Purchasing a new or pre-owned vehicle can be an intimidating process. Finding the right car to fit your lifestyle and budget often takes time, effort, and patience. But it doesn’t have to be difficult! An effective, economical credit union auto loan can make this process much simpler.
Here are some tips for finding the right credit union auto loan:
Banks are for-profit businesses owned by stakeholders, including individuals who hold stock in the bank. Credit unions are different — they are not-for-profit financial organizations with members that are considered part owners. This gives them the power to weigh in on specific credit union duties, daily operations, rules, and processes.
Currently, more than 5,000 credit unions are operating across the U.S., with 203 of those in the state of Texas. More than 125 million Americans belong to credit unions, often sharing similar interests or qualifications, such as attending the same university, belonging to the same labor union, or living in the same community.
Joining a local credit union offers many benefits to members, including lower interest rates on personal, home, and auto loans and higher rates on certificates of deposits, checking, and savings accounts.
For example, the average auto loan rate in Texas is currently 4.24 to 5.27% when issued from a bank. However, a credit union auto loan can go as low as just under one percent (depending on the applicant’s credit score) for up to a 48-month loan term.
Additionally, extra products such as GAP insurance, multi-shield protection, extended warranty, and disability insurance are typically less expensive when issued from a credit union instead of a bank. Members can also obtain auto loans for pre-owned vehicles from credit unions, whereas some banks require patrons to purchase newer vehicles to qualify for loans.
Unlike joining a bank, credit union members must meet established criteria. This includes having family members who have already joined, residing in a certain community, working in a specific industry, or attending a college or university that runs its own credit union.
If you’re already a member, applying for a credit union auto loan is much like a bank’s loan application process. During your first consultation, make sure to bring important personal documents, such as your ID card, current employment status and work history, present income and history, credit score and payment history, proof of auto insurance, and information on the vehicle you would like to purchase.
Here are more things to keep in mind when applying for a credit union auto loan:
Before you approach your credit union, look at your current credit rating and history. A “good” credit score hovers around 700, whereas a “fair” rating falls closer to 600. If purchasing a vehicle isn’t immediately necessary and your score needs some improvement, take some time to work on boosting your credit score before applying for a credit union auto loan. A higher rating could help you secure a lower interest rate.
Although not necessary, getting pre-approved for a credit union auto loan can help applicants negotiate lower prices when visiting a dealership or private seller.
Pre-approval simply means that the credit union has looked over your credit score and history — along with other supplemental information — to give you a general idea of the loan amount and interest rate you’re likely to obtain. This also helps you set a realistic, affordable budget for your purchase.
Always make sure you understand the terms before signing for an auto loan. Look over the agreed-upon fees, charges, loan length, down payment, and annual percentage rate to ensure you’re not hit with any surprises down the road.
The following taxes and fees are typically based on the standard presumptive value (SPV) of cars, SUVs and trucks bought in Texas:
Texas Tech Credit Union offers flexible and affordable financing for new and pre-owned vehicles with various terms and lengths. Reach out today to get started!