Taking out an auto loan is not always an easy decision. Most people tend to get the loan through their dealership, for reasons such as simplicity and familiarity. The buyer and the dealer go through a negotiation process and settle on a term that is convenient for both, with the buyer walking out with a brand-new car. However, several other options are readily available for finding your new car, one of them is getting an auto loan from a credit union. 

Credit union auto loans are just as common as getting one from the dealership. In fact, it’s one of the best decisions you can ever make.  In addition to getting the loan quickly, chances are you’ll also save money. To understand how this works, let’s have a look at the differences between financing your car through a car dealership vs. a credit union. 

Financing Through a Car Dealership

1. Interest Rate is Usually Higher than What the Lender Quoted – Once you show interest in an auto loan, the lender will send you all the information to gain the loan. If you agree with the term they will send back a quote to the lender. However, the quoted interest rate is usually higher because you will end up incurring the cost of mark up by the dealer for handling the financing.  

2. Dealers Do Not Mention the Bottom Line – Dealers usually see borrowers as blank checks and charge higher commissions. Once you enter into an agreement with them, they will try to get the most money they can from you. In addition to quoting higher interest rates, the dealer may also try to sell you different packages that you do not need. For instance, they may ask you how much you are willing to pay a month instead of telling you the cost of the car. This way, you may end up with a higher price tag and longer terms than expected.

3. No Credit No Problem – You may find a dealership with a slogan such as “no credit, no problem.” While this may be enticing, you may end up paying astronomically high-interest rates, with the risk of the car being repossessed if you miss a payment.

Financing Through a Credit Union 

1. Get Pre-Approved for a Auto Loan – A credit union gives you a quote for a conditional letter for pre-approval. The letter lays out the terms and conditions of the loan, making the process quick and easy. You can then take the letter to the dealer and use the pre-approved loan to finance the car of your choice. The process allows you to bypass negotiation as you get to know the details of the term and interest rate before picking out a car. This also saves you from the “how much are you willing to pay a month,” tactic that leads people to purchase more expensive cars.

2. Lower Interest Rates – By dealing directly with the credit union, you will no longer incur the expenses associated with middlemen. Your loan officer makes sure you get the best loan for your financial situation at the lowest possible interest rates.

3. Free Educational Resources – Credit unions offer clients educational resources to help in making informed decisions. They include online resources and financial counseling to guide customers in taking the loan and paying it on time. 

When looking for an auto loan, make sure you have the information needed to make the right decision. While the pushy tactics of car salespeople can be convincing, you can save a substantial amount of money by getting a loan with a credit union. Not only will you bypass the dreaded negotiation process, but you will also receive lower interest rates and friendly terms.  

UnitedOne Credit Union offers auto loans with friendly terms and interest rates. With over 80 years of experience in the financial industry, we serve clients in Manitowoc, Sheboygan, Kewaunee, and Door counties. Get in touch with our auto loan experts for personalized assistance on a loan that suits your needs.

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