Are you looking to buy a new ride? If you’re like most Americans, odds are you won’t be paying for your new (or used but new to you) car out of pocket. As of June 2023, Kelley Blue Book listed the average price of a new car at $48,808. Supply chain shortages mean that even used cars aren’t immune to sky-high prices. Even if the used car market does seem a little better in 2023 than in previous years, the average price for a used vehicle, according to Cox Automotive, was $27,147. Most of us don’t have that sort of hand. So, whether you’re looking to buy new or used, you’ll probably need a car loan. But what’s the best place to get a car loan?
In this article, we’ll look at different types of car loans, the pros and cons of each, and ultimately which options might be the best place to get a car loan for you and your unique circumstances.
What Are Your Different Options for Getting a Car Loan?
Finding the right lender to finance your car purchase can feel daunting. Not only do you have to pick the best type of lending institution, but you also need to compare rates and other benefits to know what the most affordable option will wind up being.
Ultimately, at the end of the day, the best place to get a car loan will be the place that gives you the best terms and treats you fairly, but finding that out can be easier said than done. So let’s look at some of the most common types of lending institutions that can help you secure a car loan, including banks, credit unions, dealerships, online lenders, and personal loans.
Bank Car Loans: Traditional Stability
Traditionally, banks have been one of the most common places to go to get a loan of any kind, whether a home mortgage or a car loan. The ubiquity of banks, especially big national chains, is both a pro and a con. On the one hand, when you get a car loan through a bank, you know exactly what you’re going to get, with a standardized application process. If you intend on moving at all in the next couple of years, you know that you’ll be able to visit a local branch of your bank and get the same in-person service as you did back home.
However, banks may be rigid in what they can offer borrowers in terms of extra benefits, and their big size can make the process feel cold and impersonal to some. They may not be able to accommodate you if you have special circumstances, such as a lower credit score.
Credit Union Car Loans: A Personal Touch
Credit unions tend to be a very consumer-friendly option for car loans. Credit unions are not-for-profit financial cooperatives that, when compared to traditional banks, offer lower interest rates and usually have more personalized services. Credit unions tend to be much more localized to a particular region or state, which gives them more ties to their community but means that if you intend to move out of state, your service options may be limited. However, credit unions’ more personalized nature and willingness to work closely with their members can result in a more tailored lending experience, making credit unions one of the best places to get a car loan.
Some credit unions require you to become a member to receive a loan, but usually, this is a very simple process. They’re already local, so if you live, work, or go to school in their area, you are going to be eligible. Consider Capital Credit Union’s requirements, for instance. If you live, work, go to school, or own property or a business in one of the many counties we serve, you're eligible for membership.
Dealership Car Loans: Convenient Integration
Many car dealerships offer in-house financing, which can make it very convenient for buyers to secure a loan on the spot. This can be extremely attractive due to seamless integration with the car-buying process, but it’s essential to approach this option with caution. Dealership car loans might have higher interest rates or require more money down, and since the dealership is also the one giving you the car, it can feel like they’re holding all the cards in the negotiation, giving you extra pressure to accept their terms.
Online Lender Car Loans: Caveat Emptor (Buyer Beware)
Online lending institutions, in the modern digital age, have revolutionized the process of applying for loans. With quick approval times and a convenient loan application process that can be done from your home in your PJs, it’s not hard to see the appeal. Online lenders can be more flexible in their lending criteria, which is also appealing to individuals whose credit scores might not be fantastic. However, remember that something that sounds too good to be true often is—and you should absolutely research online lenders, read reviews, and look up their reputation to ensure that they’re safe, trustworthy, and a good place to finance a car loan. They often aren’t.
Personal Car Loans: If You’re Fortunate Enough, Why Not?
Most Americans might not be able to afford the cost of a new or used car out of pocket, but “most” is not “all.” You may have a trusted friend or family member who can afford just that, and you can always take a loan out from your personal connection and pay them back. Who knows, your lender might appreciate the opportunity to have some regular income while earning interest.
However, we also know that few Americans are in this position. Furthermore, as Shakespeare once wrote, when it comes to friends, “Neither a borrower nor a lender be”—financial issues can strain family relationships and friendships if things go awry. So financing your car purchase via someone in your life might not be a great idea.
Why the Best Place to Get a Car Loan Has a Local Touch
At the end of the day, a lending institution that knows local dealerships, has good relationships with car sellers, and can broker fair, equitable loans that leave all parties satisfied is the gold standard for the best place to get a car loan.
Locally oriented lending institutions like Capital Credit Union make getting a car loan much easier than the process would be at other lenders. Plus, credit unions can offer great perks, like finding the car of your dreams with Capital CarFinder, Guaranteed Asset Protection to help with things like accident damage or theft, and more.
If you’re in northeast Wisconsin and want to find the best place to get a car union, look no further than Capital Credit Union. Looking to buy a new or used car? Join our credit union today.