Many misconceptions and misunderstandings exist among drivers regarding where to find the lowest car loan rates available. Some consumers believe the best place to get a car loan is their personal bank, but this is not always the case. Sometimes local banks simply cannot compete with the low rates offered by online-only lenders with less overhead and the ability to price-match competing for loan products.
Larger, nationwide bank chains often have stricter qualification policies because they already have a huge customer base and do not need to price-match with online competitors to turn profits. Online-only lenders are also not always the best choice. Some have low customer service ratings and are difficult to reach, while others focus on car loans for drivers with bad credit (meaning their rates are higher).
A credit union car loan, however, is worth considering. These financial institutions sometimes get overlooked in the middle of the financing fray even though they often offer some of the best APRs on the market. Credit unions have members instead of customers. To obtain a loan through a credit union you must first become a member.
Memberships are possible for people affiliated with the institutions connected to the credit union. For example, some credit unions are connected to police and fire departments. Some have relationships with military bases, military branches or schools. Various others are connected to local or regional institutions or community-based organizations.
Credit union membership status is granted to people who work at, own or are otherwise officially associated with the credit union’s affiliated organization. Memberships are also granted to the spouses of members or occasionally to friends of members who provide personal referrals. Certain credit unions allow otherwise non-qualifying consumers to obtain a membership by purchasing it for a nominal fee.
Credit unions are known to offer low APRS and great loan terms to qualified borrowers. Credit union auto loan rates are no different and under the right circumstances might beat many rates found elsewhere online. Credit union loan fees are often lower than those charged by other lending institutions. Loan minimums are also commonly more flexible. Certain lenders enforce minimum borrowing requirements.
For example, if you need to borrow $10,000 but your online lender of choice has a $20,000 minimum loan amount you might be forced to borrow surplus money. This is another example of why it is crucial to compare rates and terms before submitting applications. When you compare car loan products, you might just find a local or online credit union offering the best car loan rates on the market today.