Find affordable financing from a nonprofit lender.
Compare car loans from top credit unions
How are credit union auto loans different?
There are a few factors that set credit unions apart. Credit unions are nonprofts that are jointly owned by their members, so they can often afford to offer more competitive terms and rates. They also typically offer longer terms, a wider variety of auto loans and a more personalized service than you might get with a national bank, online lender or dealership.
The main downside is you have to become a member to be eligible — sometimes before, sometimes when you apply. This can add another step to the application process, which is often already more drawn out than online or dealership financing.
What rates can I expect from a credit union auto loan?
Credit union auto loan rates typically start around 2.99% APR. That’s lower than your average car loan, especially compared to online and dealership financing. However, several factors affect the rate you can qualify for, including:
- Credit score. You need to have near-perfect credit to get that 2.99% APR.
- Debt-to-income ratio. Your monthly debt obligations usually can’t be more than 20% of your monthly income to qualify for the best rates.
- Type of car loan. New car loans tend to have lower rates than used car loans at credit unions, regardless of your creditworthiness.
- Model and make of vehicle. The lowest APRs aren’t always available for all vehicles.
- Loan term. Often, credit unions offer higher starting rates for longer loan terms.
Do credit unions offer rate discounts?
Yes, you can often qualify for a rate discount by signing up for automatic repayments or using a car-buying service. Below are the discounts you can expect from top credit unions:
|Credit union||Rate discounts|
|Consumers Credit Union|
|Alliant Credit Union|
|Navy Federal Credit Union|
|PenFed Credit Union|
|Geico Federal Credit Union|
Can I qualify?
Credit union car loans come with two sets of requirements: membership requirements and car loan eligibility 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, like the San Diego County Credit Union.
- Employment. Some credit unions are only available to employees at a certain organization, like Geico FCU or Teachers Federal 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.
Car 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
- DTI under 45%
- US 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 check.
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.
How to apply for an auto loan from a credit union
While the application process might vary slightly between credit unions, you’ll generally go through the following steps:
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:
- Highly competitive rates. You can find a car loan starting at 2.99% APR if you have good credit — sometimes even lower.
- 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. 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.
- Potentially poor customer service. While loan officers can offer personalized service, credit unions tend to have a reputation for being understaffed or hiring under-qualified customer service representatives.
- 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.
Credit unions not for you? Compare online car loan providers
Credit unions often have some of the best deals out there, especially if you have bad credit. But they might not be the best choice if you’re looking for a fast, hands-off experience — the application can be complex. It also might not be a great choice for a long-term loan, since those tend to come with higher rates.
You can find out how credit union car loans stack up to other options by reading our guide to car loans.