How to Get Car Loans From Credit Unions


Car buyers usually have the option of financing the car through the dealership or using their local credit union or bank. Credit unions are community oriented, so you may get better service and more flexibility if you choose one for your car loan. If you opt for credit union financing, you'll obtain preapproval for the loan and finalize the loan after you've selected a vehicle to purchase.

Credit Unions vs. Dealerships

  • Although dealership financing is convenient, it comes with some downsides. The bank that finances your purchase through a dealership may not be a local one, so you may prefer going with a credit union that you have a pre-existing relationship with. Dealerships often offer extremely low financing or a manufacturer's rebate to entice you into buying from them. By choosing the manufacturer's rebate along with credit union financing, you may be able to get the best of both worlds.

Getting Preapproved

  • Unlike dealership financing, you need to secure financing from a credit union ahead of time. In order to obtain a preapproval through a credit union, you must be a member. Many credit unions offer complimentary membership to all individuals in a certain city or county, or all who work for a specific employer. You'll need to complete the loan application and submit proof of your income. The credit union may ask for one or two of your most recent pay stubs or a copy of your tax return if you're self employed. The credit union will perform a credit inquiry and also may require you to provide proof of car insurance.

Shopping Around

  • After preapproving your loan, the credit union will provide you with a document that verifies that you've been preapproved. This document, sometimes referred to as a blank check, will list how much of a loan you're approved for and may place restrictions on what type of vehicle you can purchase. Having the preapproval can help you stick within a predetermined budget and also provides you more leverage to negotiate with the dealership for a certain price.

Finalizing Your Loan

  • When you're ready to purchase a vehicle, provide the blank check to the dealership. The dealership will provide you a purchase order or a buyer order to verify what car you intend to purchase. This order will note the make, model, year, mileage and VIN of the car. If you made a down payment on the car, the seller should note that as well. You then bring this document to the credit union to secure and finalize your loan.

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