Credit unions are financial institutions that perform most of the same functions as commercial banks. Such institutions provide their members with credit, deposit accounts, and other services common to financial institutions.
Despite these similarities, credit unions are distinguished from commercial banks because their customers are also the owners. Credit unions are run and operated for the explicit purpose of promoting the well-being of their owners and their communities, meaning that the financing products available to credit union members are often better than those available from other lenders. Auto loans from credit unions are excellent examples of this general rule in action.
Credit Union Car Loans Compared to Other Lenders
Although different credit unions set their own policies, there are some general but still meaningful statements that can be made about their auto loans. First, credit unions can typically lend to their members at interest rates and loan terms competitive with those of more traditional auto loan lenders. Often, credit unions are even capable of lending at better rates and terms because their focus is not on earning a profit for their shareholders but bettering their members and host communities. Second, credit unions tend to offer their customers auto loans bundled with more lenient loan terms and are more accommodating of their financial difficulties. Although credit unions still use the same measures as commercial banks, such as collateralization to protect the value of their investments, credit union representatives are much more likely to try to work out a compromise with their customers in default than to opt for the option of repossessing the financed vehicle and then selling it to recoup their losses.
Unfortunately, there are also disadvantages associated with auto loans from credit unions. Although credit unions are often able to offer financing at interest rates and loan terms competitive with those of larger and more powerful financial institutions, not all credit unions are capable of this. Credit unions possess a responsibility for wisely managing the deposits of their customers and therefore not taking unnecessary gambles with the same, meaning that most credit unions do not necessarily finance people with bad credit. This is particularly true of credit unions that are smaller than competing commercial banks and therefore possess fewer resources to throw around. It is probable that anyone who wants to secure auto loans from such financial institutions will need better than average credit ratings.
Finding a Credit Union Car Loan
One of the biggest obstacles to customers securing auto loans from credit unions is the requirement for them to belong to the credit unions in question. In the past, credit unions required their members to belong to certain companies or non-profit organizations. Fortunately for would-be customers looking for auto loans from credit unions today, many have dropped those requirements and are now open to the general public. This means that people with excellent credit ratings may want to look into securing a credit union car loan due to the many benefits and advantages. People who need an auto loan with low credit may wish to search elsewhere, or may be forced to search elsewhere for money to buy a car.