When you think of loans, you think of banks. Yet when it comes to securing an auto loan, a credit union is by far the better choice. That’s because not-for-profit lending institutions like The People’s Federal Credit Union in Amarillo, Texas offer more competitive interest rates and better service than commercial banks to their credit union members. Here’s why:
Loans for Ordinary Americans
For nearly a century, credit unions have been helping average Americans borrow and save money at reasonable rates by offering loans to people who might have been turned away by bigger, more established banks.
You may be able to get a credit union car loan even if your credit score isn’t ideal because these institutions often consider more than just your credit score without additional information or context.
As not-for-profit entities, credit unions may lack the resources of major commercial banks, but they make up for it by emphasizing smart lending decisions, namely by focusing on low-risk, short-term loans. Foremost among those safe bets are car loans, which make up a majority of credit union holdings.
Competitively Priced Loans
Auto loan rates in Texas today average around 5.42% for a new car and 5.75% for a used car on a 36-month term. These relatively high rates are one of the reasons why you should use a credit union auto loan instead of that of a major bank.
To put it simply, credit unions offer cheaper rates than commercial banks—usually a few percentage points lower. Their desire to corner the market on car loans causes them to undercut the competition by offering reasonably priced financing. Their emphasis on short-term loans also balances the equation in favor of lower interest rates over the long run. Those lower interest rates allow borrowers to save hundreds of dollars on used cars and possibly even thousands of dollars on new cars while reducing their monthly payments and the total interest paid on their car loan amount.
Community Lenders
One major difference between banks and credit unions is that the latter typically have strong ties to local communities. Not only that but they’re owned by their members, as opposed to investors. That means they tend to make decisions based on individual needs, rather than arbitrary criteria. While a bank or another large financial institution may charge a higher rate for a used car than a new car simply because that’s the way it’s done, a credit union will be more likely to focus on the person in front of them and take into account the particular circumstance of the individual. As a result, credit unions offer more personalized service, as well as customized loan terms to suit different credit and loan profiles while lowering their risk.
Staying True to Their Original Purpose
Credit unions were designed to make lending widely available to the American public. To this day, they continue to serve that purpose. As not-for-profit organizations, they’re at liberty to make decisions that more business-minded banks would shun for fear of upsetting investors.
Because of that legal structure and community ethos, a first-time borrower (or even someone with a poor credit history) is much more likely to secure a loan from a credit union than from a bank no matter how well their loan application is supported. Thus, in addition to offering more competitive pricing, credit unions try to make it easier for ordinary Americans to get their hands on vehicles—everything from cars and motorcycles to RVs and boats—without breaking the bank.
Joining Is Easy
Joining a credit union is a simple, easy process. As long as you qualify to become a member of a credit union, you simply need to fill in an application form and open a savings account with a small deposit once you’re accepted.
From there, getting pre-approval for loans or making use of the union’s credit products is as simple as applying online or visiting a union branch in person.
All the Extra Perks and Benefits
Besides offering competitive car loan rates and terms, credit unions offer their members many additional benefits. Since each union is owned by its members, any profits made by the union go back to its members as dividends.
Most credit union members also enjoy much higher interest rates on their savings deposited in their credit union accounts.
Since credit unions are more focused on a holistic lending experience, joining a credit union can help you learn how to improve your credit score, build credit, and properly manage your loans and credit products.
The People’s Federal Credit Union
As a federal credit union, The People’s Federal Credit Union falls under the regulation of the National Credit Union Administration. A not-for-profit institution, the credit union is also run by a board of directors composed of nine unpaid volunteers.
We pride ourselves on offering competitively priced auto loans to customers in or around Amarillo, Texas, and we boast more than 18,000 members already making use of our products and services. For more information on what we can offer you, head to The People’s Federal Credit Union website today to get your auto loan rate and discover how you can become a member too.
