Credit union car loan rates are significantly lower than banks (approx 5.6% vs 7%). Any pros and cons of each?
Does borrowing from credit unions adversely affect credit scores?
Pros and Cons of Car Loan from Credit Unions?
cktftw on 18/10/2015 - 20:57
Comments
Hi naritas thanks for the info!
Don't get why any credit enquiry would lower my credit score? I understand "payday lenders" but surely not with other banks?
Sorry I'm not very familiar with these financial institutions - but aren't credit unions something like last-resort lenders?aren't credit unions something like last-resort lenders?
No. AFAIK credit unions operate much more like banks both in practise and in how they're regulated.
Hi tm87, please refer to this article (https://www.veda.com.au/yourcreditandidentity/check/vedascor…) for an explanation direct from Veda on their methodology for calculating credit score ;)
Any credit enquiry for borrowing purposes will lower your score.
Really?
To a degree yes, with the current systems of financial checks, a bank can see who you have applied with and for how much, however cannot see if you were successful in your application. So essentially they could assume you already have a dozen loans and reduce/decline you, when you were declined for each. Lesson is don't apply for a loan unless you are 99% sure you will get it.
Absolutely, check out https://www.veda.com.au/yourcreditandidentity/check/vedascor…
(information direct from Veda on their methodology for calculating credit score).
My last car loan was with Police and Nurses credit society in WA (I think they changed their name to P&N Bank now). No complaints. They were the cheapest car loan I could find.
Makes no difference with whom your loan is with. Go with what is cheapest overall.
I have had mortgage clients (I am a mortgage broker) who were happy with IMB, as their rates are very low and no set up/early repayment fees.
I am not accredited with them, but you are best to shop around. Also banks such as ST.George/Westpac will lower their rates, as long as you negotiate and can justify competitor offers.thx
So stupid borrowing money to buy a car. Pay cash.
Why is it stupid, if you can claim all interest expenses against your business and use that money to buy income generating assets for your business (e.g tools..etc ?
Hi tm87, I wouldn't say they aare 'significantly lower' (https://www.naritas.com.au/widgets/rates-widget/?t=ls#motor-…) - bear in mind, there are a lot of credit unions and banks - and each of their products carry different credit criteria (and pricing associated with that credit criteria). So some banks, Bendigo for example, may be pricing pretty similarly to Credit Unions.
The general rule of thumb so far as car loans (also for credit in general) is that: The lower the interest rate = The tougher the credit criteria OR The lower the interest rate = The slower and more laborious the approval process. So usually when you hear anyone saying negative things about Credit Unions it mainly relates to people who may otherwise have been approved elsewhere getting rejected by them..or people getting frustrated with their less streamlined systems. However, if price is the main determinant of whether you'll be happy with their service - you'd be hard to fault many of the cheapest Credit Unions as long as you bear those other factors mentioned above in mind.
So far as adversely affecting your credit score, not as a rule, no they won't. Any credit enquiry for borrowing purposes will lower your score. Enquiries with lenders of last resort and payday lenders may act as 'red flags' to other potential lenders. However, Credit Unions typically sit at the opposite end of the credit spectrum to such lenders.
Hope this helps.