Should You Choose A Credit Union Car Loan?
Doug Smith

Defined Tag: Credit Union Car Loan.

Many types of loans are available for buying a new car, and a credit union car loan is one that deserves a look as you search for the best borrowing terms. Credit lending cooperatives offer all the services provided by regular banks, including mortgages, checking and savings accounts, refinancing, and of course vehicle loans. There are some benefits to a lending union's loan that the local banks may not be able to match.

As a member of a "thrift bank," you are part of a like-minded group of people that have a profession, employer, or other connection in common. This is called a Select Employee Group (SEG). As such, the financial union is more likely to help you on a personal level to get the car loan you need. The annual percentage rate (APR) on the co-op union loan for your new car is probably going to be less than charged by local banks. This is because these credit cooperatives can operate with little overhead, and can pass the savings on to you in the form of lower interest rates when your borrow money.

Loan approval is likely to be fast at these banking concerns. Once your new truck loan is approved, the union lending process operates much the same as a regular bank. For instance, you can choose to finance the entire cost of the vehicle, or you can pay a down payment to decrease the loan principal.

Used car loans from a thrift lender may limit you to vehicles that are less than 10 years old. If you want a very new car, the loan you receive might specify that the car you buy be no more than a year old, and have no more than 5,000 miles on it. These rules ensure that the borrower is using the money for the stated loan purpose, and that the thrift lending institution can repossess and easily sell the car for a good price if the loan goes into default. If you don't know what kind of car you want to buy, you can get financed for a high dollar loan as long as you have good credit. You don't have to use all of the money lent to you if the car's price is less than the loan.

Some consumers never bother to take the time to understand what a credit cooperative is or how it works. Those borrowers may be paying substantially higher interest on the bank's vehicle loan because the borrowers did not see what a good deal a credit union car loan can be.

Copyright 2008 by Doug Smith. All Rights Reserved Worldwide. Unauthorized Duplication Prohibited. Not Intended As Professional Advice.