The Best Credit Union Auto Loans
Getting your car loan through a credit union could save you hundreds on your future car payments. Credit union auto loans often come with lower annual percentage rates (APRs) than banks and online lenders, but you’ll likely need to become a member of the credit union before you can get a loan.
Credit union auto loan rates
The average auto loan rate for new cars across all lenders is 6.84%, and the average auto loan rate for used cars is 12.01%, according to the most recent data from Experian.
Starting auto loan rates at credit unions tend to be lower than the national average, meaning you could save money by getting your loan through a credit union.
Here are the current starting rates for the top 10 credit unions in the U.S. by assets.
| Credit union | Starting APR (new vehicles) | Starting APR (used vehicles) | Membership requirements |
|---|---|---|---|
| Navy Federal Credit Union | 4.09% | 4.99% | Military or Department of Defense affiliation |
| State Employees’ Credit Union (NC) | 5.50% | 6.50% | State of North Carolina employees or retirees, federal employees assigned to N.C. state agencies, employees of select N.C.-based businesses |
| PenFed Credit Union | 4.44% (with car-buying service) | 6.49% (with car-buying service) | Open to all |
| Schoolsfirst FCU | 5.99% (with autopay) | 6.09% (with autopay) | Affiliation with an eligible school, enrollment in an eligible education program |
| BECU (Boeing Employees Credit Union) | 6.49% | 6.99% | Open to all who make a donation to an affiliated organization |
| Golden 1 Credit Union | 6.79% | 6.94% | Californians and their immediate family members and registered domestic partners |
| Alliant Credit Union | 5.19% (with discounts) | 5.71% (with discounts) | Open to all who join the Alliant Credit Union Foundation |
| America First Credit Union | 6.74% (with autopay) | 6.74% (with autopay) | Affiliation with certain parts of Utah, Nev., Ariz., Ore., Idaho or N.M., food industry workers in Utah, employees of affiliated businesses |
| Mountain America Credit Union | 6.49% (with autopay) | 6.49% (with autopay) | Residents of certain areas in Utah, employees and volunteers of affiliated businesses |
| Suncoast Credit Union | 6.00% | 6.50% | Affiliation with eligible Florida counties |
Note that every credit union defines used cars differently. For instance, Navy Federal Credit Union considers a car to be used if it has more than 30,000 miles, regardless of model year.
Starting rates for used car loans at most credit unions are currently much lower than the national average of 12.01% APR, so it’s worth your time to check your rates at a credit union if you’re looking for a used car loan.
How do credit union auto loans work?
Credit union auto loans work just like other auto loans.
Rather than pay for your new vehicle in cash, you’ll make a down payment and take out a loan to cover the rest. Then, you’ll pay back the amount you borrowed plus interest in monthly installments. You’ll usually have three to six years to pay off your car loan, but some lenders offer shorter and longer car loans.
Most borrowers choose secured car loans to get lower rates. But since your car acts as collateral for your auto loan, the credit union can repossess your vehicle if you don’t keep up with your loan payments.
Credit union auto loan pros and cons
Credit unions offer many types of loans with affordable rates, but you’ll need to consider whether becoming a member will be worth the potential savings. Here’s what you need to know about the pros and cons of getting a car loan with a credit union:
Pros
- Offers competitive rates. Credit unions tend to have the lowest APRs compared to other types of lenders.
- Perks. Credit union membership can come with benefits like discounts on retail and travel.
- Not-for-profit and member-owned. Generally, credit unions focus on members’ financial wellness and offer personalized service.
Cons
- Eligibility. Many credit unions limit membership based on location, affiliation and employment. Credit unions that are open to the public typically require a small donation to a partner organization.
- Checking rates may damage your credit. Many credit unions require a hard credit pull to check your rates. Other lenders often allow you to prequalify, which will show you potential rates without affecting your credit.
- Limited tech Small credit unions may not have the same technological capabilities as big banks and online lenders, so the application process may be more time-consuming as you deal with a less user-friendly interface.
How to get a credit union auto loan
Getting a credit union auto loan is similar to getting a car loan from an online lender, but with one extra step — joining.
1. Check your budget
No matter where you get your loan, first make sure you can afford to buy a car. Use the 20/4/10 rule and our car affordability calculator to see how a new vehicle will affect your bottom line.
2. Review membership requirements
Research membership requirements for local and nationwide credit unions, and choose a credit union you’re eligible to join. Credit unions like Boeing Employees Credit Union are open to anyone who makes a donation to a partner organization.
3. Get preapproved
Getting a preapproved car loan can give you more accurate rates. You’ll also have leverage when negotiating car prices.
If you meet the membership requirements for several credit unions, get preapproved at each credit union within a two-week period. Preapprovals temporarily damage your credit with a hard pull, but multiple inquiries count as one when they’re done within 14 days.
4. Evaluate your offer(s)
Once you have your tentative loan offer, pay special attention to APRs, fees and loan terms. Your APR measures the total cost of your loan, including interest and fees. The lower the percentage, the cheaper your loan.
Your loan term is how long you have to pay off what you borrowed. The average loan term for a new car in the U.S. is 67.6 months. If you can, choose a shorter term to save money on interest.
5. Join the credit union and apply for your loan
Some credit unions allow you to get preapproved for a loan before becoming a member. But to finalize a loan, you’ll need to join. You can usually join online or over the phone.
Once you’re a member, you can formally apply. You’ll need to provide your contact information and financial details. You may also need to send copies of your bank statements and your ID.
Frequently asked questions
If you don’t qualify for Navy Federal Credit Union, PenFed has open membership and competitive rates.
If you’re open to paying slightly higher rates for the sake of convenience, consider financing your car with a bank. Banks are more accessible because they don’t have strict membership guidelines. They also often have better tech, like customer-friendly mobile apps. Weigh the pros and cons against your needs to find the lender that makes sense for you.u.
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