Best Credit Unions for Car Loans
Credit unions accounted for $375.1 billion in auto loans at the close of 2019.
These days, it makes great financial sense to consider a credit union when you are shopping around for an auto loan. Whether you're looking to refinance your existing loan to lower your interest rate or monthly payment, or you're shopping loan rates for a new or used vehicle, credit unions can be a great place to look.
Credit unions typically are centered around a preexisting group or community, such as a college or university, a professional organization, a profession such as teachers, or your employer. To join a credit union, you must be part of the qualifying group.
At the close of 2019, average interest rates at credit unions were more consumer-friendly than those at commercial banks. This likely is because credit unions have members as opposed to customers. When you open an account with a credit union, you become a part owner of a not-for-profit banking operation along with other fellow members. This not-for-profit status allows credit unions to sometimes offer better rates than banks.
To fully understand whether a credit union loan can work for you, it's useful to see how credit union car loans stack up against getting a loan from a bank.
Best Credit Unions for Auto Loans
Just like with any other loan, the actual rate you receive will depend on your credit score, ideal loan amount, down payment, and the length of the loan. Here are some great options with rates accurate as of April 24, 2020:
Consumers Credit Union
- APR: As low as 2.69% at 60 months
- Loan Details: You can secure a loan for up to 84 months, but rates will jump by more than a point compared to a term of 60 months or fewer. Unlike others on this list, Consumers Credit Union is fairly easy to join. It is an Illinois-based company, but they work with individuals all around the country, particularly those who don’t have great credit, are trying to rebuild credit, and those who are looking to refinance.
Alliant Federal Credit Union
- APR: As low as 2.74% at 60 months
- Loan Details: Loans are available for up to 84 months, but expect to pay as much as a full point higher if financing for that long. You can become eligible for this credit union through your employer or select professional organizations.
Pentagon Federal Credit Union
- APR: As low as 2.39% at 60 months and 1.19% at 36 months if using the credit unions car-buying service; otherwise rates start at 2.14% and 2.89% respectively
- Loan Details: Loans are available for 36-60 months, up to 100 percent of the vehicle’s cost, and start at $500 and go all the way up to $100,000. This credit union is open to members of the military, U.S. government employees, or their supporting organizations. They offer unique options such as a payment saver loan where you pay lower payments and a higher interest rate, then at the end of the loan, you are responsible for paying off the balance either out of pocket, with a refinance, or trading in the vehicle.
NIH Federal Credit Union
- APR: 2.99% for loans from 49-60 months in term; as low as 1.99% for terms of 24 or fewer months
- Loan Details: Loans are available for up to 84 months. This credit union is a bit exclusive, as it is only open to those in the health care or health care-adjacent industries who live in Maryland, North Carolina, Virginia, Washington D.C., and West Virginia.
Benefits of Credit Union Auto Loans
One of the reasons people choose to put their money in credit unions is for more personalized attention. Because they are so customer-centric, credit unions are more likely to provide positive interactions. Unlike banks, credit unions are not-for-profit organizations and have an incentive to help their members rather than to make money.
Credit unions typically have lower overhead expenses because they don't need to make a profit, they don't have as many branches, and they don't have expensive advertising campaigns.
You might have an easier time getting good loan terms and a lower interest rate over the life of your loan over what you'd pay for the same loan at a national bank. You'll likely save even more with your credit union loan than you would if you paid the rates at a regional or local bank.
Drawbacks of Credit Union Auto Loans
Most national banks have hundreds of locations around the country and are easily accessible and recognizable. Because of their size and scope, they might be better equipped to handle problems or less common borrowing needs.
Credit unions also are typically smaller organizations without the same investment in information technology infrastructure as with many large banks. If you want to get a problem solved in the middle of the night or service your own account online, it’s more likely that there will be technological solutions in place to solve your issues with a bank.
National Credit Union Administration. "Quarterly Credit Union Data Summary 2019 Q4." Page ii. Accessed April 25, 2020.
National Credit Union Administration. "Comparison of Average Savings, Deposits and Loan Rates at Credit Unions (CUs) and Banks." Accessed April 25, 2020.
Consumers Credit Union. "Rates." Accessed April 25, 2020.
Alliant Credit Union. "An Online Car Loan That Puts You in the Driver's Seat." Accessed April 25, 2020.
Pentagon Federal Credit Union. "Our Most Popular Loan Options." Accessed April 25, 2020.
NIH Federal Credit Union. "Vehicle Loan Rates." Accessed April 25, 2020