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How do Auto Loans Work from Credit Unions?

Buying a car is an exciting purchase. But dealing with the loan process can cause stress. One way to make the process easier, and more importantly, save yourself some money is to explore credit union car loan rates.

Americans carry more than $1 trillion dollars in auto loan debt. Many people find themselves carrying extra loan costs due to high interest rates and onerous loan contracts. Working with an experienced credit union that has the best interest of its members in mind can make a major impact when deciding on how you finance your next ride.

Here is more information on how credit union auto financing works:

Do I need to belong to an organization to join a credit union?

How Do Auto Loans Work

While some credit unions are member specific, others have open policies that are more inclusive. Often credit unions have affiliations with other credit unions, or they may have residency requirements.

Some make it as simple as opening an account and maintaining a small balance. Many are affiliated with organizations and businesses that make becoming a member possible. However you qualify, joining a credit union makes you a part-owner in the institution. You may be wondering, "Where can I get a credit union auto loan near me?" Fortunately, there are many credit union options in Oklahoma.

How do auto loans work from credit unions?

Because credit unions operate on a not-for-profit level, they don't have to charge high interest rates to make money. They are also taxed at a lower rate than banks, another cost-saving benefit. Credit unions are then able to create savings for their members in the form of lower loan rates, lower fees, and dividends.

The actual auto loan process works the same as it would at a dealership, except you are not working with a bank to secure the loan.

What is the best credit union for a car loan?

You should look for an established credit union that offers personalized service and hassle-free loan applications. The difference between credit union auto financing and bank financing is stark if you explore these Dec. 2020 figures from the National Credit Union Association:

  • New car loans: The national average rate for banks on a 48-month loan was 4.70 percent. At a credit union, that same loan was 2.98 percent. On a 60-month loan, banks charged 4.81 percent, while credit unions averaged 3.01 percent.
  • Used car loans: The national average rate for banks on a 36-month loan was 5.10 percent. At a credit union, that same loan was 3.04 percent. On a 48-month loan, banks charged 5.16 percent, while credit unions averaged 3.16 percent.

Can I get pre-approved?

Many potential buyers look to get pre-approved auto loans. Credit unions do offer pre-approval on loans to give you a chance to better negotiate a price with the dealer. You'll need to gather pertinent information like contact info, employment and income history, potential trade-in information, the amount you want to finance and the term of the loan. Pre-approval decisions can be made faster by credit unions than banks.

Can I get a credit union auto loan with bad credit?

Credit is an important step in getting any loan. The higher the credit score, the better rate you will receive. However, most credit unions do offer more flexibility to their members in securing the lowest possible rate. Another benefit in joining a credit union is the face-to-face service you will receive. If there are credit issues in your history, you may be able to discuss them with your financial advisor, who still may be able to help you secure a lower rate.

Will a credit union refinance an auto loan?

If you have an auto loan with another lender, you can turn to your credit union to help you refinance. Getting a better interest rate can lead to decreased payments, allowing you to pay back the loan even faster.

What other benefits are there?

Several credit unions have partnered with local dealerships, allowing you to search their inventory and easily apply for loans. Credit unions also offer loans on specialty vehicles like RVs, motorcycles and even tractors.

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