Applying for your first car loan can feel like an intimidating process. Financial institutions like ProFed are a trustworthy resource to help educate and finance your first vehicle.
If you have been doing some research, you already know there are many options to choose from. You may be wondering how auto loans work at credit unions. Let’s find out!
Is There a Difference Between Banks and Credit Unions?
It would be difficult to differentiate between banks and credit unions on the surface. You can use both institutions to plan and manage your finances and secure loans, credit cards, etc. Despite these similarities, there is a distinction between the two.
What separates banks and credit unions boils down to profit. Banks are your typical for-profit institutions, and their policies reflect that. On the other hand, credit unions are not-for-profit, which shows how they operate. Credit unions like ProFed have some of the best interest rates for auto loans.
Credit unions tend to have better, more personalized member service. This is because they are usually smaller institutions than banks, and they often know the people they serve by name. That’s how credit unions get their reputation for being understanding and member-focused.
Why Should You Apply for an Auto Loan with a Credit Union?
Answering the question, “How do auto loans work from credit unions?” requires an understanding of their benefits.
- Lower Loan Minimums: Some credit unions offer lower loan amounts to their members. This option is beneficial whenever you desire only to finance a portion of your vehicle purchase and when your vehicle isn’t that expensive.
- Easy To Join: You don’t need to be a government employee, involved with the military, or work in particular industries to join a credit union. Take ProFed Credit Union, for example; all that is required is that you live, work, worship, attend school, volunteer, or regularly conduct business in Adams, Allen, DeKalb, Huntington, LaGrange, Noble, Steuben, Wells, and Whitley counties.
- Improved chances of approval: The credit rating system is excellent for people with good credit. Just because your credit scores aren’t what you hope they could be, doesn’t mean you have to shoulder an expensive loan or even deal with rejections. Credit unions try to find a way to help their members, even those with less-than-perfect credit scores.
- Personalized services: Since credit unions are smaller organizations, they can offer personalized services and work with you one-on-one to help meet your financial needs and stay within your budget.
Is There a Special Process When Getting An Auto Loan With a Credit Union?
The auto loan process differs slightly for each financial institution. However, there are four standard steps.
- Apply for a loan: A credit union will typically have multiple loan options. Loan pre-approvals also offer you bargaining power at car dealerships, and often, with a pre-approval, you can complete the purchase of your vehicle in one sitting.
- Provide proof of insurance: You’ll need to provide evidence that you took out insurance for your vehicle. It’s in your best interest and that of your lender that the car is protected.
- Show evidence of income: The credit union needs this to determine whether you can repay the loan.
- Finalize your application: Once everything is in place, a credit union rep will reach out to you to finalize your loan. You’ll learn about the amount you qualify for, the interest rate, and more. Be sure to read and understand the agreement before signing it.
Are You in Need Of An Auto Loan?
Check out ProFed Credit Union! Our loan products help you get a low rate plus a flexible term to ensure it can fit within your budget. If you’d like to know more about how our loan products can work for you, don’t hesitate to contact us today.
