Recommended Credit Union for Auto Loans
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When searching for a place to finance an auto loan, many car shoppers go directly to the Internet, thinking online lenders always offer the best interest rate and terms. Although online lenders are a great option, it’s smart to check out local credit unions, as well.
Because they are non-profit, they may not advertise as heavily as other banks and lenders. Getting a loan from a credit union requires membership, and for some people that can seem like a barrier to getting a loan. Credit score requirements might be on the higher end also.
Credit union membership
Becoming a member of a credit union is often as simple as opening a savings account with a $5 deposit. In many cases, you don’t even have to visit the credit union in person.
Credit unions have eligibility requirements that may rely on your address, your place of employment, or an affiliation with a professional organization.
How to apply for a credit union auto loan
The process of applying for an auto loan at a credit union is the same as it is at a bank or online. In fact, credit unions may have less restrictive requirements for auto loans than some other lenders.
Applicants provide identifying information such as full legal name, address, social security number, drivers license number, and a government-issued photo id. They give the credit union information about their employer and offer proof of income in the form of bank statements, tax returns, or pay stubs.
Credit unions typically conduct a hard pull of credit to qualify applicants for an auto loan. The credit bureaus combine similar credit inquiries in a 30-45 day period into one single inquiry to prevent shopping around from hurting your FICO credit score.
How to find the right credit union for your next auto loan
If you are already a member of a credit union, start your research by checking out typical interest rates for auto loans on their website. Find out their loan minimum and be sure to learn about any loan fees.
At the same time, apply with some online lenders to get pre-approvals so you can understand what a competitive interest rate looks like in your current financial situation.
Federal credit unions
If you aren’t currently a member of a credit union, start with a few federal credit unions with the best terms. If you are employed in the healthcare field or have a spouse, parent, or partner who is, you are eligible for membership at National Institutes of Health (NIH) Federal Credit Union. They offer car loan APRs as low as 1.99%, and they’ll finance up to 125% of the car’s value for a maximum of 84 months.
PenFed Credit Union has auto loans with APRs starting at 2.49% for used cars and 1.49% for new cars if you use the PenFed buying service. They’ll finance between $500 and $100,000 up to 110% of the car’s value. Loan terms are 36 to 96 months. Membership at PenFed Credit Union is available to current and former members of the military, their families, employees of the United States government, and those who are members of certain qualifying organizations.
Current and retired employees of schools and their families can join SchoolsFirst Federal Credit Union online, over the phone, or in person. With a membership, you’ll get exclusive savings with Enterprise and Autoland. The credit union offers auto loans with interest rates as low as 2.84% APR. They’ll loan up to 100% of the MSRP on a new car for between 36 and 84 months. Eligible members can also get access to their no payments for 90 days program.
Local credit unions
Local credit unions may be more willing to work with applicants who have a history of past credit problems. No matter which financing option you choose, it’s vital to compare offers from a variety of lenders.
Credit unions that refinance auto loans with bad credit may also be local. Their non-profit status may allow them to extend educational programs to applicants to help them improve their credit status, as well.
Alternatives to credit unions; Auto loans with bad credit
It may be difficult to get a loan from any type of lender for those with bad credit. A history of repossessions, bankruptcy, judgements, or even an unstable employment history could mean rejection from a credit union.
There are a few reputable lenders who specialize in helping those with bad credit rebuild their payment history by extending auto loans. Qualified applicants may be able to get the loan they need so they can get their credit back on track.