Senate Cents: A Financial Wellness Blog

Share:

Credit Union Auto Loans

By: Philip Reed, NerdWallet

Published: November 30, 2018

If you’re looking for a loan before buying a car, don’t forget to consider credit union auto loans. Even if you’re not a currently a member of a credit union, they’re worth checking out. Depending on your credit and employment history, you could get a lower interest rate than from other lenders while enjoying a more personalized application process.

Just as with banks and online lenders, at most credit unions you can get preapproved for an auto loan. This simplifies the car-buying process and puts you in a stronger negotiating position at the dealership.

Advantages of credit unions

Car buyers increasingly are turning to credit unions for auto loans, in part because of the lower interest rates on offer. Credit unions’ share of the auto loan market rose to 19.6% in the third quarter of 2016 from 17.6% in the previous third quarter, according to Experian’s Automotive Finance Market report.

Credit unions offer:

  • Competitive interest rates for a wide range of auto loans
  • A personalized loan application process
  • Preapproved financing to streamline car shopping
  • Perks and promotions for members

There are also fundamental differences between credit unions and banks that could make a big difference for you. Credit unions are nonprofit financial institutions and tend to offer more personalized service, while banks are for-profit and may have more innovative products and technology.

Rate shop before you car shop

If you’re already a member of a credit union, find out what interest rate it will offer you. The rate may seem good, but you should also compare it with those at other banks and online lenders. Only by shopping the marketplace can you find your lowest interest rate and best terms. Shopping for rates might sound like a hassle, but many online auto loan providers now contact multiple lending sources — including credit unions in some cases — after you fill out a single application.

Even if you’re offered a lower rate elsewhere, other factors could steer you back to your credit union. Trust, simplicity and the personal touch that credit unions provide are important to many people.

Wide range of loans

Typically, credit unions offer the same loans available through conventional banks or online lenders, such as:

  • New car purchases from dealerships
  • Used car purchases from dealerships or private parties
  • Refinancing for your existing car loan
  • Lease buyouts  

Membership requirements relaxed

While many credit unions specialize in serving members of a certain community or workforce, such as teachers, membership requirements are usually broad, so don’t assume you can’t join a credit union. If the rates are good, it could be worth joining just for a car loan. Plus, credit unions provide other services that you might later use such as savings accounts, credit cardsand personal loans.

At the dealership

Once you make a deal for the car you want, the finance manager will request payment. When he finds out you’re financing through a credit union, he may try to beat your rate with a loan through the dealership. It doesn’t hurt to see what he can offer, because below-market rates and even 0% financing may be available.

If you do take financing through the dealership, make sure all the other terms of the loan remain the same. And don’t be talked into long loan terms just to get a lower payment; you pay a lot more in interest in the long run.

But if you already have a good rate and don’t want to complicate things, you might be more comfortable proceeding with the credit union loan. If you’re shopping around for a good auto loan, check out NerdWallet’s favorite credit unions.

Philip Reed is a staff writer at NerdWallet, a personal finance website. Email: .

Updated June 1, 2017.

View all posts

Members' Voice Testimonials

This credit union is the best, I love the customer service and you can't beat the interest rates. I'm happy to be a member of this great credit union.

- James · Locust Grove, GA

The branch manager introduced herself and was extremely helpful. She stated that if there is anything we ever need to please let her know. Very positive experience!

- Larry · Cumberland, MD

Greta was absolutely amazing - as always. She makes me and my parents feel valued and supported. We are forever grateful. [The Credit Union] has been hugely supportive over many years. And we feel known and cared for.

- Eliza · Washington, DC

Long as I have been with the credit union, I haven't had any problems. I also like the protection on my account.

- Charles · Upper Marlboro, MD

My overall experience at the credit union was exceptional. The staff was hospitable offering water, my service was timely and professional and the office was well lit and clean.

- Denise · Washington, DC

As a member for more than 40 years, i have always had great service from the USSFCU and know that they stand behind their great reputation.

- David · Silver Spring, MD

A top rate Credit Union, [I'm] privileged to be part of! Thank you for all you do for our family! USSFCU Credit Union was able to resolve our financial situation - vehicle, personal loans, customer service/recommendations, within 6 months. We belonged to another credit union for over 20 years, with results not even close to comparison. We switched ...

- Manuel · Bowie, MD

Your people and products are amazing. The recent [online banking] overhaul is phenomenal. [I've] been electronic banking since Tele action phone banking - paying bills with my push button landline decades ago. USSFCU is light years ahead of everyone else in terms of ease of use and client experience!

- Misty · Brookings, OR

I have been a member for more than 30 years. I no longer reside in the DC area but continue to bank with USSFCU because of the ease and the customer service.

- Tamra · Denver, CO

I have been a member for over 50 years, and I have always gotten good service with loans, when I had to have service at a branch, and when I needed to have money sent to me from my savings account. The personnel have always been friendly and treated me with respect.

- John · Fort Washington, MD

I especially appreciate being able to quickly speak with someone (not a robot) and that person has always been knowledgeable and helpful.

- Bernard · Richmond, VA

Excellent customer service streamlined and transparent process. The representatives are efficient, knowledgeable, and understanding of the type of loans offered by Credit Union.

- Erwin · Ellicott City, MD

The USSFCU behaves as a credit union ought to behave. The staff works with and for the members, not for a corporate board. Interest rates for a car loan, a home improvement loan, and a mortgage are low and terms are transparent.

- Ruth · Takoma Park, MD

Staff are courteous and friendly to work with. Very knowledgeable about services and products offered or available. Excellent follow-up with customers.

- Jacquelyn · Sanford, FL

I have appreciated USSFCU services for many years since I left my work on Capitol Hill. I have appreciated the occasional webinars on purchasing a home or retirement planning.

- Jamie · Washington, DC

I have been a member since 2006, and have always appreciated the customer service response to any concern or query. In addition, as I have traveled extensively, USSFCU has provided support and access.

- Kathleen · Ukiah, CA

I've had a credit union account for decades, even though I no longer work on Capitol Hill. I now have two accounts. I've been able to do all of our banking remotely, by app or by phone.

- Richard · Washington, DC

I have been a USSFCU member for almost 20 years. There is nowhere else I want my money to be. I always receive excellent service.

- Nicole · Alexandria, VA

I deeply appreciate the stellar service, the proficiency, the professionalism, and the kindness. I am truly honored and grateful to bank with a financial institution that treats customers like family.

- Angela · Alexandria, VA

Read More testimonials.