5 Reasons to Consider a Credit Union Auto Loan

Money SmartsMarch 11, 2022

When you're taking out an auto loan, it's important to shop around and find the best lender for you. Be sure to include your local credit union in your list of options because they always give their members competitive rates and great service. As well as lower rates, a credit union auto loan might be more flexible so you can borrow the amount you need over the term you want. Read on to find out why your local credit union could be the best choice.

1. Not-For-Profit Business Model

One of the main ways that credit unions are different from other financial institutions is that they aren't trying to make money for themselves. Instead, the revenue a credit union makes from interest and fees is given back to you – the valued members. Members receive credit union revenue in the form of:

  • Low-interest loans and credit cards
  • Generous rates on deposits in savings and share certificate accounts
  • Updated products, services, and features
  • Resources, tools, and programs to help members thrive

2. Competitive Rates

As mentioned, credit unions can offer great rates on auto loans because of their not-for-profit business model. Here are a few pointers on how interest works and why you should consider a credit union auto loan:

  • The annual percentage rate (APR) you get will impact your monthly payment and how much your loan costs in total, so it's an important factor when choosing your loan.
  • Your credit score will determine your APR – the better your credit, the lower your rate.
  • If your credit isn't so great, some financial institutions might not approve your auto loan.
  • The personal relationship you form with your credit union may mean they'll take other factors into account so you could still get a loan.

3. Lower Minimum Loan Amounts

You don't want your car payment to use up most of your paycheck. Luckily, credit unions often let you borrow a smaller amount for your auto loan compared to other financial institutions. A lower auto loan minimum can be helpful if:

  • You're looking to buy a less expensive vehicle.
  • You've saved up a sizable down payment.
  • You want to avoid paying a lot of interest.
  • You want to pay off your auto loan sooner.

4. Dedicated to Helping Members

All credit unions come with a story. They are usually established to meet the needs of a particular group in a community, which might be underserved by big financial institutions. For example, Great Lakes Credit Union was founded to serve civil servants in Lake County, Illinois, at a time when there weren't many other options. In addition to competitive rates on auto loans, credit union revenue is used to fund:

5. Local Service

These days, there's something nice about talking to an actual person who lives, works, or worships in your same ZIP code. When you become a member of your local credit union, you'll be able to:

  • Drop into a friendly local branch on your way home from work or on your lunch break.
  • Call and speak to a local person who may understand your situation better than an assistant at a centralized or outsourced call center.
  • Keep all your accounts in one handy place, from your auto loan to mortgage and investments.

Thinking About Applying for a Credit Union Auto Loan?

There's no doubt about it, an auto loan is a convenient way to purchase a car – and your local credit union might offer you the best deal. The next question is, how much car can you afford? Before you apply for your credit union auto loan, it's a good idea to crunch some numbers and figure out the right loan amount for your budget. The car sticker price is just one of many factors you should consider. Don't forget you need to include repairs, gas, and insurance in your monthly budget. Plus, you might want to save up for a down payment. Click below for some simple tips to determine how much you should spend on your car!

How Much Car Can I Afford?

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