Why you should consider a credit union for your car loan

Shopping for a new car can be a hassle. From deciding which new or used car works best for you and your needs to where you’ll find the best deal, a lot goes into getting a car loan and narrowing down your final choice. However, there’s another crucial factor to consider: where to finance your new car. People debate whether they should finance with a credit union or a bank. We’re here to break down the differences, so you can find the right car loan.

Credit unions have lower interest rates

A credit union is a not-for-profit financial institution that is owned by its members rather than shareholders, so it’s able to return profits to and invest in members. That’s why credit unions can typically offer lower rates on loans. Credit unions often offer rates as much as 2% lower than banks. According to the National Credit Union Association, as of September 2024, a new car loan from a bank with a 60-month term has an average rate of 7.50%. Comparably, a new car loan from a credit union with a 60-month term has an average rate of 6.27%—nearly a 2% difference. It may not seem like much, but in the long run, it saves big.

For example, if you purchased a new car—a car sold in its original, manufactured condition with no previous owners—for $30,000 and no money down, with a 7.50% rate on a 60-month term, your monthly payment would be $601. However, if you purchased the same vehicle with the same loan term but at a rate of 6.27% from a credit union, your monthly payment would be $583. That would save you $1,080 throughout your auto loan. Dozens of factors determine your APR and providing a loan, so the best way to know what rate you qualify for is to contact the financial institution directly for a quote.

Credit unions offer more flexible loan terms

Whether you’re buying a new or used car, credit unions offer more flexible and affordable financing options. This flexibility allows members to tailor their loans to fit their budgets and financial goals, ultimately saving money in the long run.

Credit unions are more willing to work with members to create “customized” financing terms, whether that means adjusting the repayment period or offering special programs for first-time buyers. These options help ensure your loan fits your financial situation, reducing the risk of default and unnecessary financial stress.

Credit unions offer lower loan minimums

Credit unions often have lower loan minimums than traditional banks—sometimes not having a requirement at all—making credit union car loans an ideal option for many buyers. So, if you’ve purchased a vehicle, have a large down payment, and need to finance a small portion of your car, then this is perfect for you. Or, if you’ve purchased a cheaper vehicle altogether, this is also an excellent option to consider.

Credit unions have higher approval chances

Credit unions tend to have smaller membership than banks, so their underwriting process can be more selective. However, credit unions also focus on ensuring their members are taken care of and preserving a long-term relationship, which is why local credit unions often provide more personalized loan terms.

Often, if a bank deems you too much of a risk, they’ll toss your paperwork aside and deny approval. On the other hand, credit unions are usually willing to listen to you and your financial situation and consider that when deciding on approval. Credit unions believe that because they’re owned by their members, the best interest of the member must be served. Plus, it’s often easier to receive services through an institution with which you have a relationship.

If you’re not a member, don’t worry—it’s simple to obtain credit union membership to take advantage of our car loan options. At Georgia’s Own, there are a few easy ways you can become a member. If you meet the requirements and are approved, all you need is a $5 deposit to establish your membership, which represents your share in the Credit Union. Requirements at other institutions vary.

Overall benefits of choosing a credit union

Fewer fees

In addition to offering lower rates, credit unions also offer reduced fees and higher savings yields. For example, many traditional banks charge prepayment penalties, which means you’re charged a fee if you pay off your loan early. This goes back to our not-for-profit position—we give back our profits in the form of better rates and fewer fees.

Member-focused service

As a member, you’re more than a customer—you’re technically a part owner. This means your financial well-being is prioritized, and decisions are made with your best interest in mind. Because of that, credit unions often provide personalized service and are committed to helping you reach your financial goals.

Community connection

As a credit union, we’re rooted in the communities we serve. Our profits are reinvested locally through financial education programs, sponsorships, or even lending to small businesses. By joining, you’re directly contributing to your community’s growth and stability.

Flexible and inclusive membership

Credit unions are typically more flexible than banks in approving loans, especially for members with fair or limited credit. We work to find solutions that fit your needs, making it a great option for borrowers at different financial stages.

Financial education resources

Many credit unions offer free financial education resources, tools, and workshops—all to help members make informed financial decisions. Whether you’re saving for retirement or buying your first car, you can count on us for support.

Secure and trustworthy

If you become a member and decide to choose a credit union as your main financial institution, deposits at credit unions are insured up to $250,000 through the NCUA, offering the same level of protection as bank accounts insured by the FDIC.

Key takeaways:

• Credit unions typically offer lower loan interest rates because they’re a not-for-profit financial institution, which can help you save over the life of your car loan.
• Credit unions offer flexible terms which lets you find a loan that best fits your needs.
• Credit unions provide other perks besides lower loan rates, like personalized, member-focused service.

If you’re on the hunt for your perfect vehicle, consider us for all of your financing needs. When you finance your car with us, you’ll enjoy flexible payment options, protections for your vehicle and loan, including low-cost mechanical repair coverage and GAP, and so much more—we can even refinance your current vehicle. Ready to get behind the wheel of your dream car? Click here to learn more about our auto loans or apply today.