Auto Loan
Credit Union Auto Loans in 2024
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Credit unions are member-owned, non-profit financial institutions. Unlike banks, these offer financial products and distribute their profits among their members. So, if you are exploring auto loan options, credit union car financing is also an option. If looking at credit union car financing, you must thoroughly research and understand the credit unions and the auto loan rates. Here is a detailed guide about credit union auto loans in 2024.
Key Takeaways
The table below gives information about the best credit unions, the APR range they offer, their loan amount, loan term, and membership requirements.
| Credit union | Starting APR (new vehicles) | Starting APR (used vehicles) | Membership requirements |
|---|---|---|---|
| Navy Federal Credit Union | 4.64% | 5.54% | Military or Department of Defense affiliation |
| State Employees' Credit Union (NC) | 5.59% | 5.78% | State of NC employees or retirees, federal employees assigned to NC state agencies, employees of select NC-based businesses |
| PenFed Credit Union | 5.24% (with car-buying service) | 6.49% (with car-buying service) | Open to all |
| BECU (Boeing Employees Credit Union) | 6.59% | 7.09% | Open to all who donate to an affiliated organization |
| Schools first FCU | 6.49% (with autopay) | 6.69% (with autopay) | Affiliation with an eligible school, college students enrolled in an eligible education program |
| Golden 1 Credit Union | 6.89% | 7.04% | Californians, members of select employee groups |
| Alliant Credit Union | 6.85% (with discounts) | 7.47% (with discounts) | Open to all who join the Foster Care to Success organization |
| America First Credit Union | 5.95% (with autopay) | 6.10% (with autopay) | Affiliation with certain parts of UT, NV, AZ, OR, ID, or NM, food industry workers in UT, employees of affiliated businesses |
| Mountain America Credit Union | 7.99% (with autopay) | 7.99% (with autopay) | Residents of certain areas in UT, employees and volunteers of affiliated businesses |
| First Technology Federal Credit Union | Varies by state | Varies by state | Open to all who join the Computer History Museum or Financial Fitness Association |
Credit union auto loans operate similarly to other types of auto loans. For instance, instead of making a full payment for your new vehicle upfront, you secure a loan that will generally require a down payment. The repayment will include monthly installments covering three to six years, although the duration can vary.Your vehicle acts as collateral as your loan is secured. Therefore, the failure to maintain timely loan payments could result in the credit union repossession of your car.
| Advantages of Auto Loans from Credit Unions | Disadvantages of Auto Loans from Credit Unions |
|---|---|
| Credit unions often offer lower interest rates due to their non-profit model. | Qualification for membership is mandatory. |
| There are several benefits offered to credit union members. | The eligibility criteria may not be uniform for all credit unions. |
| Provides more customized customer service. | A potential delay in the loan process can occur as some unions require you to hold the account for a set time. |
| The membership approval process may be less convenient than online applications with banks. | |
| There can be instances of hard credit pull. |
You might be confused about how to choose a particular credit union. Now, you will know in detail about the pros and cons of a particular credit union and why you choose it.
Pros and cons
Pros
Cons
Brand overview
Navy Federal Credit Union has you covered all the banking options no matter what you prefer: they have branches, ATMs, and CO-OP locations across the country, not to mention an app. They lend money for all sorts of vehicles, including boats, motorcycles, recreational vehicles, and new and used cars. All their membership details are available on their website.
Pricing
Navy Federal Credit Union offers the lowest interest rates. Up to 36 months, the loan rates for new and late-model vehicles start at 5.04%. The maximum loan term for new cars is 96 months, and that for used cars is 72 months.
Eligibility
You can be a member only if you belong to the armed forces, veterans, the Department of Defense, or the qualifying members.
Pros and cons
Pros
Cons
Brand overview
Pentagon Federal Credit Union, also called PenFed, provides its service in all 50 states, and most of its branches are in the greater Washington D.C. area. Some major services include banking products and services, car loans, credit cards, home equity loans, and mortgage loans.
Pricing
For loan terms of 36 months, the interest rates for new cars start at 4.99%, and those for used cars start at 6.14%. The maximum loan term for new auto purchases will be 84 months.
Eligibility
You can become a member by opening a savings account for $5 to indicate your share in the credit union and use its services.
You should have a valid Social Security or Taxpayer Identification Number (TIN).
Pros and cons
Pros
Cons
Brand overview
Randolph-Brooks Federal Credit Union (RBFCU) provides its services to four Texas market areas: Austin, Dallas-Fort Worth, Corpus Christi, and San Antonio, having over 60 branches.
Pricing
Up to 24 months, the auto loan rates start at 5.49%, and the maximum loan duration is 84 months.
Eligibility
To become a member, with a minimum deposit of $1, you must open a primary savings account.
Pros and cons
Pros
Brand overview
America First Credit Union has its headquarters in Riverdale, Utah, United States. It is a member of the CO-OP network of ATMs, and free ATM access to the 30,000 ATMs nationwide is provided by this network.
Pricing
Up to 36 months, America First Credit Union offers a loan rate that starts at 6.49%, and the maximum loan duration is 96 months.
Eligibility
You can be a member of America First Credit Union if you are a resident, work, volunteer, or attend school in states like Idaho, Oregon, Nevada, Utah, New Mexico, and Arizona. In addition, they can be members if they are immediate household members or work with affiliated employers.
Unlike applying for loans with banks, the process might not be as smooth as there may not be an online system in place. However, it is not complex if you consider a few details before filling in your application form.
Deciding on the car you will purchase may not be a difficult task. However, it is better to know the amount you want to spend on your car purchase and finalize the budget after including the additional charges like insurance and maintenance that will tag along. This will help shortlist the credit unions for car financing according to your needs.
Checking your credit score prior will give you an idea about the APRs you can qualify for. In other words, you will get low rates if you have a credit score above 670.
Learn the rates and terms from multiple credit unions before committing. There are plenty of options out there. So, you must spend some time before committing to a credit union to save money by shortlisting what suits your budget and needs.
A pre-approved loan doesn't guarantee a loan but gives you negotiating power and your position in the credit union. Even though preapproval requires a credit hard pull, the multiple checks done within 14 days will be counted as one.
After you have received a tentative offer, analyze it by calculating the total costs, including the fees and interest rates. Also, choose the term based on the interest rate and according to how much you might be able to pay every month.
Credit unions approve your auto loans once you become a member. So, if you are clear about the loan, you should become a member and apply.
Credit unions vary in the minimum credit score needed to qualify for a vehicle loan; thus, there is no universally applicable standard. It depends upon the credit union, the vehicle's make and model, the borrower's employment and income history, and other factors. You should expect a cheaper interest rate the higher your credit score is. Borrowers with credit scores above 720 should expect the best interest rates.
Credit union car loans are no different from the regular car loans. In other words, instead of taking a loan from the bank, you take one from the credit union, make a down payment, and then pay the installments with the interest rates. Here are the reasons to get a credit union car loan.
One of the main reasons why many prefer credit unions is that they offer lower APRs when compared to regular banks. Therefore, it is a cost-effective choice for those who require an auto loan.
Credit unions are member-owned. It works on a non-profit basis. This unique structure can result in more favorable loan terms and a focus on serving the financial interests of their members.
Since it is member-based, credit unions are more customer-oriented. Since it is more localized, there is an option to discuss your financial situation in detail and create specific solutions tailored for you.
As individual financial needs and goals are considered in a credit union, they also consider flexible loan repayment options.
Credit unions are for everyone and are not restricted to a specific company or employees. In addition, car loans are the main forte of credit unions for both old and new cars.
Joining a credit union for a car loan also means becoming a member. As a result, additional benefits include access to other financial products, educational resources, and even a role in the credit union's decision-making processes.
| Feature | Dealership Car Loan | Bank Car Loan | Credit Union Car Loan |
|---|---|---|---|
| Loan Source | Arranged through the dealership. | It is obtained directly from a traditional bank. | It is obtained from a member-owned credit union. |
| Interest Rates | Rates can vary and may be negotiable. | Rates are less flexible. | Offers lower rates |
| Loan Terms | May have a variety of terms available. | Standard terms may be less flexible. | Flexible terms, with potential for customization based on member needs. |
| Down Payment | Negotiable downpayments | Requires a down payment. | Down payment requirements may be more flexible and negotiable. |
| Approval Process | Quicker approval process. | Streamlined approval process | Longer approval process. |
| Customer Service | The focus is often on selling the vehicle. | Standard customer service from a bank. | Personalized service due to the smaller size of the member-owned structure. |
| Flexibility and Options | May offer additional financing options. | Limited options | Flexible options for individual needs and circumstances. |
| Accessibility | Convenient if purchasing from the dealership. | Accessible through local branches or online. | Accessible through local branches or online, with membership requirements. |
Credit unions are popular because of their flexibility and the me-centric approach. You can choose a good number of credit unions for your car financing. However, credit union auto loan rates are not standard like those of banks. The rates are determined based on the individual's credit scores, financial position, and needs. In addition, the member incentives also make credit unions a viable option for auto loans.
Navy Federal Credit Union and Pen Fed credit unions have the best car loan rates.
There are benefits and drawbacks to both credit unions and banks. While banks are more accessible, credit unions are more personal and flexible.
Though credit unions also use credit scores and the borrowing history to approve loans, they generally have flexible terms and conditions that provide their members access to loans.
While the interest rates can vary with the person's credit history, five percent or below is a good rate for a 72-month car loan.
PenFed Credit Union is the best to finance a car.
The standard suggestion is to make a down payment equal to 10 and 20 percent of the total price of the vehicle.