Should I Get an Auto Loan From a Credit Union?

When you seek a car loan, chances are you’ll see credit unions interested in your endeavors. Usually, because you can get auto loans from different options, including banks, understanding how credit unions help you decide whether you’ll get your loan from them or banks.

As such, before getting deeper into the whole concept of whether you should obtain your car loan from banks or credit unions, learn more about credit union auto loans from Empower Federal Credit Union offering car loan options professionals.

What you should know about credit unions

In simple terms, the most basic definition of a credit union is a financial institution offering banking services such as loans, investment accounts, and deposit accounts. However, unlike banks, credit unions are not profit-based financial organizations.

When you join them, you become part of the unit owners. As such, the non-profit working concept of these unions makes getting a car loan from them a better option, especially since it doesn’t have lots of processing. With these unions, getting an auto loan won’t charge you high interests like banks.

They also tax you at lower rates hence helping you save more while getting a vehicle. The profits or interest banks get passed to your savings account as a member considered among the owners of a credit union. You earn these profits and interests as a member as dividends.

Again, getting a car loan from credit unions is a better consideration, especially since unions consider your loan applications more holistic than banks do instead of looking at you as an investor.

Also, most loan applicants in a credit union share common characteristics, thus making it easy to get a car loan regardless of your financial status and history, unlike in banks where those with better credit scores and financial abilities are preferred.

How does your credit union auto loan work?

Unlike banks, your credit union loan works by pooling money from the union members. This happens when you, as members, put your money together and invest it for mutual aid purposes.

Therefore, unlike in banks where you only open an account, saving in a credit union makes you a member and owner. As such, once you save and join others, you’re eligible to borrow the pool of money for investments, including getting a loan for your vehicle.

How do you join credit unions and get a car loan?

Unlike joining banks, especially those with strict regulations for getting loans, joining a credit union is effortless. Find a credit union and research its working conditions. Once you find out how they work, see if you qualify for their membership.

Mostly, you’ll need cooperation with people you share the same features, such as living in the same area, working at the same company, or having relatives, friends, and family members of such unions. After researching and collecting your data, apply and join.

Also, you can explore a credit union and join online. However, online credit unions may not contain members of your family or those who work at the same company, thus making it hard for you to get recommendations about how such partnerships work.

What is the difference between credit unions and banks?

Usually, the primary difference between a credit union and a bank is the profits and ownership. Unlike credit unions, banks belong to their shareholders. These are people who buy stocks in such banks and have shares.

On the other hand, members of credit unions are the owners. These are people like you who use the union services.

Also, banks are profit-making organizations, and those profits belong to the shareholders. On the other hand, credit unions are nonprofit organizations meaning any money they make returns to members in higher savings, lower loan rates, fees, and sometimes in dividends.

Additionally, because they are non-profit institutions, credit unions are taxed differently, unlike banks.

How do you apply for a car loan in a credit union?

Because the vehicle loan application is always similar to other financial organizations, including banks, the only difference you’ll experience when applying for an auto credit loan is the membership.

Once you qualify, you can apply for your loan online, over the phone, at a credit union branch, and in more ways based on how the union operates. Also, if you’re not a member, you can join and apply for a car loan instantly.

After you apply for the loan,  the union reviews your application, verifying information, including your employment, identity, credit score, and income. These factors are determined to assess your eligibility for the loan.

Also, after the review, you’ll be asked about the details of the vehicle you need, plus proof of insurance for the car.