FindItMore | In the tug-of-war that local credit unions and banks have found themselves in, the former is increasingly gaining points. While banks have multiple branches dotting several parts of the country, local credit unions offer lower interest rates.
Not to mention, credit unions offer excellent customer service, a point that reels in clients quickly. According to a Walker survey, customer service will carry more weight than product and price by 2020. In other words, it will end up taking the differentiator spot for businesses’ success.
Since credit unions boast personalized services over banks, they make a preferable option for loans and other financial reasons. Similarly, when it comes to car financing, credit unions seem to be a better option than banks.
Let’s dive into more reasons for choosing local credit unions over banks for car financing:
- Car financing is an integral service covered by credit unions
Local credit unions provide car financing regularly to their clients. In contrast, banks have crocodile shares in other areas, so they don’t pay much attention to providing car loans. There’s no denying that you can always secure a loan for a car from a bank. However, credit unions have significant experience in the area.
Credit union loans for brand new cars climbed by 14.3% in 12 months. On the other hand, loans for used-car loans upped by 11.2%. Moreover, in 2017 credit unions exhibited $129 billion and $200 billion in loan balances for new and used cars, respectively. This showcases an excellent car financing portfolio.
- Better chance of getting an approved loan
Deciding to get a loan from a certain source is one thing, getting the loan approved from the source is another matter entirely. Therefore, if you pair both of these factors together, your chance of getting an approved loan is better when it comes to local credit unions.
Both banks and credit unions have a similar loan application and underwriting process, credit unions are more likely to listen to your story in case you have a poor credit history. Any credit issues of the past can affect your future odds of getting loans in the case of banks. But, that’s not the case with local credit unions, making them a preferable option over banks.
- Personalized customer services
There are over 5,600 credit unions insured federally in the US. If they are steadily rising to popularity, it is owing to their personalized services. Besides, getting a membership for a local credit union needs community connections.
Any determinants such as your work industry, your religious ties and so on can get you a membership to your local credit union.All you have to do is search for the credit unions in your area, for instance, if you’re based in Houston, then search for ‘Houston credit union.’
Since a credit union is local, it is based in your community. Subsequently, there are better community ties involved and more personalized customer services. This is why a credit union takes out more time to understand and solve any problem that you may have regarding car financing loans. In contrast, banks operate nationally with little community-basis in their services.
- Lower interest rates
If there’s anything that is a buzzkill when it comes to car loans, it is the interest rates that stamp on top of the borrowed amount. These add up to the total cost, which is why the lower the interest rates are, the better. When it comes to the credit unions versus banks for car financing, credit unions take the trophy.
These charge at least 1% lower interest rates than banks. The average interest rate on a five-year loan for a new car via credit unions is 2.97%. On the flip side, banks charge 4.5% of interest in a similar loan case. Therefore, upon buying a car worth $30,000, a credit union can help you save roughly $1,100 in interest.
- Friendly loaning process
Getting a loan from a local credit union is a much better experience than having to deal with profit-interested bankers. Credit unions have a reputation for being built by community members for members of the community with their wellness at the crux of the financial affairs.
As a result, the loan-getting process is friendly. Members don’t even have to meet in person with loan officers for applying for a loan. Instead, they can get a loan over the phone, online, or at an auto dealership. What’s more, credit unions can also educate you on the best possible car deals for the auto loan that you avail.
The bottom line is that local credit unions earn several points over banks when it comes to car financing. With an educational and non-sales approach, local credit unions make a viable option for getting auto loans.