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Credit unions good for car loans?
I am looking to buy a used car that is $16000. a 72 month loan seems to be getting me an apr of about 11% no matter who i go through – would a credit unio be able to give me a lower rate – and are there any downsides to being a credit union member?
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I just checked my credit union and you can get 48 months for 6%.
So they have good deals. I’ve blogged on how to bootstrap your way out of repeated car loans. Basically buy a car, finance it for three, but pay for six. The second three becomes savings for the next down payment.
I can’t give you a downside for a credit union loan, but I can give you a giant upside.
Most, if not all, credit unions don’t use the rule of 72 on your car payments. Most everyone else makes you pay the interest first and principal later. If you prepay the loan, then you’ve paid a higher rate for your money. CUs use a simple interest formula. Prepay early and you save interest expense. That prepayment also happens unexpectedly when the car gets totaled. So two good reasons to use the Credit Union. And, the CU usually has free credit life insurance thrown in.
So do your homework, it can save you big bucks.
Downside, you may have to bring a check from the credit union to the dealer, so you won’t have instant gratification of signing papers and driving away. So, I did think of a downside. But that dealer financing can be very “expensive” if you don’t really examine the details, which most people don’t.
Good luck,
Let us know how you make out.
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Reinke Faces Life 
Some credit unions will pre-approve you with a “valid up to amount” check included with dealer instructions. So you can potentially not only eliminate your “downside”, but also have a better negotiating position with the dealer. I.E. you can say, “make it $20k and I’ll write you a check now!”
Dealers much prefer people with cash in hand (virtually that is) because it gives them present value, so you SHOULD be able to leverage that money to your benefit.
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