Editor's choice: PenFed Auto Loans
- Low starting rates
- Reduced payments
- Extended warranty available
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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.
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:
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|
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:
Often you can meet geographic or employment requirements if a direct family member is eligible — even if you aren’t.
Every credit union has its own eligibility requirements. However, there are some criteria you generally must meet with every lender:
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.
Credit unions typically work with a wide range of vehicles that go beyond cars. You can often find:
While the application process might vary slightly between credit unions, you’ll generally go through the following steps:
From its minimal eligibility requirements to its membership discounts, here are a few perks of taking out a car loan from a credit union:
Consider these potential drawbacks before applying for a car loan from a credit union:
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.
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