Buying a car is something that you will likely find yourself doing at some point. There are a lot of options when it comes to purchasing a vehicle. While some decide to pay in cash, others find that financing is the best way to go, especially if they are purchasing a new or more expensive vehicle. There are a variety of lenders who offer auto loans. In recent years, more people have been interested in credit union auto lending services. There are a variety of benefits to financing with a credit union. Here are three things that you should consider.
Interest Rates Tend To Be Lower
The first thing that you should be aware of is that you'll most likely find that you are able to qualify for a better interest rate if you go with credit union auto lending services. In fact, in most cases, going with a credit union will mean an interest rate that's around 1 percent lower than the interest rate at a bank. The average interest rate is 2.97 percent for a new car loan at a credit union. That same loan at a bank has an average interest rate of 4.5 percent. Going with a credit union can mean significant savings.
Your Credit Score Matters
Just like with traditional bank loans, a credit union will also take a close look at your financial history before they approve you for an auto loan. This means that things like the amount of debt you are in and your credit score matter. Having a good credit score will greatly increase your chances of being approved. The requirements for credit score and other factors that determine whether or not you are approved vary from credit union to credit union. Typically, you will need a credit score of at least 650.
Down Payments Help
One of the main benefits of using a credit union is that it often offers personalized service and great communication. The people at the credit union will take steps to help you find the best possible financing options for your needs. One thing to consider is that even with credit union auto loans, down payments are still helpful. Down payments of 20 percent are recommended, but putting down even more can mean significant savings on your monthly payments.
If you are considering purchasing a car, a visit to the credit union may be in order. There are a few things that you should know. First, interest rates tend to be lower on these loans. While you are more likely to get a better deal on an auto loan at a credit union, your credit history will still play a large role in your interest rate. Down payments are also helpful and can help reduce your monthly payments.