If you’re like most car owners, when you a buy new car, you don’t pay for it upfront with cash. Instead, you finance it and make monthly payments over the course of years (on average, most car loans are for a five-year term). The two most popular sources for financing your next car purchase are commercial banks and credit unions. Read on to learn the pros and cons of credit unions vs. traditional bank loans for vehicle financing.
Bank Pros and Cons
The most common financing route is bank financing. Besides offering security and the convenience of multiple branches, banks can help you become pre-approved for a car loan so you don’t miss out on your ideal ride. The convenience of securing a car loan from your mortgage lender can also be appealing. On the downside, some banks view auto loans as inconsequential and aren’t motivated to provide the most competitive rates. They’re also sticklers for lending only to those with good credit scores.
Credit Union Pros and Cons
The other common car financing option is a credit union loan. Financing this way is easier to secure, even if you have a questionable credit history. Smaller and more local, credit union reps tend to be more willing to work with you and consider your unique circumstances as opposed to focusing solely on your credit score. Credit union interest rates also tend to be significantly lower than bank rates. Finally, credit unions are notorious for offering outstanding, attentive customer service. However, if you’re an avid online banker or hate to drive, a credit union may not be the best option. Credit unions have been slow to embrace online banking, and the number of branches they have tends to be limited.
Benefits of Buying a Car from an Independent Car Dealer
In addition to deciding how you’ll finance your vehicle purchase, you need to decide where you’ll shop for it. You could go to a local dealership or you could take the path less traveled and head to an independent car dealer. There are several reasons the latter option is the smarter one.
- Competitive rates. Dealerships are notorious for hard-sell tactics and extensive advertising blitzes designed to get you onto their car lot. All that advertising isn’t cheap. Those expenses are rolled into the sticker prices you see at the dealership. Additionally, independent dealers typically sell older model vehicles that are often more cost effective.
- Quality certification. You can buy with confidence from independent dealers that inspect their inventory with rigorous safety inspections. Why not drive away with dealership quality at an independent price?
- Options galore. When you head to a Honda, Toyota, Mercedes-Benz or BMW dealership, you will find only Hondas, Toyotas, Mercedes-Benzes or BMWs, respectively. Independent car dealers offer an array of vehicle makes, models, ages and prices.
When you’re in the market for a new-to-you car, contact us at Deboer's Auto Sales & Service. You’ll find an extensive selection of pre-owned vehicles we’ve subjected to rigorous quality and safety tests. Our financial team can also provide helpful tips for securing bank or credit-union financing.
