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Why You Should Finance Your Next Car Loan at a Credit Union

Posted by Freedom First Credit Union on May 19, 2021 6:00:00 AM
Freedom First Credit Union

Why You Should Finance Your Next Car Loan at a Credit Union

When shopping for a new set of wheels, your first stop should be at a credit union, like Freedom First. Though many people start their process on the dealer’s lot, you’ll enjoy a lower rate, a simpler loan application and other benefits by choosing to finance your car with Freedom First.

This is why people are increasingly choosing to finance their cars directly through credit unions. In fact, auto loans comprise more than a third of all the active loans across the 5,600 credit unions in the U.S.

Let’s take a look at the differences in the auto loan process at a car dealership versus Freedom First.

Financing an Auto Purchase at a Car Dealership

When you visit a dealer’s lot with the intention of purchasing a car, the dealer will likely ask you how much you’re willing to spend on your vehicle of choice. You may have already worked out your numbers, or, you may just have a vague idea of how much you can realistically afford. Either way, the dealer will probably try persuading you to push your self-imposed limits to the max or even to go over your ceiling price.

But, if you’re financing your car through the dealer, that’s only the beginning. Once you’ve chosen the car you’d like to buy, you’ll need to submit a complicated auto loan application form, which the dealer will send to the finance companies it partners with. The dealer will then share the lenders’ offers with you and ask you to make your choice.

However, in most cases, the dealer is only the middleman. This means they are going to present your options in a way that most benefits them – and not you. Thanks to this practice, even a fantastic offer from Freedom First will be presented as higher than it actually is, or may not be presented at all.

For example, say your dealer contacts three lenders:

  1. Lender A agrees to offer you a 5% Annual Percentage Rate (APR),
  2. Lender B offers a 6% APR, and
  3. Lender C offers a 7% APR.
But the lender will not automatically present you with Lender A’s offer. Instead, they will first determine which lender would afford them the greatest profit.


The rates presented by the above lenders are known as the “buy rates,” or the lowest possible rate the lenders will grant the borrower. Lender A might offer the dealer a flat fee for each new loan the dealer nets them at the buy rate, with more profit granted for each new tier of a car price, such as $10,000. Lender B, on the other hand, allows the dealer to increase the buy rate by 3% to a new “contract rate.” The dealer then pockets the difference as his own profit. Lender C allows the dealer to offer a contract rate at 2% higher than the buy rate.

In the above scenario, it isn’t hard to picture the dealer pushing you to accept an offer from Lender B or Lender C at the new contract rate of 9%. If you complain that this rate is too high, the dealer may then suddenly “remember” that Lender B is willing to finance the loan at a 7% APR. In either case, there’s very little chance you’ll end up being presented with the offer that is truly in your best interest. And you’ll never even know you’ve been duped!


Financing an Auto Purchase at a Credit Union

Getting an auto loan with a credit union like Freedom First is a completely different experience because we exist to serve your best interest.

When you walk into Freedom First with the intention of taking out an auto loan, you’ll be dealing with people who know who you are and what your financial reality is like. No one will try to push you into a loan you can’t afford.

The process of applying for a Freedom First Auto Loan is simple, quick, and easy. Also, as a member of Freedom First, you already have a head start on getting that pre-approval.

One of the biggest advantages you’ll have when financing an auto loan through your credit union is a lower APR. Because you’re working directly with the lender, you’ll only hear the actual rate we offer instead of a marked-up rate the car dealer presents to you.

If you’re in the market for an auto loan, make your credit union your first stop. You’ll enjoy a lower rate and the friendly, professional service you’ve come to expect at Freedom First.


We’re Here to Help!

Get an auto loan with Freedom First and don't make a payment for 90 days*! You could go the whole summer without making a car payment and use that extra money for:

  • Summer vacation at the beach
  • A quick house project
  • Or pay down some debt

You'll also enjoy a rate as low as 1.49% APR**, flexible terms with no hidden fees, and no penalty for early repayment. You can also save with additional rate discounts*** for using autopay from a Freedom First checking account, using direct deposit for at least the amount of your payment (if depositing $500 per month or more), and more!

We're ready to help you get pre-approved, answer all your questions, and lock in a great low rate.

Apply Now

*Payments cannot be deferred more than 90 days from the day of loan closing. Offer valid on auto loans not currently financed with Freedom First Credit Union. Limited time offer.

**APR = Annual Percentage Rate. Rates are valid as of May 1, 2021, and may vary depending upon credit qualifications, selected terms and applicable discounts. All rates are fixed unless otherwise indicated. An estimated monthly payment of $327 would result for a loan amount of $20,000 at 5.49% for 72 months.  Rates are subject to change without notice. No prepayment penalties. Certain restrictions apply. Loans are subject to credit approval. Repayment terms may vary depending upon rate.

***Certain restrictions apply. Call 540-389-0244 (local) or 866-389-0244 (toll-free) for more information on our loan products and terms.

Topics: Personal Finance, Interest Rates, Auto Loans

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