Buying a car is a good thing and can be a major financial decision for an individual to make. However, this decision can become a lot easier if you consider getting a car loan.
The best way to get the loan you need is through a credit union. This is because their interest rates are usually lower than that of other financial institutions.
This article will provide you with information on what a credit union is and the requirements to help you get the loan for your car approved faster and with ease.
If you are interested in getting more information on loans in general, go here: https://www.thebalance.com/how-long-does-it-take-to-get-a-loan-4783332
What Is a Credit Union?
This is a type of cooperative (usually financial) formed by organizations, large corporations and other entities for their employees. The purpose of this union is to provide traditional banking services to members and workers.
They usually enjoy tax-exemption since they are non-profit enterprises. This group is created, funded and owned by its members. Incomes generated are channelled into providing services and funding for projects that will benefit both its members and the community.
Clients of a credit union usually enjoy better rates since they are not publicly traded, and all they need to do is make enough money for their daily operations. They are, however, limited in options when compared to traditional banks.
In the past, membership was restricted only to those in the same community, working in the same company or organization and sharing a common bond. However, this has changed over time. Members of the public are now allowed into these unions.
Note that an individual will need to open an account with them to be a member. The amount needed in opening the account is usually minimal.
When this is done, the individual becomes a part-owner and can now vote to determine those who will run the group’s affairs. Note that the voting power of a member is not dependent on how much shares the person has. All members have equal votes.
Requirements for Approval
The most obvious requirement you must have guessed right is that you have to be a member of a credit union.
Other specific requirements will be dependent on the unions.
Most times, they include living in a certain location, being an employee of a company and being a part of an organization. Members always enjoy numerous benefits. Get more information on those benefits here.
Furthermore, you will be required to show proof of steady income, and you should earn a certain amount yearly. This proves that you are capable of meeting the monthly payment requirement.
Proof of employment is part of the things you will also need. However, the type of proof you may be required to show will depend on the credit union involved.
The union may demand your tax returns of, say, two years to five years if you are self-employed. You will do well also to include information on your social security as well if that applies to you.
You are likely going to need proof of residence and identity. This, most times, applies to new members and those getting a loan for the first time. The proof of residency is to enable them to know where to get you if you do not make a payment, and there is a need to take the car from you.
Another requirement is to ensure you have a good enough credit score. Generally, a good score is between 640 and 660 through different unions have what they consider good enough score.
You may need some time to work on your score if it is not high enough before applying for the car loan. Pay credit card balances and other due payments, and you will be good to go in most cases.
Also, ensure that there are no mistakes in your credit report. Your report is in order can add to your credit score.
If your credit score is not high and you really need to get the car loan sooner, it is still possible. All you need to do is look for someone who has a strong credit to co-sign your credit union auto loan for you.
Car insurance proof will also be definitely needed. Your union will be interested in knowing that you are adequately covered and compliant with state law.
As you take note of the above requirements, it is important to know that the applicant or the co-signer must be at least eighteen years old to access the loan. Also, ask to know ahead of time the documents you will need to make the process faster.