Say Goodbye to Your High School Car: Best Credit Unions for Car Loans

If you’re like many younger Millennials (somewhere between ~25 and 30) or elder Gen Zers (early 20s) there’s a big chance you’re still driving around your clunker from high school.

Okay, so maybe it’s not a clunker per se. It’s been a great car. There’s even a chance you could squeeze a few more years out of it.

But sometime soon, you’re going to need an upgrade. The best way to make sure you are able to get a new car when you need it is to start planning now.

That plan should absolutely include saving up for a down payment. But it should also include some research on the best credit unions for car loans.

Do I Need a Car Loan?

Short answer: probably.

We’d all love to be able to save up enough cash to pay for a car in full, but that’s just not realistic for most of us, no matter what Dave Ramsey says — especially if your car breaks down before you expect it to.

Luckily, getting an auto loan doesn’t have to be so painful, nor do you have to suffer through knowing some rich guy is profiting off you in the process.

Your Best Bet? Credit Unions

If the whole rich-man-in-a-fancy-suit-profiting-off-you doesn’t suit your vibe, you’re in luck.

At a credit union, our metaphorical conference room isn’t filled with rich execs. It’s full of the credit union’s members — including you.

That means no one is trying to profit off you, which means there are fewer overhead expenses. Credit unions also have fewer branches and fewer marketing expenses. Put all that together and you get a financial institution that gives back to its members in the form fewer fees and better interest rates (on auto loans, for example).

Credit unions also care more about their members and often have a closer relationship with them which equals better customer service and more flexible loan terms. Some may even look at factors outside your credit score when determining your loan worthiness, which is great if you have poor credit.

Best Credit Unions for Car Loans

While most credit unions offer better interest rates, fees and customer service than banks, that doesn’t necessarily mean every credit union is the same. We’ve rounded up a few of the best credit unions for car loans for you to help you start your search off on the right foot.

PenFed Credit Union

With APR as low as 1.14% at 36 months when using their car buying service, PenFed has one of the best offerings around. Even without using their car buying service, you can still get a loan for as low as 2.14% APR which is significantly below the average auto loan interest rate of 5.76% reported in 2019.

PenFed is open to members of the military, U.S. government employees or their supporting organizations, and they offer more personalized options that allow you to have lower payments in exchange for a higher interest rate, and then at the end of the loan, you are responsible for paying off the balance either out of pocket, with a refinance or trading in the vehicle.

Alliant

Alliant is one of the biggest and most popular credit unions in the nation, partially because it’s easy to join (all you need to do is donate to their partner charity) and because it has a robust service offering and quality online banking.

With Alliant, you can get an APR as low as 2.74% at 60 months, which even beats most of PenFed’s offerings. They also offer a vehicle service program to help you save on maintenance and repairs.

NIH Federal Credit Union

If you live on the east coast or work in healthcare or an adjacent industry, NIH Federal Credit Union might be a good fit for you. Not only do they offer 2.99% APR for loans from 49-60 months in term and APR as low as 1.99% for terms of 24 or fewer months, but they also have an incredible community outreach program.

Your Local Credit Union

If none of these credit unions sound like a good fit, the best credit union for you might be right down the road. Your local credit union may have fewer service offerings, but they are often highly invested in your community and have great community initiatives like scholarships, financial literacy classes and more.

Because they’re able to offer more personalized service, they may also be able to better accommodate your specific situation if you, say, have poor credit.

And while the best credit unions for car loans will offer better APR than banks, there will of course be some credit unions with rates closer to the national average. But with better customer service and a not-for-profit model, that interest will get cycled back to you and the other members rather than line the pockets of already-rich bankers.