How to buy a car with a credit union auto loan
When an individual plans to buy a car, the first thing that comes to mind is availing a loan from a commercial bank, car dealer, or auto finance company, but often, they forget about the undisputed auto loan leader, “the trusted credit union.”
A credit union auto buying loan is an excellent choice because it offers lower interest rates than other financial institutions. They serve the same purpose as a commercial bank but have other added advantages, making them a better choice for many individuals.
So, let us look at the journey of buying a car with a credit union auto loan and its advantages:
What is a credit union?
A credit union is a non-profit cooperative financial institution that is owned by its members. Unlike a bank, which is owned by shareholders and the profit is distributed among them, a credit union is owned by its members, who are also the customers.
If you talk about statistics, more than 122 million Americans are availing the benefits of a credit union, making it an unchallenged leader in auto loans.
How do auto loans from a credit union work?
A credit union works like a commercial bank. You have to apply for an auto loan, and the institution will check if you tick all the boxes for the eligibility criteria.
If they find you eligible for the loan, they will provide you with funds that you can use to finance your car.
After that, you have to pay them a monthly installment with interest until your loan has been paid back. Once you have paid the loan, the vehicle will become yours.
Even though a credit union and a commercial bank are similar, they have some differences in how they function.
A commercial bank is profit-oriented, meaning that it aims to earn profit for its shareholders. On the other hand, a credit union is a non-profit organization. Therefore, its main aim is to provide excellent service to its customers, who are also its members.
Why should you apply for a loan from a credit union?
A credit union’s only mission is to ensure its members’ financial well-being, meaning you! Therefore, there are numerous benefits to applying for a loan from a credit union. Some of them are mentioned below:
Lower interest rates
You can avail of a loan with a lower interest rate from a credit union compared to other financial institutions. They can provide loans at a lower interest rate because they don’t prioritize making profits but rather aim towards making their financial services available to everyone.
Great customer service
Many people value the excellent customer service that credit unions offer. According to a survey by Customer Reports, 96% of customers were satisfied with the services offered by credit unions. You can be assured of amazing service in a commercial bank because members are also the customers.
Community involvement
Credit unions aim to provide affordable financial services to low-income communities. Therefore, if you come from a low-income group, credit unions are a great option to get an auto loan.
Avail loan with a low credit score
Credit unions are more lenient than banks. Hence, getting a loan from them is easier, even with a low credit score. However, they may ask for a cosigner or require a large percentage of the down payment deposit. Moreover, since the credit score is bad, they may also charge higher interest.
Conclusion
A credit union can be a great option for an auto loan if you have a bad credit score or want a loan at a lower interest rate. Moreover, another added advantage of these institutions is that members are also the customers, so the services are always top-notch.
Availing for a loan from a commercial bank comes with a lot of hassle. But on the other hand, credit unions make the process of getting a loan straightforward.
So, if you are planning to buy a car and don’t know how to get a loan, a credit union is just the right solution.