Do You Get a Check When You Finance a Car Through a Credit Union?
Credit unions provide financing for car loans directly to consumers, as well as through car dealerships. Depending on where you buy your car, your credit union may or may not give you a check that contains the loan proceeds. Checks containing loan proceeds always take the form of cashier's or certified checks, both of which are regarded as cash equivalents.
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Dealerships
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Credit unions only write loans for existing credit union members, and those who are not currently members but meet the eligibility requirements. Membership rules vary; some credit union rules are very relaxed, and anyone who works, lives or goes to school in a particular area can become a member. Credit unions with minimal membership requirements often form strategic partnerships with local car dealerships. The salespeople at the car dealerships complete the sales papers for the purchase transaction, and complete loan paperwork on behalf of the credit union. After the buyer signs the purchase papers and the loan agreement, the credit union wires the loan proceeds directly to the dealer.
Standard Purchases
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Many car dealers are not credit union partners, in which case you typically have to go through several steps in order to finance your car through a credit union. Firstly you visit your credit union and get pre-qualified for a car loan. You then go to the car dealership, choose a car, show the dealer your pre-qualification letter and agree to a sale price for a vehicle. Take the sales contract back to your credit union and finalize the loan process. The credit union loan officer gives you a check made payable to the car dealer, which you then give to the dealer in exchange for the car.
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Refinance
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While many people think of car loans as purchase loans, you can refinance a vehicle that you already own. If you have an existing lien on a car, the credit union sends a payoff check directly to that lien holder. However, if you extract cash from a car that you own free and clear, the credit union loan officer gives you a check containing loan proceeds. You can deposit it into your credit union account or negotiate it elsewhere.
Considerations
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When you purchase a car, rules in many states require a state-appointed notary to witness the transfer of the title. Car dealerships usually have at least one notary on staff, but if you buy a car from a private citizen your credit union may not agree to release the loan proceeds to you. Instead, you and the seller must sign over the car's title at the credit union in front of a notary, and then the credit union officer gives the check directly to the seller.
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