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Credit union auto loans

Find affordable financing from a nonprofit lender.

Looking for a credit union auto loan? Find a car loan
Want to learn about credit union rates? Learn more

Credit unions are nonprofit financial institutions that are owned by their members. While you have to get a membership for most of their products, you can often find more affordable rates and forgiving requirements than a national bank. However, they can take a while to process — and membership typically is only open to select individuals.

How are credit union auto loans different?

Credit unions are nonprofits that are jointly owned by their members, so they can often afford to offer the most competitive interest rates. The main downside is you may need to get a membership to access their products. This can add another step to the application process, which is already more drawn out than online or dealership financing.

Apply for a credit union car loan

The credit union below does not require a membership for its car loan.

Name Product Min. Loan Amount Interest Rate Loan Term Min. Credit Score Requirements Table description
Coast Capital Car Loan
$10,000
Varies
18 - 84 months
650
Able to service debt payment of $300/month
Finance or lease both new and used vehicles with competitive rates and flexible terms from one of Canada's largest credit unions. No credit union membership required for this product.
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Is it better to get a credit union car loan?

It depends on the person seeking out an auto loan and their needs. Along with banks, credit unions tend to be the more traditional route to secure auto financing. This means you’ll find much lower interest rates, you’ll come across lower fees, and you have better odds of getting approved provided you have a solid credit history to back you up.

Like banks, credit unions have a more rigorous process for approving loans and aren’t as lenient with how much they are willing to loan you compared to online lenders. Your first checkpoint is to apply for membership if required and then fit the eligibility criteria to secure a loan.

Secured vs. unsecured car loan

When searching for a credit union car loan, a product 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 your car will act as collateral. So if you don’t make your repayments, the lender can repossess your car. An unsecured car loan means the loan has no collateral.

Generally, loans with collateral have lower interest rates than loans without, but interest rates also depend on other personal factors.

Fixed- vs. variable-rate car loan

Credit unions can offer a fixed interest rate or variable interest rate for your car loan. With a fixed rate, your payments will stay consistent throughout the loan term. With a variable rate, your interest rate will fluctuate with the markets, which can change your payment amounts or the duration of your loan term. Variable rates generally have a lower starting rate than fixed rates and are advantageous when rates are stable or falling.

Credit union auto loan rates

Credit union auto loan rates vary depending on the location of the population it serves. Here are examples of credit union loan rates in Canada for car loans and personal loans:

Credit unionInterest rate
Newfoundland and Labrador Credit Union car loans
  • Variable rate, on new 2021 vehicles: 3.30%
  • Variable rate, on 2021 vehicles: 3.75%
  • Variable rate, on 2020 vehicles, special promotion: 4.20%
  • Variable rate, on 2017-2019 vehicles, special promotions: 4.20%
  • Variable rate, on 2016 vehicles or before: 5.75%
  • Variable rate, on 2021 motorcycles: 4.49%
Desjardins car loans
  • Secured, average car loan rate of 6.99%
  • Fixed rate, secured, hybrid or electric vehicles only of $10,000 or more: 4.5% for non-members and 4.2% for members
FirstOntario Credit Union personal loans
  • Fixed rate, secured: 7.34%
  • Fixed rate, unsecured: 7.84%
  • Variable rate, secured 6.49%
  • Variable rate, unsecured 6.99%
Steinbach Credit Union personal loans
  • Starting at 3.45%

As of July 2021

What affects my interest rate?

Several factors affect the rate you can qualify for, including:

  • Credit score. You generally need to have a good credit score to get a competitive interest rate.
  • Debt-to-income ratio. The lower your debt-to-income ratio is the better it is for you to qualify for the best credit union car loan rates.
  • Type of car loan. New car loans tend to have lower rates than used car loans at credit unions, regardless of your creditworthiness. However, some credit unions just offer a regular personal loan that you can use towards your car purchase.
  • Model and make of vehicle. The lowest APRs may be dependent on the vehicle. Some credit unions, like the Police Credit Union, offer interest rates on cars that are within four model years.
  • Loan term. Often, credit unions offer higher starting interest rates for longer loan terms.

Can I qualify for a credit union auto loan?

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

Membership requirements

Credit unions are typically 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:

  • Credit union membership
  • Canadian citizen or permanent resident
  • Over 18 years old

Credit unions can be less than forthcoming about every factor they consider when you apply, which is one reason why you might want to prequalify first. This will give you an idea of what rates and terms you’re eligible for without hurting your credit rating with a hard credit inquiry.

What credit score do I need to get a credit union auto loan?

To secure a credit union car loan, you should aim for a credit score of at least 650.

Credit scores range from 300 and 900 in Canada, with traditional lenders like banks and credit unions accepting scores at no lower than 650. If your credit score creeps any lower, you’ll have a difficult time securing a car loan at a lower interest rate and you may have to resort to bad credit auto loans.

What types of auto loans do credit unions offer?

Credit unions typically work with a wide range of vehicles that go beyond cars. You can often find:

  • New car loans. Finance a new car from a dealership.
  • Used car loans. Finance a used car from a dealership or private seller.
  • Lease buyouts. Finance the balloon payment at the end of a lease.
  • Car loan refinancing. Trade in your current car loan for a better deal.
  • Motorcycle loans. Finance a new or used motorcycle, usually from a dealer.
  • ATV loans. Finance an off-road vehicle, usually new.
  • RV loans. Finance a camper or mobile home.
  • Boat loans. Cover the cost of a new boat.

Compare car loans from other lenders

Below are other car loan lenders (online lenders) if credit unions are not for you.

Name Product Min. Loan Amount Interest Rate Loan Term Min. Credit Score Requirements Table description
Loans Canada Car Loans
$500
0% - 29.99%
3 - 96 months
300
Min. income of $1,800 /month, 3+ months employed
Get access to financing from multiple lenders across Canada through a single application with Loans Canada. Bad credit, CERB and EI borrowers are considered.
CarsFast Car Loans
$500
4.90% - 29.90%
12 - 96 months
300
Min. income of $1,800 /month, 3+ months employed
Browse thousands of vehicles from dealers across Canada and get matched with financing that meets your needs. Apply online to purchase a new or used vehicle and get the vehicle delivered to your door.
AutoLoanProviders
$7,500
3.99% - 29.99%
12 - 96 months
300
Min. income of $1,800 /month, 1+ months employed
Available in Ontario only.
Browse thousands of available vehicles and apply online from the comfort of your own home. Receive confirmation of your financing options and get your new vehicle delivered to your door anywhere in Ontario free of charge. All credit scores considered.
LoanConnect Car Loans
$500
9.90% - 46.96%
3 - 120 months
550
No min. income requirement
Get access to 25+ lenders through LoanConnect's brokerage. Receive pre-approval in as fast as 60 seconds and get your funds in as little as 24 hours.
Canada Auto Finance
$500
4.90% - 29.95%
3 - 96 months
300
Min. income of $1,500 /month, 3+ months employed
Canada Auto Finance is a broker that connects borrowers with partnered local lenders. Financing for a new or used car is available for borrowers with bad credit, no credit, CERB, EI or bankruptcy.
Carloans411 Car Loans
$500
1.90% - 19.99%
Up to 72 months
300
Min. income of $1,600 /month, 3+ months employed
Get connected with suitable lenders through CarLoans411. Finance your next car, van or truck with loans available in amounts from $500 to $50,000. Check eligibility for this loan through LoanConnect.
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How to apply for a credit union auto loan

While the application process might vary slightly between credit unions, you’ll generally go through the following steps:

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

Of all your options, credit unions tend to have the longest approval times for a car loan, especially compared to online lenders and dealerships, which can often offer financing on the spot.

This is because credit unions, and banks, require more documentation to verify your identity, your income and your employment status, which slows the process down. Keep in mind, if you aren’t a member of a credit union you need to apply for membership first. This adds another step to the application process.

The approval time for car loans from credit unions vary. Some have quick online applications that take the same amount of time to approve as an online lender.

Others require you to visit a branch, fill out an application and wait days for the more traditional approval process. Because the time varies so widely, talk to your credit union to see how long it might take. As a rough estimate, it could be done in as quickly as one business day or up to two weeks to finalize your car loan.

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

From its minimal eligibility requirements to its membership discounts, 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.
  • Fewer requirements. These nonprofit lenders are often friendlier to borrowers with less-than-perfect credit.
  • Membership discounts. You can sometimes get a higher discount by signing up for autopay from your credit union bank account.
  • Car-buying services. Many credit unions also offer a car-buying service to streamline the application process.

Why consider other types of financing?

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

  • Long 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. If you’re already overwhelmed, a credit union might not be right for you.
  • Longer terms are more expensive. Long-term car loans are already expensive, since there’s more time for interest to add up. But credit unions also tend to charge higher rates on long-term loans, making it even more costly.

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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