with them.
3 reasons why you should get an auto loan at a credit union
1. Better rates.
Currently, credit unions don’t pay taxes. This alleviates much of the cost associated with generally conducting business. Plus, for the #2 reason listed below, members are all considered equally important for the health of the credit union, so they will work harder to get you approved at their best possible rate. Though at times their rates are comparable to banks’, CUs are usually have much more competitive for auto loans, personal loans, and credit cards.
2. As a member, you’re an owner.
At Credit Unions, each member is a part-owner of the organization and has an equal voting share. Plus, once you’re a member, you’re always a member. That means that CUs have more of an “individual” mindset; understanding that each member’s situation is different and that each member deserves to have the best possible change to reap the benefits that their membership can offer. This means that CU members reap three main benefits:
- Loan applicants will look deeper and harder to ensure that you qualify for a loan.
- Members are active participants with their banking institution and it tends to give people a community mindset.
- CU members typically experience lower rates than bank customers.
- Because of this, bonds between members and their Credit Union is stronger than bonds between a customer and their bank.
3. Same offerings as a bank.
Credit Unions have the same terms and conditions and the same protective products available to their members as banks have to their customers. Additionally, while banks are more focused on mortgages and commercial interest loans rather than on fixed rate loans (like auto loans), CUs focus on the opposite. The “bread and butter” of Credit Unions are fixed rate/auto loans, so not only are they good at it, but they’re competitive with each other, further motivating them to lower rates for those loan types.
Clearly, Credit Unions are the way to go, which is why they comprise such a large portion of our lender network. Many people have the mindset that CUs have very selective or specific membership guidelines, but they really aren’t as difficult to get into as you might think. CUs with a growth mindset can and have legally expanded their membership parameters. So, go by your local Credit Union and check them out!
If you’ve already committed to an auto loan, not to worry. Luckily, not only do we work with mostly credit unions, but we shop them for the best rates on your new loan on your behalf. At no cost to you.