Credit Union Car Loan Pros
Credit unions have flexible eligibility criteria and offer comparatively lower rates depending on your credit score.
Here are some notable benefits of credit union car loans:
- Lower Interest Rates - The main justification for entering the credit union and applying for a loan is the competitive interest rate. Since they are not-for-profit organizations, they give their profits back to members in the form of discounted rates. When looking for car financing options, this means lower monthly payments and smaller debt over time. In addition to lower interest rates, credit union members are paying lower fees.
- Shorter Terms - Credit unions will also give you a choice as to how long you want the loan to last. The longer the repayment period on the loan, the more interest you pay. When you have the choice of having a shorter repayment term, the monthly cost will be higher, but you’ll eventually pay less interest. It is also in your best interest to repay the loan as soon as you can afford.
- Customer Service & Convenience - It's easy to be a part of any credit union, and once you apply for the car loan, it's just a matter of sitting down with a finance representative, going over your financial documents, and waiting for the final approval. It may not be as easy as an online loan agent, but you can speak to a real person and rely on the highest level of customer support while you’re applying. You can expect straightforward responses for all your queries.
- Not-For-Profit - The fact that credit unions are not-for-profit businesses makes all the difference in the world. Their only motivation is to return their profits to their members in the form of better interest rates. By eliminating the profit factor from their business model, they avoid creating the illusion that they are taking advantage of their customers through scandalous lending practices.
Credit Union Car Loans Cons
While there are quite a few benefits, you must also consider the possible drawbacks of a credit union car loan.
Some of the common problems are:
- Limited Options – Given credit unions aren’t just dealing in car loans, you might have to compromise with a limited number of loan options compared to banks or other online lenders. Moreover, not all terms and options are clearly listed for comparison.
- You Might Not Get Special Offers - Unlike participating dealerships and captive finance firms, which frequently end up funding their loan options, credit unions are not actively involved in car loans. Hence, you might not get added offers that come from dealer financing or private lenders.
- Dated Technology - Credit unions are smaller organizations and don’t necessarily have a vast online presence. You might have to visit the physical office numerous times during the approval process. However, private banks and other lenders offer online applications and 24/7 services for customers.
Best Credit Union For Car Loans
If you’ve finally decided that a credit union car loan is the right choice for you, here are 4 organizations that you must check out:
Alliant Federal Credit Union
You can get car loans with repayment terms for as long as 84 months.
There are no prepayment penalties and you can even get pre approved.
Moreover, the APRs start as low as 2.99%.
Consumers Credit Union
They also offer repayment terms of 84 months and APRs starting as low as 3.19%.
Becoming a part of this credit union is fairly easy and you can access good deals even with a bad credit score.
Additionally, they serve customers across the US.
NIH Federal Credit Union
NIH offers the lowest APR of 1.99% and funds up to 125% of the vehicle’s cost.
The repayment term is 48 months however, membership isn’t open for all.
Only healthcare works or related industries can be a part of the credit union.
Pentagon Federal Credit Union
You can get loans as low as $500 and as high as $100,000.
The repayment period ranges from 36 to 84 months.
However, membership to this credit union is strictly open to US government employees, military personnel, and other government-run organizations.