DCU Auto Loan Review

DCU auto loans at a glance

Digital Federal Credit Union (DCU) is Massachusetts-based but offers auto loans in all 50 states. As a credit union, you have to become a member before you can borrow. If you don’t meet DCU’s traditional membership requirements, you can become eligible by joining a partner organization for a small fee.

Here’s what you could expect if you use a DCU auto loan to buy a car.

• Same rates for new and used: New-car loans almost always have lower rates than used-car loans. At DCU, your rate will be the same no matter if your car is brand new or just new to you.
• Multiple rate discounts: DCU’s quoted rates include a 0.50% rate discount for certain members who make electronic payments on their car loan and maintain qualifying direct deposit with a DCU checking account. You can also get a discount of 0.25% for financing a fully electric vehicle.
• Can borrow more than what your vehicle is worth: You can finance up to 130% of your car’s value. That extra 30% is money in your pocket. But remember — you’ll owe interest on whatever you borrow.
• No payments for 60 days: DCU doesn’t require you to make a car payment for the first 60 days of your loan. However, interest will still accrue.
• Special financing available: You can find loans for antique cars, motorcycles, boats, RVs and mobility-modified vehicles through DCU.
• Best for competitive rates on all sorts of vehicle loans: Between discounts and high loan amounts, DCU can be a great spot to get a car loan. Keep in mind, though, that you have to join the credit union (if you aren’t already a member).

DCU auto loan requirements

DCU doesn’t specify what credit score you need to get an auto loan. It doesn’t offer prequalification, either. That means you have to agree to a hard credit pull to check your rates. You can apply before becoming a member, but to accept your loan and to borrow, you have to join the credit union.

DCU membership is open to:

• Relatives of current DCU members
• Employees or retirees of partner employers (there are more than 800 of them)
• Those who live, worship, work or attend school in certain areas of Massachusetts
• Those who live in a participating condo association
• Members of partner organizations

If you don’t meet DCU’s employee- or regional-related requirements, consider joining a partner organization. Annual membership fees range from $10 to $120. For more information, please see DCU’s specific membership requirements.

Getting a car loan might not be as exciting as jumping behind the wheel. Still, who you pick to finance your new ride is important. The only way to switch lenders in the middle of your loan term is to choose a new company and refinance your auto loan.

Here are some points to consider before choosing DCU.

Credit union auto loans tend to come with ultra-low rates. DCU is no exception. It also offers a 0.50% rate discount for Plus and Relationship members with electronic payments. If you want the lowest DCU auto loan rates, you have to maintain a higher level of membership.

Plus members must get a monthly direct deposit of at least $500, and Social Security checks don’t count. Relationship members must meet Plus member requirements and make at least five monthly transactions (debit card purchases, for example).

Notably, DCU car loans have a high loan-to-value (LTV) ratio. That means you can borrow more than what the vehicle is worth, making it a solid choice if you need to refinance an upside-down car loan.

DCU company overview

DCU got its start in 1979. Today, it boasts more than 1 million members. DCU has physical branches in parts of Massuchusetts and New Hampshire. However, half of DCU members are digital-only. You can do your borrowing and banking online, over the phone and via mobile app.

DCU is also part of a nationwide co-op shared branch program. Essentially, you can go into a co-op branch (even though it’s technically a different credit union) and do business as if you were at a DCU location.

DCU auto loan types offered

Aside from new, used and refinance auto loans, DCU offers low rates and flexible terms for many types of auto loans.

*All rates include a 0.50% Relationship discount

Loan add-on options

Although auto loan add-ons can get pricey, they’re worth considering. Still, be sure to shop around to find the best deal. You might find these coverages cheaper with your current car insurance company.

• GAP insurance: GAP, or guaranteed asset protection, insurance can help you avoid out-of-pocket expenses if you owe more than what your vehicle is worth and you total your car. For $599, you can add GAP to DCU new and used auto loans.
• Mechanical breakdown insurance: DCU’s mechanical breakdown insurance (MBI) works like an extended warranty. There are three plans to choose from, each with a different level of coverage. MBI is available on both new and used vehicles. This is unique as many insurance companies that offer MBI only do so for brand new cars.
• Payment protection insurance: Instead of providing coverage for your vehicle, payment protection is like insurance for your loan. With it, DCU will cancel your loan payment temporarily (with no penalties, credit reporting or interest) if you experience a life-changing event. Examples here include a death in your family or job loss.

How to get an auto loan with DCU

You can apply for a DCU car loan online or at a branch. If you’re already a member, the process will be a little quicker. DCU will automatically fill in the information it has from your file.

If you’re not a member, you’ll get information on how to apply to become a member after you submit your loan application.

To apply for an auto loan, you will need to provide the following information:

• Whether the vehicle is new or used
• How much you need to borrow
• What repayment term you’d like
• Your personal information (name, Social Security number, date of birth)
• Physical and mailing address
• Government-issued ID
• Co-applicant information (if you want to add a second person to your loan)
• Employment status
• Gross monthly income
• Monthly expenses

If you decide to finalize and fund the DCU auto loan offer, you must:

• Become a DCU member
• Submit a copy of the purchase and sale agreement (for dealer purchases)
• Submit any additional requested documents, including proof of income (in some cases)
• Sign the Note & Loan Agreement

After finalizing your loan documents, you should receive a physical check in two to three business days.

Is a DCU auto loan right for you?

DCU could be a great place to get cheap auto loan rates if you don’t mind joining a credit union. This is especially true if you’re buying a used car, since it offers the same rates for both used and new.

How DCU auto loans compare

Even if DCU seems like the right choice, get offers from several lenders. You can’t be sure that you’re getting the best deal unless you compare numbers using an auto loan calculator.

Note that the information below applies to new vehicles only (except for DCU, since it offers the same rates for used and new).

Also, PenFed and Capital One let you check your eligibility without hurting your credit. DCU does not. Get your rate shopping done within 14 days so that only one hard credit pull will count against you.

Like DCU, PenFed is a credit union. However, it has open membership, meaning you won’t have to meet eligibility requirements to join. Its rates are a little lower than DCU’s, but it also offers slightly lower loan amounts (125% LTV compared to DCU’s 130%).

Capital One is a bank, and bank auto loan rates tend to be a little higher than those of credit unions. But you don’t have to bank with Capital One to get a loan. And while it doesn’t specify its credit score requirements, internal LendingTree data shows that it offers bad credit car loans. If you don’t qualify for DCU or PenFed, Capital One could be an option.