December 14, 2018
Why Choose Credit Unions over Bank for Car Loans
Over 5,600 credit unions are operating in the United States under federal insurance!
What makes them so different from the traditional lending houses, i.e., banks?
Do they really put the community first?
Do the 110 million members of credit unions know something that you don’t?
Are they really better for car loans than banks?
They absolutely are because more than a third of the business they do constitutes car loans!
Are you looking to buy a new car yourself? Then your local credit union is the place for you. Here are some reasons why:
Credit Unions are different
At a bank, you will remain a customer who has been assigned an account number. At a credit union, on the other hand, you will be much more. These financial lending institutions offer you to become a part of their organization via cooperative membership. With membership come privileges, such as voting for the members who’d form the board, which you aren’t likely to find elsewhere.
Credit unions can be understanding when loan problems happen
It can happen to anyone. From time to time, we may have all been in dire straits. It has led to mistakes occurring with the loans we might have taken. Whether it is due to having insufficient cash to pay off an installment or a delayed payment because your check got delayed in the mail, such incidents do happen. Unlike the banks, credit unions are more accepting when you inform them of an incorrectly credited payment or that the report against you at a credit bureau isn’t right.
All you’d have to do is get in touch with a member service representative as soon as you can. They will answer any questions you have or address your concerns. This will take place without your call being transferred from department to department!
Credit Unions will give you auto loans on lower rates
Of course, this is one of the most important influencing factors that puts the ball firmly in the credit unions’ court! The rates that a bank or another source offer you are bound to be higher than what awaits you at your local credit union. The National Credit Union Association (NCUA) reported last year’s average loan rates on auto loans. Those rates as offered by the credit unions were almost two percentage points lower on new cars. The breach increased when we compare the rates for used car, which were almost 2.25 percentage points lower!
If we do a bit of calculation, for a loan of $20,000 on a new car, you’d have to pay 2.78% ($357) with a 60-month term. Now let us look at the monthly rates offered for the same car by the bank. The number jumps to 4.69% ($375). If you think saving $18 per month is nothing, think in terms of years, i.e., $216 saved per year!
Applying the same calculations on a used car, we get a rate of 2.86% ($441) from credit unions. The banks, on the other hand, offered 5.09% ($461). Another $20 that you save on a monthly basis.
Credit unions help you calculate how much you can safely pay
You may already have heard that it is much easier to qualify for an auto loan at a credit union as compared to a bank. Now, consider another positive point of banking at a credit union. As a member, you will conduct most of your financial business there. That means your local credit union will have the necessary information on checking and savings accounts, financial investments, and mortgage loans.
This information about your finances can be highly useful in determining how much you can pay! The auto loan you get will thus be created to suit your needs. Couple this kind of great service with a good payment record and you will have the loan to buy your new car within no time.
Credit unions offer more than just a car loan
When you become a member of a credit union, you have access to their educational resources. Most of them contain resources that can help members make financially informed decisions. You could learn more about the various financing options available to you. Besides that, knowing the true value of your vehicle purchase can also come in handy. Being better informed on auto loans and purchasing cars mean you could get the best deal there is!
As is evident, even though credit unions operate a bit like banks, these lenders are vastly different. They are owned by the people depositing their money and are mostly nonprofits. They promote the welfare of the community by offering more than just loans. Their lower operating costs ensures they won’t overcharge you for an auto loan. Still on the fence about joining? Then don’t! Just remember to confirm if the local credit union lends money to its members. If they do, you are likely to find the Best Auto Loans waiting for you there!