Exploring the possibility a car loan with a credit union first can sometimes result in a lower monthly payment for consumers without a credit history or with poor credit
What we know
Although it doesn't always result in an auto loan approval, consumers that have experienced problem credit and belong to a credit union at least owe it to themselves to try this option first.
Here at Auto Credit Express we've always believed this is true. And we should know because for over two decades we've been helping car buyers with bad credit searching for online auto loans find those car dealers that can offer them their best opportunities for loan approvals.
And while it isn't typically the case, we have seen situations in which credit-challenged consumers have received an approval for a car loan from their credit unions. But at the same time many car shoppers are both unfamiliar and confused over what credit unions are and how they operate. To understand how credit unions work you first have to know what makes them different from banks.
Credit unions
Unlike most lending institutions that are publicly owned corporations, particularly large banks, credit unions are nonprofit organizations owned by their member customers. Since they're member owned and don't have to worry about answering to stockholders about profits, they can typically price their loans more aggressively than banks. This means that, typically, credit union car loans feature lower interest rates than comparable auto loans offered through banks.
We use the word "typically" because this is not always the case. That's because some credit unions act more like banks while some very large banks, because of their size, have the ability to offer customers very competitive interest rates on auto loans.
Customer service
Another common difference between banks and credit unions is the personalized service you can expect. Since credit unions are usually smaller with fewer employees, the service you receive is usually more personal.
Balancing this is the fact that banks, because they are usually larger, can offer such amenities as online and mobile banking as well as automatic bill pay for loans and utility payments. Banks are also more likely to feature additional perks such as 24-hour customer service hotlines – an advantage typically not available to credit union members.
Fee schedules
When it comes to charging their customers fees, however, banks are notorious for tacking them on to everything from checking accounts, overdrafts and ATM machines to teller fees and falling below minimum balance requirements for savings, checking and investment accounts.
In comparison most credit unions shine in this area. While credit unions will typically charge their customers for overdrafts or returned checks, they usually back away from charging checking, savings or teller fees. ATM withdrawals are, in most cases, also fee-free unless the machine being used is outside their network. And even though they are local, many participate in one or more nationwide networks of credit union ATM machines that allow members to use any of them at no additional charge.
A car loan without credit history
Applying for an auto loan at a credit union is easy, although it usually has to be done in person. In most cases, you must live in the area served by the credit union. Unlike banks, credit unions usually require you to become a member before applying which means you'll first need to open a savings account (called a share account).
The most important thing to remember is that if you have poor credit you may not qualify for a credit union car loan – although applicants without a credit history usually have a better chance. This is because unlike those new car dealers that work with lenders that offer higher-risk car loans, credit unions typically don't approve applicants with the lowest FICO scores.
So what should you do if you're turned down for an auto loan at your credit union? We're glad you asked.
Apply with us
If you have less than perfect credit or you've experienced problems getting a car loan without credit history at a credit union, we want you to know that a BHPH dealer usually isn't the only alternative.
That's because Auto Credit Express matches people that have experienced car credit difficulties with those new car dealers that can offer them their best chances for approved auto loans.
So if you find yourself in this situation and you're ready to reestablish your auto credit, you can begin now by filling out our online auto loan application.
