According to Statistica, approximately 6.3 million passenger cars were sold to drivers in the United States in 2017. It’s a safe bet that of those 6.3 million cars, many of them are financed through auto loans. In fact, 45 percent of people are financing their vehicle and the average borrower has nearly $18,000 in auto debt.
With so many types of auto loans available and lenders available, it pays to do research when it comes to car loans. For several reasons, a credit union auto loan is an advantageous way to go when it comes to financing a car. Getting a credit union auto loan ensures you’ll likely be supporting a local organization and in all likelihood you’ll get a lower rate that you may not be able to find anywhere else.
Advantages of getting a credit union auto loan include:
- Good Interest Rates: One of the top advantages to getting a credit union auto loan is the interest rates. Joining a credit union and getting an auto loan means most of the loans you take out, whether for auto or some other purpose, are going to be lower than what you’ll find through a commercial lender. Credit unions are non-profit organizations (NPOs), which means earnings are returned to members of the credit union through lower interest rates. When it comes to financing a new or used vehicle, that means drivers are paying less money per month and being charged less interest over the length of the loan.
- Shorter Loans: Another advantage to taking out a credit union auto loan is that those taking out the loan can decide how long they want it to be for. A good rule of thumb to remember is that a longer loan means you’ll pay more interest over time. A shorter loan means less interest, even if a monthly payment might be a little higher. In general, paying off a loan as quickly as possible is always a good way to go.
- NPO: As previously mentioned, credit unions are not-for-profit organizations and that’s an advantage when it comes to getting a credit union auto loan. Being an NPO means credit unions aren’t making a profit. Instead they return savings to their members through better interest rates, whether it’s through savings or through loans. Being an NPO also makes customers feel more comfortable because a credit union isn’t out to gouge customers with through-the-roof loan prices and practices.
- Better Customer Service: It’s incredibly easy to join a credit union. Most credit union savings accounts require you to have a small amount in a savings account to join, sometimes as little as five dollars. When it comes to applying for a credit union auto loan, the process isn’t necessarily faster through a credit union, but those applying for loans can feel comfortable because they are getting to talk with real, actual financial officers who can help them through the process. Joining a credit union is also advantageous because you can do your banking at the same place you’re applying for your credit union auto loan.
Overall, applying for an auto loan through a credit union has many advantages. When it comes to applying for a credit union auto loan, those applying will get a decision from the credit union with reasons why you’ve been approved or denied. The terms and rate offered by a credit union are competitive, but don’t come with hidden fees and as previously mentioned, the interest rates are likely to be lower since credit unions are NPOs.