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Factors that Affect Your Credit Union Car Loan Approval

Credit Union Car Loan ApprovalAre you looking to buy a car by using a credit union auto loan? If so, you are making a wonderful choice because Credit Unions usually offer borrowers the best terms and auto loan rates available. This is especially true if you are a first time buyer. The only caveat is that you have to be a member of the Credit Union and they typically just serve a distinct group of people.

Each one of these lenders can vary from company to company, but in most cases, not every first time car buyer is likely to qualify for a credit union car loan.

Factors that Affect Credit Union Car Loans

1) Total Amount to be Financed

Do not be deceived, even if you have the very best circumstance under which to borrow money for a credit union car loan, the sky is definitely not the limit. Most of these credit unions put a hard cap on first timers. Do yourself a favor and find out what this is before you begin looking at cars.

2) Age and Condition of the Car

This factor can greatly affect whether or not you get the auto because if they have to repossess the car, then they need to recoup their costs. More specifically, what they is interested in pertaining to the condition of car is usually the total miles it has. The magic number is usually 100,000 miles – if the car you are buying has over 100,000 miles, then it becomes harder to get the car loan.

3) Ability to Make Loan Payments

All lenders generally use a formula of some sort that reflects how much debt you are presently carrying with regard to your income. As a guideline, lenders like to see first time borrowers with a loan payment to gross monthly income ratio of around 15-20% or less.

4) Down Payment

As with any other type of loan with any lender, the amount of down payment you are willing to make will always make a huge difference. Not only does it reduce the lender’s overall risk associated with the loan, it shows that you are serious and putting some skin in the game – and that matters a lot.

5) Employment History

Generally speaking, the majority of credit unions like to see that you have been working with your present employer for at least 12 months – and the longer the better. Now they may consider the amount of time that you have been in the same line of work. It is very reasonable if you changed companies for a bad raise – especially if you worked for the prior company for several years.

6) Credit Union Membership

As we mentioned before, credit union car loans are exclusively for their members. But sometimes they will extend their invitation base. For instance, if one of your family members belongs to the credit union, then they may be able to sponsor you for a membership.

And if you are a member, then what will matter to them is how long you have been a member. Additionally, the amount of cash that exists in your account with them, along with your monthly banking activity will also make a difference.

7) Your Credit Score

Every potential borrower falls into one of four auto loan categories as it pertains to loan approval.

Easiest – Lots of good credit history with no loan defaults. There is evidence of reliable income that shows the ability to easily make loan payments. Their credit history is long.

Easy – Good credit history, but is limited. There is also evidence of solid income, but the credit history is short.

Tough – Has no credit at all, either good or bad.

Toughest – There is no credit, but perhaps something questionable like liens or collections on their record.


Do not get the wrong impression here; you will not necessarily need to meet all of the above favors to get your loan approved, but the more of them you meet, the better. But the idea here is that if you are weak in one area, you can make up for in other areas.

If you are interested, read more here: https://www.lgfcu.org/products/loans/auto-loans/new-auto-loan

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