When you’re looking at the options for a car loan, check into a car loan from a credit union. Most people have heard of credit unions and seen them, although few understand the benefits that can come from being a member. One of the advantages is that you can often obtain lower rates for a car loan with a credit union.
What is a Credit Union?
A credit union is a kind of bank. Unlike commercial banks, however, it’s owned by its members. They pool their money, and out of the money they deposit with the credit union, they’re able to make loans to other members.
With some credit unions, anyone can join. Others tend to limit their membership to people from a certain organization or company. If the credit union is open, you’ll need to pay a small fee to become a member and have access to all their services. As credit unions aren’t as profit-oriented as banks and other commercial lenders, their interest rates are often lower, which can be useful if you want a car loan from a credit union.
One reason you’ll want a car loan from a credit union is for the lower interest rate, which translates into you paying less for your car. Not all credit unions charge the same interest rate. You’ll need to check with different credit unions to see what their interest rates are for auto loans before you join one. Make sure that it’s a credit union you’re eligible to join. Many people join credit unions simply to take advantage of offers such as these.
The application process for a car loan from a credit union is very similar to applying for loans from other institutions. Before you go in to apply for a loan with a credit union, you need to have several things in order. After your membership has been established, decide what kind of car you want to buy. Will you be trading in a vehicle on the new car? If so, how much is it worth in trade? For that you’ll need to consult something like the Kelley Blue Book, which will tell you the value of your car.
Do you intend to put a down payment on the new vehicle? How much can you afford to put down on it? A larger down payment will affect the interest rate of your loan.
Length of the Loan
These days it’s not uncommon to find car loans that last longer than 60 months. The shorter the loan you want, the more you’ll pay each month, but the lower the interest rate. When you apply for a car loan from a credit union, discover the difference a shorter term loan can make to the amount you end up paying. If you have good credit, and have a trade in or a down payment on a new car, then you should receive a quick answer when you apply for a car loan from a credit union.