If you choose to borrow from a credit union to buy a car, you could end up saving a lot of money in fees and interest on your next vehicle purchase. Generally, credit unions offer much lower rates of interest than finance companies and banks. Moreover, as a credit union member, you will pay reduced rates for loan documentation and application.
If you are already a member of a credit union, you might already know the requirements for car loan application. However, if you have not yet joined a credit union, you need to know the requirements for applying for a car loan before you become a member.
You should be a member
Credit unions only give loans to members. What is a credit union? A member-owned cooperative catering to a specific group. Although requirements for credit union memberships vary, you will find that most people are eligible for membership in one credit union or another.
You just need to do some research to find out the specific requirements to be a member of a credit union.
Although credit unions offer great rates of interest and terms on their car loans, the loans are not given to everyone – not all members get them. Credit unions usually have fewer financial resources and are smaller than most banks. Therefore, they need to invest member’s savings and deposits wisely. As a member, you need to demonstrate credit worthiness to be approved for a car loan. This is the tradeoff they have for the fantastic rates of interest they offer.
Aside from the above requirements, credit unions also ask for the documentation and assurances that banks do before they approve your car loan. In fact, not much is different between the two when it comes to loan application: you need to have a certain credit score, you need to demonstrate the ability to repay your loan, and you must have a specific debt to income ratio.
However, some credit unions have stricter criteria for loan approval. To be sure of the specific criteria, you need to visit your local credit union.
Advantages of credit union car loans
Aside from the low interests offered by credit unions, they also offer instant response to most credit needs and maximum convenience. You should also know that not all services offered by banks are offered by credit unions. Looking at online sites will give you some idea about the credit unions in your area of residence.
Credit union vs. bank auto loans
If you are looking for a new car loan and need help with your finances, you should start by examining your credit union loans before going to the bank for help. With so many lenders in the market, it can be easy to assume that all of them are similar. However, this is not true and you should be aware of some key differences before you take out a loan.
Banks are owned by shareholders who work to increase their profits while credit unions are owned by members. Therefore, when you join a credit union, it will be like buying a small stake in a bank and your ROI will be lower rates of interest. When looking for the best credit unions for car loans, you should start in your locality. If all your transactions are consolidated by one bank, they might give you a good rate, but credit unions offer the lowest rates.
Another reason why people prefer to borrow from banks is that they offer personalized service. Because they are smaller, credit unions can afford to be friendlier to their customers.