Thinking about purchasing a new or pre-owned vehicle? Obtaining an auto loan from a Texas credit union may be your best option. Unlike banks, credit unions are not-for-profit financial organizations, with members who are also part owners. This means members can vote on certain credit union operations, regulations and processes. Banks are for-profit businesses and owned and controlled by shareholders — people who have stock in the bank.

texas credit union auto loan

There are more than 5,000 credit unions in the US and 202 credit unions in the state of Texas. Similar to for-profit banking institutions, credit unions can provide members with home and auto loans, investing options and checking and savings accounts. However, as not-for-profit organizations, credit unions are taxed at lower rates, and these savings can be passed onto members. 

More than 121 million Americans are credit union members. They often share certain characteristics, such as attending the same school or place of worship, or belonging to the same labor union or homeowners’ association.  

How do credit union auto loans work?

To issue these loans, credit unions utilize funds deposited by members and lend them to other members. Credit unions are able to make this money back when borrowers pay interest on these loans. This allows them to share the funds with members through lower fees, special perks and higher interest on savings accounts or dividends.

Auto loan rates from credit unions can be much lower than the rates offered by other lenders. The current average rate for a vehicle loan in Texas is 5.27% on a 60 month loan, but can go as low as .99% on new & used vehicles when borrowed from a credit union. 

Interest rates offered through dealerships can also be high because dealers often work with various lenders to provide loans for buyers. Although state auto loan interest rates will vary depending on the financial institution, a borrower’s credit score will also influence the rate and loan term they receive. 

Ancillary products like gap insurance, multi-shield protection, disability insurance or an extended warranty can also be much cheaper when purchased through a credit union versus a bank or auto dealership. Credit unions also offer lower loan minimums for anyone purchasing less expensive, pre-owned vehicles, or for consumers who are able to make large down payments.

Applying for an auto loan at a credit union is similar to the loan application process at a bank. Members should bring their identification cards, employment information, proof of income, credit scores and histories, proof of auto insurance and details of the vehicle they’re interested in purchasing. 

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How do I join a credit union?

There are more than 200 credit unions in Texas, so you simply have to find one that interests you and explore its membership qualifications. Members typically must meet certain affiliation requirements, such as attending a particular college, working in a certain industry, living in a specific area or having family members who already belong to the credit union. 

Joining a local credit union has advantages — it is familiar with the community and will likely offer products that are tailored to meet specific needs. Credit union members also have access to lower interest rates on other types of loans and better interest rates on savings accounts, checking accounts or CDs. 

In terms of auto loans, Texas Tech Credit Union members have access to some of the lowest interest rates in the state:

New vehicles:

  • Up to 48 months: .99%
  • 49 to 60 months: 1.24%
  • 61 to 72 months: 1.49%
  • Up to 84 months: 1.74%

Used vehicles:

  • Up to 36 months: 3.24% (Doing away with 36 months)
  • 37 to 48 months: .99%
  • 49 to 60 months: 1.24%
  • 61 to 72 months: 1.49%

Joining Texas Tech Credit Union is simple and open to current and former students and many other members of the community. Click here to see if you qualify for membership. 

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