When you need to borrow money to purchase a used vehicle, a credit union can be a good option. Banks and credit unions are both financial institutions, but there are differences between them. Banks are for-profit institutions while credit unions are not-for-profit. This allows credit unions to offer lower interest rates and better customer service.
If you are looking to buy a used or repossessed car, a credit union might be the best option for you. Let’s look at the benefits to getting an auto loan from a credit union and the steps to take.
Benefits of Getting an Auto Loan from a Credit Union
Credit unions use their non-profit status to pass savings along to their members. This is why interest rates and other fees are typically lower than what you would find at a bank. Not a member of a credit union? That’s no problem. Most eligibility requirements are based on where you work, where you live and the types of organizations you belong to.
Once you do become a member, you can take advantage of the credit union’s services. Here are some of the benefits to expect from a credit union car loan:
- Lower interest rates
- Higher approval odds
- Lower loan minimums
- Lower fees
- Better customer service
Steps for Getting a Credit Union Car Loan
Getting an auto loan from a credit union is very similar to getting one from the bank. There are generally four steps you’ll have to go through and everything is streamlined for your convenience.
Apply for a loan
The first step is to apply for a loan. You can do this online or at a local branch. Applying online is fast and convenient, but if you have questions, it’s best to fill out the application in person. Once you get your pre-approval, you can use this for negotiating power.
Repossessed cars and trucks are sold by motivated sellers, so having a pre-approval will work in your favor. You can often negotiate a lower price because the seller knows you already have financing lined up.
Provide proof of insurance
You and your lender both want to protect your vehicle, and the way to do this is through insurance. You may need to provide proof that you have full-coverage comprehension and collision insurance to protect your vehicle.
Show proof of income
Your lender will also want to make sure that you can afford to pay back the loan. In the case of repossessions, the banks and lenders have already had one owner default on the vehicle so they certainly don’t want another. Expect to provide copies of your pay stubs or tax returns from the past two years.
Finalize your loan
Once all of the information and documentation are received, you’ll finalize your loan through a credit union representative. At this time, you’ll be told how much you qualify for, your interest rate and any other related terms and conditions. If you agree with everything, you’ll sign the loan agreement and take home your new car!
RepoFinder has a huge inventory of repo vehicles waiting for new owners. Many of them come from banks and credit unions, which are highly motivated sellers. Browse our website today and negotiate with the sellers for the best possible prices.