DCU Auto Loan Review

Whether you are buying a new or used car or refinancing the one you already have, taking out an auto loan from a credit union like DCU can be a smart move.

Digital Federal Credit Union not only offers competitive interest rates, it offers the same APRs for used cars and refinance loans as it does for new car purchases. But like all credit unions, getting a loan from DCU requires membership, an extra step in the loan process if you’re not already a customer. In addition, its best rates are available only to those with higher levels of membership. Keep reading to learn if a DCU auto loan is the right fit for you.

• About DCU and its auto loans
• DCU auto loans: At a glance
• DCU membership requirements
• How to apply for auto loan financing through DCU
• The fine print
• Pros and cons of financing through DCU
• The bottom line: Who is DCU best for?

About DCU and its auto loans

One of the top 20 credit unions in the U.S., as measured by assets, DCU offers loans for traditional used and new cars, classic or antique cars, recreational vehicles, boats and both street and off-road motorcycles. DCU serves more than 800,000 members in all 50 states, but if you’re hoping to apply for an auto loan in person, it only has branches in Massachusetts and New Hampshire.

Membership is available to employees and their families affiliated with more than 700 companies and organizations, eight of which are open to anyone to join. You are also eligible if you reside within one of seven participating communities in Massachusetts and Georgia. A complete list of partner companies and organizations can be found on the member eligibility section of the DCU website. We’ll also discuss membership requirements in more detail, below.

DCU auto loans: at a glance

• Terms up to 84 months for new and used vehicles
• Starting APRs between 4.49% and 6.99%
• Amounts not available

Other lenders charge more for used car and refinance loans, but DCU offers the same rates and terms for new and used vehicles, regardless of whether they are purchased, refinanced or a buyout at the end of a car lease. Though DCU lists starting APRs from 4.49% to 6.99% with terms up to 84 months, those rates include a 0.50% discount for Plus members, which we’ll discuss in a minute.

It’s also not clear from the DCU website where terms begin or exactly how much you can borrow for these and other vehicle loans. The company declined interview requests. Qualified borrowers can finance up to 120% of the book value or the purchase price, whichever is less, but this does carry risks that you’ll become underwater on your car loan.

Discounts available. In addition to the Plus membership discount, DCU offers a 0.25% rate discount for energy efficient vehicles: those that have a federal fuel economy rating that average at least 35 MPG. 

Mobility aids. DCU also provides loans for vehicle modifications to aid people with disabilities. Qualified borrowers can finance up to the full purchase price or the combined value of the NADA retail price plus the retail value of the conversion, whichever is less. Starting rates range from 4.99% to 7.39%, including the Plus discount, for terms ranging up to 120 months. There is a $5,000 minimum finance amount.

Classic and antique car loans

• Terms up to 120 months
• Starting APRs between 5.49% and 7.89%
• Amounts not available

If you’ve always wanted to own a classic, antique, replica or kit car, DCU offers loans for those vehicles, too. Cars must be roadworthy and some may require an appraisal. Qualified borrowers can finance up to 90% of the appraised value for terms up to 120 months. Starting APRs for these loans include the Plus discount.

Motorcycle loans

• Street motorcycles: Starting APRs 3.50% – 4.25% for 0 –60 month terms
• Off-road motorcycles: Starting APRs 7.85% – 8.35% for 0 –60 month terms
• Amounts not available

Whether you want a street motorcycle or an off-road bike, DCU once again offers the same rates and terms whether your purchase is new or used. Qualified borrowers can finance up to 120% of the NADA retail book value or the purchase price, whichever is less. Starting APRs for these loans include the Plus discount.

RV loans

• Terms up to 180 months
• Starting APRs between 6.99% and 8.49%
• Loan amounts start at $5,000

DCU finances all types of recreational vehicles, such as motor homes, travel trailers and camping trailers as well as motorized toys, such as personal watercraft, snowmobiles, all terrain vehicles, scooters and mopeds, which it calls small recreational vehicles with APRs starting between 7.85% and 8.35% for loans up to 60 months. It’s possible to borrow up to the full purchase purchase or NADA retail book value (whichever is less) for motorized toys and up to 90% of the purchase price or NADA value for recreational vehicles. Starting APRs for these loans include the Plus discount.

Boat loans

• Terms up to 180 months
• Rates between 6.99% and 8.49%
• Loan amounts start at $5,000

New boats, used boats, purchase or refinance: It’s all the same to DCU. As with RVs, DCU has minimum amounts it will lend for boat loans, ranging from a $5,000 minimum for loans up to 180 months and a $75,000 minum for 240 month loans, with several tiers in between. Starting APRs for these loans include the Plus discount.

DCU membership requirements

Financing for the many types of vehicle loans offered by DCU can be done entirely online once the borrower becomes a member, which requires opening an account. We’ll talk more in a minute about exactly how to apply, but in the meantime, there are several ways to qualify for DCU membership, including levels that offer auto loans discounts.

1. Immediate relatives of current DCU members are automatically eligible. This includes the member’s spouse, domestic partner, child, sibling, parent, grandparent or grandchild, as well as stepchildren, stepparents, stepsiblings and adopted children.
2. Individuals that live, work, worship or attend school within certain areas are automatically eligible. Those areas include the Massachusetts communities of Lowell and Worcester as well as the northern part of Chelmsford and the western part of Tewskbury, plus those that live in the Georgia cities of Cumming, Gainesville or Norcross. Businesses and other legal entities located in one of these areas are also eligible to join DCU.
3. Individuals affiliated with any of 700+ companies and organizations are eligible. This includes current and retired employees, as well as the spouse, domestic partner, child, sibling, parent, grandparent or grandchild, stepchild, stepparent, stepsibling or adopted child of the current or retired employee, even if that person is not a DCU member. Spouses of someone who died while they worked for or were retired from any participating company or organization are also eligible. A complete list of the participating companies and organizations can be found here.

Plus membership. Once you join, you may want to upgrade your membership to a higher level to be eligible for a 0.50% discount on DCU auto loans. Level 2 or “Plus” members must:

• Maintain a direct deposit of their paycheck, Social Security or pension into their DCU account.

Relationship membership. To access Level 3 or “Relationship” membership, you will need to:

• Maintain the same direct deposit requirements of Plus members.
• Make at least five payments per month of debit or credit card transactions, bill payment, balance transfers or person-to-person transfers.

How to apply for auto loan financing through DCU

1. Become a member
2. Upgrade your membership to the Plus or Relationship level if you want to take advantage of the 0.50% discount.
3. Have either a total dollar amount or a specific vehicle in mind with the estimated total amount as well as the vehicle’s details, such as the make, model, year, VIN and mileage if used.
4. Gather the pertinent personal information about yourself, including your home and work addresses and phone numbers, current income and Social Security number. If you have a co-applicant, you’ll need the information for that person also.
5. Complete the online loan application.

The fine print

As with any loan, be sure to read all the paperwork thoroughly so you can fully understand the loan rate and terms, your monthly payment and any fees or add-ons associated with the loan. DCU does offer two add-ons to many of its auto loans:

• GAP insurance for $295
• Mechanical breakdown insurance at varying costs

These services are optional and can also be purchased elsewhere, so if you are interested in one or both, you may want to shop around. You could also read more GAP insurance, which protects you when your car loan balance is higher than your car’s current book value.

Regardless of what type of vehicle you need to finance or the type of loan you’re considering, it’s important to compare DCU’s offerings with loan options from multiple lenders, including their terms, APR, fees and any prepayment or other penalties. The application process and customer service experience can vary from one lender to another. LendingTree has reviews of many auto lenders and also allows prospective borrowers to compare multiple auto loan offers by submitting a single online form where you may receive up to five offers from lenders, depending on your creditworthiness.

Pros and cons of financing through DCU

Like many credit unions, DCU offers highly competitive rates on a wide range of vehicle types, but there is the hurdle of becoming a member, which may or may not make sense depending on your other banking needs. The result? It’s always a good idea to shop around for a lender to determine which is best suited for you. Let’s take a look at the pros and cons of DCU:

Highlights of DCU auto loans

• Loan rates that are the same for new and used, purchase or refinance. Often lenders will charge a higher interest rate for a used car loan, or a refinanced auto loan.
• Loans for a wide variety of vehicle types. Unlike some lenders, DCU also offers loans for classic, antique and specialty vehicles, both on- and off-road motorcycles, recreational vehicles, motorized toys and even mobility aids.
• Free checking and other services. While you must become a member, which includes opening an account, to obtain an auto loan, DCU checking accounts have no minimum balance, no monthly maintenance fees and unlimited check writing. In addition, DCU also offers its members a free notary service, online storage and even a prescription discount card.

Lowlights of DCU auto loans

• Membership is required. You must be a member and open an account in order to apply for an auto loan and not everyone will qualify for membership.
• Discounts are only available for higher level members. In order to get the 0.50% discount off APR, you must be a Plus or Relationship member, which requires at least direct deposit into your account.
• You must complete an application to see your loan rate. DCU does not publicly share its top-end loan rates, minimum loan amounts or terms, nor its credit requirements or any fees you might have to pay, so the only way to fully see what you may be offered is to complete the auto loan application.

The bottom line: Who is DCU best for?

If you meet the requirements for eligibility or already a member, DCU is a solid option. DCU is a better option if you qualify for its Plus or Relationship membership levels, which gives you access to the APR discount.

While all business through DCU can be done entirely online, if you are the type who wants to visit a local branch with DCU employees, DCU is likely only a good choice if you live in one of the Massachusetts or New Hampshire communities where its 20+ branches are located. In all other areas of the country, members will need to use online and mobile banking, or access a co-op shared branch at another credit union.

DCU could make the short list of potential lenders for those who are buying used or refinancing since its rates are the same as new car purchases, which is not frequently the situation with auto loan lenders. In addition, DCU could also be on the list of possible lenders for those looking to purchase some kind of specialty vehicle, since it offers a wide range of those types of loans.