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Credit union car loans

You could find affordable financing from a not-for-profit lender when you opt for a credit union auto loan.

Want to learn about credit union rates? Learn more

Credit unions are not-for-profit financial institutions that are owned by their members. While you may have to get a membership, you can often find competitive credit union car loan rates.

Credit union auto loan rates

As a benchmark, the average car loan rate in Canada according to Statistics Canada is 7.66%.

Credit unionInterest rateLoan term
Newfoundland and Labrador Credit UnionSpecial rate, fixed, new 2022 vehicle: 5.50%
Special rate, variable, new 2022 vehicle: 6.20%
New 2023 vehicles: 6.0%
Variable, 2022 vehicle: 6.70%
Special rate, fixed, 2022 to 2019 vehicles: 6.25%
Special rate, fixed, 2018 and prior: 7.80%
3 - 8 years for new, 3 - 5 years for used
Kawartha Credit Union6.99% for vehicles 5 years old or lessUp to 5 years
DucaNew hybrid car loan:

Fixed rate: 4.30% - 4.40%
Variable rate: 9.19%

New car loan:

Fixed rate: 4.80% - 4.90%
Variable rate: 9.19%
1 - 5 years
Steinbach Credit UnionPersonal loans start at 7.7%Not disclosed

Should you get a car loan from a credit union?

It depends on what you’re looking for in a car loan. Credit unions provide competitive car loan interest rates in Canada depending on the car you’re looking to buy and your financial situation. For example, some credit unions have special rates for new cars of any type or new electric or hybrid vehicles. However, you may need to get a membership to access their car loan products.

Fixed vs variable rate credit union auto loans

Credit unions offer a fixed interest rate or variable interest rate for your car loan. With a fixed rate car loan, your interest rate will stay the same throughout the loan term. With a variable rate car loan, your interest rate will go up or down depending on whether Bank of Canada’s benchmark rate changes. If your variable rate goes up, your payments will generally stay the same, but more of the money will go towards paying the interest than the principal.

The central bank raised the benchmark interest rate eight times from March 2022 to January 2023. Currently, it plans to pause rate hikes conditionally as it assesses the impact of its increases on the economy.

Secured vs unsecured credit union car loans

When searching for a credit union car loan, a feature to keep an eye on is whether the car loan is secured or unsecured, because this can differ among credit unions. A secured car loan means the car you’re buying will act as collateral. So if you don’t make your repayments, the credit union can repossess your car. An unsecured car loan means the loan has no collateral. The older the car, the less likely the credit union will accept it as collateral.

Generally, loans with collateral have lower interest rates than loans without collateral.

New vs used credit union car financing

Credit unions offer car financing for both new cars and used cars. They may offer special discount rates for current-year models or new electric vehicles.

Credit unions can also finance used cars, but they may have a cut-off year. Banks and credit unions typically don’t want to finance cars older than 10 years. If you’re buying a used car, expect higher rates compared to a new car.

Can I qualify for credit union vehicle loans?

Credit union car loans can come with two sets of requirements: membership requirements and loan eligibility requirements.

Membership requirements

Credit unions are meant to serve a specific population. There are three main types of membership requirements for credit unions:

  • Geographic. Sometimes membership is only available to people who live in a certain area or province as their emphasis is on the community that they serve.
  • Employment. Some credit unions are only available to employees at a certain organization, like the Police Credit Union.
  • Donation. Many credit unions allow you to join even if don’t meet its typical geographic or employment requirements by making a small donation to a local charity.

Often you can meet geographic or employment requirements if a direct family member is eligible — even if you aren’t.

Loan eligibility

Every credit union has its own eligibility requirements. However, there are some criteria you generally must meet with every lender:

  • Canadian citizen or permanent resident
  • Over 18 years old
  • Have a steady income and employed for 3+ months
  • Have a credit score above 660

Can I get a credit union car loan with bad credit?

It’s not likely you’ll get approved for a car loan by a credit union if you have poor credit. Overall, credit unions have strict eligibility requirements and require a credit score of at least 660. If you’re looking for a car loan and your credit score is under 560 or 600, learn about your bad credit auto loan options.

What types of auto loans do credit unions offer?

Credit unions are flexible with their vehicle loans. You can find credit unions that offer the following:

Can you use a credit union car loan to finance a private car sale?

Some credit unions do allow you to use their auto loans to finance a private sale. Before you apply, check first with the credit union whether it can offer this, and find out whether the private sale auto loan is secured or unsecured.

How to get a car loan from a credit union

While the application process might vary a little between credit unions, you’ll essentially go through the following steps:

1. Compare credit unions

Shop around to find a credit union you’d be willing to join. Weigh factors like membership fees, rates, loan terms, loan amounts and the type of car loans offered.

2. Get pre-approved

Often you can get a ballpark idea of what loan amounts, rates and terms you might be eligible for by filling out a short online form or talking to a loan officer at the credit union. Try to get car loan preapproval with a few lenders so you can pick the best offer. You can even use this offer to negotiate for a lower rate at the dealership.

If you decide to go with the dealership financing, make sure to read the contract. Dealerships sometimes sneak in unnecessary add-ons that can make the overall cost higher. They might also offer 0% financing — though these typically have strict conditions.

3. Get approved

If you want to proceed with the credit union’s offer, submit to a hard credit check and provide documents to verify your income and identity.

4. Submit your contract

Sign your car purchase and loan documents. If you’re buying from a private party, you should receive the money by direct deposit to your account or as a cheque. Otherwise, your credit union typically sends the funds directly to the dealer.

How long does it take to get approved for a credit union auto loan?

Credit unions have longer car loan approval times compared to online lenders and dealerships, which can often offer financing on the spot.

This is because credit unions require more documentation to verify your identity, income and employment status, which slows the process down. And if you aren’t a member yet, getting membership is another step in the process.

Some credit unions have quick online applications, and then a representative reaches out to you about next steps in one to two business days. As a general guide, getting a credit union car loan from start to finish takes one to three weeks.

How much will a credit union car loan cost me?

This depends on the interest rate, loan term and loan amount. As an example, below is how much a new vs used credit union auto loan may cost at varying fixed rates and loan terms.

$23,000 new car loan at 5% APR over 5 vs 7 years

5 years7 years
Monthly payment$434$325
Total interest charged$3,042$4,307
Total loan cost$26,042$27,307

    $15,000 used car loan at 7.3% APR over 3 vs 5 years

    3 years5 years
    Monthly payment$465$299
    Total interest charged$1,748$2,949
    Total loan cost$16,748$17,949

    Credit union auto loan calculator

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    In addition to your monthly payment, this car loan calculator shows how much you’d pay on your loan’s principal amount and how much you’d pay overall in interest. The principal amount is the amount that you borrowed and should be equal to your loan amount. Total interest is the amount you would pay on top of the principal — the cost of having your loan.

    What influences your credit union auto loan interest rates?

    Several factors affect the rate you can qualify for with a credit union, including:

    • Credit score. You need to have a good credit score to get a favourable interest rate.
    • Debt-to-income ratio (DTI). Your DTI is the percentage of your monthly debt repayments out of your monthly income. The lower your debt-to-income ratio is the better it is for you to qualify for the best credit union car loan rates.
    • New vs used car. New car loans have lower rates than used car loans, regardless of your creditworthiness.
    • Model and make of vehicle. Certain models may have special low rates, but you’ll need good credit to qualify.
    • Loan term. Longer loan terms often have higher interest rates.

    Compare car loans from other lenders

    1 - 4 of 4
    Name Product APR Loan Amount Loan Term Requirements Long Table Description
    CarsFast Car Loans
    4.90% - 29.90%
    $500 - $75,000
    12 - 96 months
    Requirements: Min. income of $2,000 /month, 3+ months employed
    Loans Canada Car Loans
    1.49% - 31.99%
    $500 - $35,000
    24 - 120 months
    Requirements: Min. income of $1,800 /month, 3+ months employed
    Carloans411 Car Loans
    1.90% - 19.99%
    $500 - $50,000
    Up to 72 months
    Requirements: Min. income of $1,600 /month, 3+ months employed
    Canada Auto Finance
    4.90% - 29.95%
    $500 - $45,000
    3 - 96 months
    Requirements: Min. income of $1,500 /month, 3+ months employed
    loading

    Compare up to 4 providers

    What are the advantages of getting a credit union car loan?

    Here are a few perks of taking out a car loan from a credit union:

    • Competitive rates. You can find car loans or personal loans offering competitive APRs if you have good credit.
    • Lower minimums. You can sometimes find car loans as low as $500 from credit unions, making it a better deal for a cheap private party purchase.
    • Personalized service. Customer service is what most credit unions are known for. Credit unions often have the option to apply online, in person or over the phone. If this is your first time, you could benefit from having someone walk you through the process.

    What are the disadvantages of credit union car loans?

    Consider these potential drawbacks before applying for a car loan from a credit union:

    • Slower turnaround. Like banks, credit unions can sometimes move slower than online or dealership financing.
    • Membership required. Becoming a member adds another step to the car-buying process.
    • Online applications not available. Some credit unions may require you to visit a branch to apply for car financing.

          Bottom line

          Credit unions often have some of the best deals out there, especially if you have good credit. But they might not be the best choice if you’re looking for a fast, hands-off experience and the application to become a member can add to the complexity.

          You can find out how credit union car loans stack up to other options by reading our guide to car loans.

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