Comparing Credit Union Car Loans

Comparing credit union car loans to traditional lending institutions such as banks might produce some pleasant surprises. Although traditional commercial and savings banks offer a wider array of financial products and services than a credit union does, car loans offered by the latter should be far more attractive.

Credit unions are non-profit organizations that exist to benefit its membership. Nowadays, credit unions are open to virtually everyone and are formed on the basis of employment, hobby, geography and other factors defining its "field of membership." Where traditional financial institutions seek profits for shareholders, credit unions concentrate on service to members and can offer rates and products that may not be available to the ordinary consumer at a commercial institution.

Due to the non-profit nature of a credit union, interest rates are going to be lower than a traditional bank may offer. Where a traditional bank offers a 48-month car loan at 6.01%, a credit union can offer the same loan at 5.49% according to Datatrac from December of 2008.

Additionally, traditional banks began the practice decades ago of levying additional charges and fees accompanying loans issued. Since credit unions are created to provide members better financial services, auto loans issued to members do not normally carry a lot of miscellaneous fees making these attractive solutions for members to finance vehicle purchases. Additionally, since most memberships in credit unions do come with an obligatory checking or savings account, and since payroll direct deposit is emphatically encouraged, additional factors such as payment convenience also tend to make credit unions a perfect choice for handling all financial needs. Automatic payments can be deducted at the needed moment allowing a member's funds to stay in an interest bearing account until the very last moment.