If you have bad credit a traditional automobile loan through a bank may not be a possibility for you. However, people with bad credit might have an easier time seeking a credit union car loan instead.
A credit union is a financial cooperative with services provided only to people with memberships. The idea is to be better able to provide loans at a much better rate than what can be found at commercial lending institutions. Depending on the membership level, length of time they have been a member and other considerations, many credit unions have devised plans for their members with less than perfect credit.
Unlike a traditional bank, credit unions are non-profit organizations. That means they do not make profits for stock holders because the only stock holders are the credit union’s members. Credit unions make funds available for lending based on deposits members make in savings accounts, certificates of deposit, individual retirement accounts and other products.
Also, because credit unions are non-profit they are exempt from many local, state and federal taxes, which means they can set requirements lower for members seeking auto loans.
Credit unions are known for making loans to people with bad credit or young people who have not yet developed an established credit history.
More than 90 million people in the United States are credit union members and this membership saves them more than $8 billion each year. Credit unions have also been largely unaffected by the recent economic downturn like traditional banks which has led more people to look to them for services when their credit is bad. In fact, membership in credit unions has risen significantly in the past few years.
If you are considering turning to a credit union for your next automobile loan the first thing you should do is shop around. You can go online to the Credit Union National Association’s locator device and see what services are offered in your area.