If you're a member of a credit union, you may be wondering if it would be better to get a car loan through them or a dealership. If you have bad credit, credit unions are known to be more lenient, but a special finance dealer may still give you your best chance at an approval in the end.
Getting a Car Loan from a Credit Union
Credit unions are popular financial institutions for many consumers because they are non-profits. They often charge fewer fees to their members, offer credit at competitive prices, and are more lenient if members have less than perfect credit.
Credit unions have also become an increasingly popular place to apply for an auto loan. In recent years, they've increased their presence in the automotive loan market. According to Experian, credit unions saw the highest growth of all lender types in car loan market share in the first quarter of 2018. In those first three months of 2018, credit unions represented 21.3 percent of the total market share of auto financing. Of all loans for new vehicles, credit unions financed 13.5 percent of them, as well as 28 percent of all used car loans.
Of course, in order to get a car loan from a credit union, you have to be a member with them in order to qualify. Anybody can join one by opening an account to get a share in the credit union, but where you're eligible to become a member typically depends on where you live or your affiliation with certain groups like your employer or residence.
But once you're a member, applying for an auto loan is as simple as contacting them and saying you'd like to apply. If you visit in person, you may be asked to sit down with a loan officer to talk about your situation before filling out an application. If they pre-approve you, they'll give you a maximum loan amount and you can shop for cars in that price range.
Getting a Car Loan from a Credit Union with Bad Credit
On the other hand, getting pre-approved for an auto loan with a credit union can be more challenging if you have poor credit. Credit unions are direct lenders and, typically, these types of financial institutions are stricter about the credit score needed to qualify. In general, many direct lenders automatically turn down applicants who don't meet their credit score requirement.
However, having an existing relationship with a credit union can make a difference. If you've been a member in good standing for a long time, they may be more willing to offer you a car loan even if your credit is less than perfect.
If you're a member of a credit union, have bad credit, and need an auto loan, you should first go to your credit union in your search for financing. While bad credit can be a barrier to getting approved, it doesn't hurt to try. But if you find that your credit is in the way, the next step is to apply through a special finance dealership.
Should I Get a Car Loan through a Credit Union or Dealership?
For many car buyers dealing with poor credit, a special finance dealership offers a better chance of getting approved than a credit union. These dealers work with subprime lenders who have loan programs designed for borrowers with bad credit.
While subprime lenders rarely lend directly, you can get financed by one by working with a special finance dealership. So, how do you find one of these dealerships in your area? Auto Credit Express can help with that.
We work with special finance dealers all across the country, and we want to match you with a local dealership that can provide auto financing options. All you need to do to start the process is fill out our secure auto loan request form. Our service is free of cost and obligation, so you can get started with confidence today!