When purchasing a car, where do you naturally think of borrowing from? For most people, the answer is a bank or dealership. However, there is a third option that does not get as much attention: credit unions.
Learning about the advantages of credit union auto loans is important when making an informed decision. A credit union is most likely the BEST source for an auto loan for you and here is why.
Lower Interest Rates
According to the National Credit Union Association, average auto loan rates for a credit union compared to a bank looked like this as of March 26, 2021:
Notice how the average rates at a credit union are almost 2 percentage points lower than what banks charge on loans of the same term. If you look at past data provided on the website, this has held true for many years.
Why it matters: Real life examples.
On a $25,000 new car loan with a 60-month term, the monthly payment for a credit union loan at 2.98% would be $449, and the total interest over the life of the loan would be $1,940. The same auto loan at a bank would be $469 a month with total interest adding up to $3,149. That means you could save $20 a month, or $1,209 over the life of the loan by taking out an auto loan with a credit union versus a bank.
On a $25,000 used car loan with a 48-month term, the monthly payment for a credit union loan at 3.02% would be $554, and the total interest over the life of the loan would be $1,572. The same auto loan at a bank would be $577 a month with total interest adding up to $2,690. That means you could save $23 a month, or $1,118 over the life of the loan by taking out an auto loan with a credit union versus a bank.
Credit unions offer the same products and services as banks but are structured differently. At a bank, management reports to the shareholders and the profits are given to them. Credit unions are owned by members and are not-for-profit; they take their profits and invest them back to their members with better products and rates.
You might ask, “How does this affect customer service?” Since credit unions work FOR their members, NOT shareholders, it is their obligation and priority to help their members reach their financial goals, not make a profit from them. Also, your approval odds at a credit union are much higher than at a bank. We understand that you are more than just a credit score and an account number. We are willing to work with members who have less-than-perfect credit to make their financial goals a reality.
Ready to join?
So, you are sold on the idea of a new car and a credit union to finance it. Now it’s time to join. One of the biggest misconceptions about credit unions is that they are hard to join. Do you live in Lubbock or a surrounding county? Good; you’re in! Now let’s focus on getting you that new ride. To apply click HERE or text us at 806.798.4607! Not a member yet? Join HERE.