We all need safe transportation to navigate our busy world. While public transit is affordable, it doesn’t always get you where you need to go, so owning your vehicle is much better. A vehicle is getting increasingly expensive, but some lenders can help you with this major purchase, including a credit union.
Auto loans from credit unions closely resemble that of a traditional bank. In addition, their dedication to their members and the local communities is of great benefit. It is why many people come to them for their auto loans. Once in place, you can enjoy your new vehicle and continue to work with your local credit union for all your financial matters.
How do auto loans work from credit unions?
Credit Unions Are Not Banks
You have probably seen a credit union in your local city, and from the outside, they look much the same as a bank. Both offer similar services and products, but with a credit union, you become a member, get shares, have voting rights and can even become a board member.
Because their members own them with a not-for-profit structure instead of a large corporation like a bank, they can offer lower interest rates for loans and higher rates for savings and investment products. Finally, credit unions are locally focused and strive to give back to the community in which their members live and work.
Getting An Auto Loan
To apply for an auto loan with a credit union, you must first become a member. This is a simple process of going to your local branch or one that may be affiliated with your job, military service, organization or other connection specific to the credit union.
You can also apply online to become a member and get a savings or checking account.
Financial Information
Credit Unions are focused on benefiting their members, which extends to getting an auto loan. They also have more flexibility with their approval process and will consider more than just your credit score and recognize those with non-traditional employment.
You will need to gather all your relevant financial information to take to the branch so they can see your worthiness in obtaining a car loan. This includes:
- SIN or social security number
- Proof of identity, usually a passport, birth certificate or driver’s license
- Credit history
- Employment and income details
- Information about the vehicle you want to purchase
Once you have all this information, give it to the loan officer or submit it online. Make sure everything is accurate, as mistakes can delay the application process.
Finalizing the Loan
After the credit union has gone through your application, they will either approve it or deny it. If they deny it, they will give you all the reasons and suggest how to improve your creditworthiness to reapply to obtain a loan or other forms of credit.
If your loan is approved, you will get paperwork stating the loan terms, including interest rate, loan duration, any fees and payment amount.
You can also get a quick pre-approval. This is a soft pull on your credit history that doesn’t affect your rating, and you may then be able to get better terms based on your financial situation.
Once you are happy with the terms, sign the loan agreement and obtain the financing.
Research Different Credit unions
Some credit unions offer different rates depending on several factors, so it is beneficial to shop around and compare them. Remember that you may not be eligible to become a member of every credit union, so beyond finding the best loan rates, ensure you qualify for membership.
Your credit union may also offer additional guidance through your vehicle purchase for a more personalized touch to make an informed decision when getting financing. This can include educational resources, workshops and seminars to help you.
Relationship Building
With a credit union, you are more than just a number. They want you to feel supported, and it is a way of building a relationship with you as you continue to use their services and products. Having an existing relationship with them helps, and you may get better rates for being a long-standing member.
Ultimately, you will discover that getting an auto loan through a credit union will save you money because they typically offer lower interest rates, reduced fees and no hidden charges. They are transparent in all their dealings with members because clear communication is their priority, so you will fully understand the terms and be confident in obtaining a loan.
If you are considering purchasing a vehicle, become a member of a credit union and start building that relationship now.
