We all want to get the best deal when looking for a loan. Nowadays, there are multiples institutions besides banks able to provide with the money you need to get your new ride. Banks, credit unions or financial institutions are the core organizations, regulated by the law that can give you credit for cars.
Yet, the big offer of financial institutions assist to car dealerships on having larger options to choose which one is the most convenient to associate with. The same happens with borrowers, many offers may create doubts about which one suits the best their interests.
Therefore, what are the different between these two financial institutions?
In a nutshell, credit unions are associations made by people with common features: relatives, work place, membership of a specific organization etc. Therefore, they serve more to this population than a special group of investors.
Credit unions are owned by costumers, this increases the chance of getting better interest rate, which is one of the main goals of credit unions. These institutions achieve this goal through decreasing the direct expenses cost and overhead costs.
Yet, as you imagine, making a loan through credit unions you need to be part of the funding organization, hold a membership or belong to a geographic group.
On the other hand, banks are owned by investors. They usually are larger than credit unions, which explain why in many cases their interest rate is bigger. The cost of funds is higher, direct expenses – maintaining their offices, 24/7 services, credit cards and checkbooks cost more.
Nevertheless, banks in many cases banks are willing to give bigger credit – although your credit score is more vital for these institutions.
Different than credit unions, banks are open to any person: no matter if you belong to a minority, or if you are part of an organization, you are able to get a loan as long you fulfill certain requirements.
Furthermore, credit unions tend to be more human. They offer personalized experience since the seller can get to know the client: credit union don’t have as many members as banks, which make it very convenient for borrowers to ask for “exceptions”.
Of course, both credit unions and banks are ruled by laws. Yet, if you know seller or whoever is assisting you on the paperwork for the credit, you can build a relationship with them and maybe ask, for instance, faster process due to emergencies.
In conclusion, which one is better for car loans?
Unfortunately, we can’t give you an answer. The best company is whichever suits your preferences and financial status. For instance, if you are part of a credit union, your credit score is good but your income is not so much, there is a chance to get a loan anyway if you have built a relationship with the institution.
Also, there are cases where banks give the best loan rates. This happens a lot when the person has great score, capacity and solvency. They can decrease the interest rate considerable less than a credit union.
Banks can provide you with better coverage and formal service. Most of banks have plenty of offices, 24/7 service and apps to check the status of your loan or account.
Nevertheless, if you are looking for building relationship with a company, the best way is start savings or getting loans with small institutions.