Have you ever wondered how auto loans work at credit unions? Join us as we take a deep dive into the process and demystify everything from the steps involved in applying for an auto loan at a credit union to the advantages credit unions provide versus traditional banks when it comes to auto loan services.
What Are Auto Loans at Credit Unions?
When you are in the market for a new or used vehicle, you have many options for finding a loan. Most people will choose the traditional route and use a bank or credit union for financing. Auto loans from credit unions work like any other loan — the credit union lends you a fixed amount of money for a period of time, and you pay the loan back with interest. The only real difference between auto loans from a credit union vs. a bank is that you must be a credit union member to access their loans.
Benefits of Getting an Auto Loan from a Credit Union
The good news is that becoming a credit union member to qualify for perks is relatively easy. At Hudson River Community Credit Union (HRCCU), for example, anyone who lives, works, worships, or attends school in Saratoga, Warren, Washington, Rensselaer counties or the Towns of Cohoes, Watervliet, or Green Island are eligible to join the credit union. You can also join HRCCU if an immediate family member falls into one of those categories. The benefits of choosing to take out an auto loan with a credit union include the following:
Lower Interest Rates
Because they are non-profit organizations that are owned by their members, credit unions are able to offer lower interest rates than banks. This can result in saving as much as 1-2% on interest percentages, which could add up to hundreds or thousands of dollars over the life of the loan.
Personalized Customer Service
At their heart, credit unions are community-based organizations dedicated to their members (notably, not “customers”). This type of personalized service is evident in the services that credit unions offer, which often includes options for those with less-than-perfect credit.
Flexible Terms
As part of their service to their members, credit unions offer a variety of flexible financial products, including auto loans that are designed for members with different financial histories. This could include longer term loans as well as lower down payment and fee requirements.
Membership Advantages
In addition to the benefits of auto loans, credit union members enjoy other perks such as access to a national network of ATMs and access to financial education that is tailored to the community and the members of each credit union. Credit unions offer everything that banks offer but with a different structure that is designed to benefit their members/owners in a way that banks, which are owned by shareholders, simply cannot do.
How to Get an Auto Loan from a Credit Union
Ready to get your next auto loan from a credit union? Great! It’s a relatively simple process that is no different than any other auto loan application.
Eligibility and Membership Requirements
Before you can get an auto loan from a credit union, you need to be a member. Fortunately, this is a relatively simple process, and most credit unions, like HRCCU, have very inclusive membership policies that are designed to get as many community members to sign up as possible. Most credit union membership applications are simple and only require basic information such as identity and proof of residence to begin.
Preparing Your Application
Once you are a member of a credit union, you are ready to begin the more complex process of applying for an auto loan. You must gather a few key documents to start this process:
- Government-issued identification, such as a driver’s license or passport
- Proof of income; pay stubs and W2s work well for this
- Proof of residence, which is covered by your driver’s license or a utility bill
- Trade-in or other downpayment information in order to help loan officers determine how much money you will need to borrow
The Application Process
Once all your information is processed, the credit union will run a credit report with one or more of the three major credit reporting agencies — Experian, Trans Union, or Equifax — to help with your loan approval. The higher your credit score, the more favorable your loan terms will be, including interest rate and total payment amount. Even if you have struggled with credit in the past, remember that credit unions are uniquely positioned to help find you an auto loan that you can manage and use to build your credit for the future.
Approval and Disbursement
Once approved, the loan process with your credit union works the same way as it does with traditional banks. If you have already chosen and negotiated the terms for the vehicle you want, the credit union will send the funds to the dealer and get you behind the wheel as quickly as possible. If you opted for a pre-qualification, they will give you paperwork to take to the dealership to prove that you have access to the funds you need to complete the purchase. From there, the dealership will work with the credit union to complete the terms of your loan, and your repayment will begin within 30 to 60 days.
Credit Union vs. Bank Auto Loans
As we have already covered, getting an auto loan from a credit union vs. a bank has several financial advantages. However, for most members, the real difference between working with credit unions such as HRCCU comes from the value of the customer experience.
Auto Loan Rates at Credit Unions
To view the latest auto loan rates at HRCCU, please visit our Auto Loan Rates page for up-to-date information.
Getting an Auto Loan at HRCCU
At HRCCU, we take pride in offering all the common benefits of getting an auto loan through a credit union from our personalized service right down to our great interest rates. We work with members in the Capital District every day to find them affordable auto loans that help them build or maintain their credit and get the vehicle they want and need. Contact us today to learn more about our auto loan options and to speak to a financial advisor today about your auto loan needs.
