Ready to buy a car? Holding back because you aren’t quite sure how to get the best deal? Before you jump at the first solution, take some time to investigate your options. Comparing a credit union vs. a bank auto loan can give you a financial advantage that can really make a difference over time. Let’s consider the options more closely.
What makes a credit union different from a bank?
At first glance, banks and credit unions appear to be the same. Both are financial institutions that offer banking services such as checking and savings accounts, credit cards, loans and other financial products.
Yet the most significant difference between credit unions and banks is their ownership. Credit unions are not-for-profit financial institutions owned by their members. When you join a credit union, you become an owner of the institution.
That creates a significant advantage when utilizing the credit union for savings and loans. Credit unions pool all members’ money and use that to offer financial products with better rates and fees than what you’ll find at traditional for-profit banks. Because their primary goal is to serve their owners, they go the extra mile of reinvesting any money made back into the products they offer. As an owner, you’ll find that you often make out with better rates and lower fees.
What you’ll need to secure an auto loan
In many ways, credit unions and banks work similarly when approving you for a loan. They look for indicators that you’re trustworthy and can afford to repay the loan. They’ll request:
Proof of identity
Plan to provide a driver’s license, passport or other government identification with you. It should include a signature to help prove it’s really you.
Proof of income
Lenders want to verify that you have the income necessary to repay the loan. They will look at your monthly paychecks or salary, any other assets you own, your employment status and monthly expenses. Gather copies of your most recent pay stubs and bank statements.
Proof of residence
Lenders will want to know if you rent or own and how long you’ve lived at your current residence. Find a piece of personalized mail, such as a utility bill or credit card statement, as proof. You may need to provide addresses for previous residences as well, depending on the last time you moved.
Lenders will review your credit history, including the type of credit accounts, credit limit, account balances, other loans and payment history. A lender will need your address, date of birth and Social Security number to pull your credit report.
What separates credit union loans from bank auto loans?
Traditional banks often advertise promotional rates for auto loans to increase business. Dealers often tout their “dealer financing” as a better way to drive away with a car.
Yet, in both cases, it’s important to note that they are businesses looking to make a profit. If you have an excellent credit score and look good on paper, either may offer “promotional deals” that may be worth looking at. However, for the rest of us, it’s often better to shop around. There are many auto loan packages available if you’re willing to do some research.
Because credit unions are owned by their members, they often offer:
Lower interest rates
Credit unions have different interest and fee structures when compared to banks. Banks are in business to make a profit and must answer to their shareholders when they don’t meet requirements. Credit unions are member-owned and not-for-profit, which helps keep their interest rates low. They are also exempt from certain taxes profit lenders must pay, which can be passed along as savings to you.
Credit unions are often willing to dig a little deeper and work with members with less-than-perfect credit. They’ll consider individual circumstances and are often willing to tweak loan products to meet you where you are. Credit union lenders are more inclined to talk to you and coach you toward strengthening your financial situation. They may also be more willing to look at the entire picture before forming an opinion.
Credit unions are known for their superior customer service. Employees are more than workers; they’re often members too. That means they have similar values and interests as you do when utilizing the credit union’s services. You’ll often find articles and other tools available to help sharpen a member’s money skills. You’ll also have access to a variety of people in the community to learn all you can about financial literacy. Have a question? Just ask!
Are you ready to get a credit union auto loan?
After comparing credit unions vs. bank auto loans, are you convinced a credit union is the right option for you? Are you ready to secure your credit union auto loan?
To start, you’ll have to be a member of a credit union. If you’re not already a member, it’s easy to become one. At Solarity, we require our members to meet one or more of the following criteria:
- Live, work or attend a school or worship in a Washington State school district
- Have a family member who is a current member
- Be a member of the GoWest Foundation
You can apply for membership online and then apply for an auto loan right away. Don’t worry if there isn’t a branch near you; our members live across the US and use our online banking services for convenience.Whether you’re thinking about buying a car, truck, RV or another vehicle, new or used, make your first step a visit to your credit union. The lending team can look at your numbers and help you determine how much you can afford to borrow. We can discuss your needs and help you move through the application process if you decide you’re ready for pre-approval. This will allow you to find the best option available to you and be ready to say “yes” when you find the car you’ve been looking for.