Shopping around for a loan for a new car or home can be extremely time-consuming, especially when you consider how many options are available to you. Credit unions are often overlooked by people shopping around for a loan, which can be a mistake. Two reasons to consider a credit union for your next loan are lower rates and approval requirements.
One of the most important factors for new home or auto loan is the interest rate. Aside from the principal loan amount, the interest rate is going to be the primary driving factor behind how high your monthly payments are going to be, so finding the lowest possible rates is very important. According to U.S. News Money, in 2014 the average interest rate on a new car loan from a bank was about 4.88 percent, while credit unions offered an average of 2.74 percent.
Another reason to consider a loan from a credit union is that they will often be willing to offer lower rates to individuals that have maintained a relationship with them for a long period of time. For example, if you have already have a loan or account in good standing with a credit union, then there is a very good chance that they will offer you a lower interest rate than the ones they are offering new customers.
In many cases, a credit union may even be willing to lower their approval requirements if you get a loan through them. In addition, if you have already received a loan from a particular credit union, they may be willing to loosen the approval requirements even more in order to reward you for being a repeat customer. Now, these lower approval requirements versus a traditional bank do come at a cost, such as the credit union only be able to offer their services to certain groups of people.
Credit unions differ from banks in that they are designed to only serve a certain group of people. For example, some credit unions are set up to only allow members who are in the military, while other credit unions may simply require that you live in a certain area or region. However, if you qualify for membership in a credit union, then you can easily take advantage of the lower approval requirements for loans.
Speak to a local credit union today to see if you qualify for membership. A credit union, like Rio Grande Credit Union, is a fantastic option for individuals look for an auto or car loan with lower rates and approval requirements than those offered by a traditional bank.