The Best Credit Union Auto Loans
- Credit union auto loans work like standard car loans, but often feature lower annual percentage rates (APRs) than banks or online lenders — potentially saving borrowers money.
- You’ll often need to become a member of a credit union before you can get an auto loan.
- Credit unions may require a hard credit pull to check your auto loan rate, and can have less advanced technology than large banks.
Getting your auto loan through a credit union could save you money on your future car payments. Credit union auto loans often come with lower APRs than banks and online lenders, but you’ll likely need to become a member of the credit union before you can get a loan.
Credit union auto loan rates
The average auto loan rate for new cars across all lenders is 6.80%, while the average auto loan rate for used cars is 11.54%, according to the most recent data from Experian.
Starting auto loan rates at credit unions tend to be lower than the national average, meaning you could save money by getting your loan through a credit union.
Here are the current starting rates for the top 10 credit unions in the U.S. by assets*.
| Credit union | Starting APR (new vehicles) | Starting APR (used vehicles) | Membership requirements |
|---|---|---|---|
| 3.50% | Military or Department of Defense affiliation (including family members) | ||
| (with autopay) | (with autopay) | Affiliation with an eligible school, enrollment in an eligible education program | |
| (with car-buying service) | (with car-buying service) | Open to all | |
| Open to all who live in Washington, certain areas of Idaho and Oregon or in proximity to BECU’s North Charleston, S.C., branch location and donate to its charitable foundation or those affiliated with a partner organization | |||
| Affiliation with eligible areas of Utah, Nevada, Arizona, Oregon, Idaho, New Mexico or California, food industry workers in Utah and employees of affiliated businesses | |||
| Californians and their immediate family members and registered domestic partners | |||
| (with autopay) | (with autopay) | Open to all who join the Alliant Credit Union Foundation | |
| Work for a partner company or the State of Oregon, live or work in Lane County, Ore., belong to a qualifying organization or meet other eligibility qualifications | |||
| Live in eligible sections of Michigan or anywhere in Florida, or donate to the Amyotrophic Lateral Sclerosis (ALS) Foundation | |||
| Live or work in Texas, Colorado or Utah, be a member of an eligible branch of the military or affiliated with the Department of Defense or be a family or household member of a current member |
Note that every credit union defines used cars differently. For instance, considers a used car to have more than 30,000 miles, regardless of the model year. Meanwhile, to qualify for a used auto loan with State Employees’ Credit Union, your car must be less than 10 years old with no more than 150,000 miles.
Starting rates for used car loans at most credit unions are currently much lower than Experian’s 11.54% APR national average, so it’s worth your time to check your rates at a credit union if you’re looking for a used car loan.
Estimate your monthly payment
How do credit union auto loans work?
Credit union auto loans work just like auto loans from banks or other lenders.
Rather than pay for your new vehicle upfront, you’ll make a down payment and take out a loan to cover the remaining cost. You’ll then pay back the borrowed amount, plus interest, in fixed monthly installments. You’ll usually have three to six years to pay off your car loan, but some lenders offer shorter and longer car loans.
Most borrowers opt for secured car loans to get lower rates, but a secured loan means that your car’s used as collateral. So if you fail to make your loan payments, the credit union has the right to repossess the vehicle.
Credit union auto loan pros and cons
Credit unions offer many types of loans with affordable rates, but you’ll first need to meet their membership requirements. Consider whether joining is worth the potential savings.
Here are some advantages and disadvantages of getting a car loan through a credit union:
Pros
- Offers competitive rates. Credit unions tend to have lower APRs compared to other types of lenders.
- Membership perks. Credit union membership can come with benefits like discounts on insurance, retail and travel.
- Member-focused mission. As not-for-profit and member-owned institutions, credit unions generally prioritize their members’ financial wellness and offer personalized service.
Cons
- Eligibility rules. Membership is often limited by factors like location, employer or military affiliation. Open-to-the-public credit unions may require a small donation to a partner organization.
- Checking rates may damage your credit. Many credit unions require a hard credit pull to check your rates, which can temporarily impact your credit score. Other lenders will often allow you to prequalify for a car loan, which will show you potential rates without affecting your credit.
- Limited tech. Small credit unions may not have the same technological capabilities as big banks and online lenders. The application process may be more time-consuming as you deal with a less user-friendly interface.
How to get a credit union auto loan
Getting a credit union auto loan follows a similar process to getting a car loan from an online lender, but with one extra step — joining the credit union.
1. Check your budget
No matter where you get your loan, first make sure you can afford to buy a car. Use the 20/4/10 rule and our car affordability calculator to see how a new vehicle will affect your bottom line.
2. Review membership requirements
Research membership requirements for local and nationwide credit unions, and choose a credit union you’re eligible to join. Credit unions like are open to anyone who donates to or joins a partner organization.
3. Get preapproved
Getting a preapproved car loan can give you more accurate rates. It also provides valuable leverage when negotiating the car’s price at the dealership.
If you meet the membership requirements for several credit unions, get preapproved at each credit union within 14 to 45 days. Though preapprovals involve a temporary hard pull on your credit, multiple inquiries for a car loan within this window usually count as a single inquiry on your credit report.
4. Evaluate your offer(s)
Once you have your tentative loan offers, focus on the APRs, fees and loan terms. Your APR measures the total cost of your loan, including interest and fees — so the lower the percentage, the cheaper your loan.
Your loan term is how long you have to pay off what you borrowed — as of this writing, the average loan term for a new car in the U.S. is 68.9 months. Choose the shortest loan term you can comfortably afford to reduce how much interest you have to pay over time.
5. Join the credit union and apply for your loan
Some credit unions allow you to get preapproved for a loan before becoming a member. But to finalize a loan, you will need to join. You can usually join online or over the phone.
Once you’re a member, you can formally apply for the loan by providing your contact information and financial details. However, you may still need to send copies of your bank statements and ID.
Frequently asked questions
Credit union loans may be the better choice for borrowers seeking the lowest possible rates and member-exclusive benefits.
Banks, however, typically offer greater convenience and accessibility, as they don’t have strict membership requirements and often provide superior technology like robust mobile apps.
Weigh these pros and cons against your personal needs to find the best lender for you.
That depends on the credit union and your credit history. As not-for-profit organizations, many credit unions focus on helping their members access loans, even those with imperfect credit.
But approval’s never guaranteed — if you don’t meet your credit union’s requirements, consider applying for a bad credit car loan instead.
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