Wouldn’t it be great if you visit a car dealership, pick the car you want, write a check for the whole amount, then drive off with the car?

A lot of filthy rich people could afford that. But for most people, that is something akin to an impossible dream.

When you buy a car and you can’t pay a cash–you have two options: take out a loan from a bank, or finance the car through the dealership.

That’s just fine if your credit score is top notch–you can get really nice interest rates.

But what if your credit score is bad? Or you don’t have a credit score at all?

In an earlier post here, I recounted the difficulties that a new immigrant or a non-resident alien could face while buying a car in the United States. All of the options I got were bad, except for the loan that I got from a credit union.

How to Get a Car Loan from a Credit Union

Taking out a loan from a credit union is way better than getting one from a commercial bank. Here are just a few benefits:

• Your credit score is NOT the primary consideration for approval.
• Interest rates are lower, most of the time.
• You get more personalized customer service.
• Credit Unions operate locally, and thus, have an eye for the people in the community.
• They are great for helping you build your credit.

image credit: William Murphy via Flickr

Here’s a quick guide on how you can get a car loan from a Credit Union. (I’m not sure if they will allow you to take out a loan for a time-traveling Delorean though.)

1. Look for Credit Unions in your area.

Just do a quick Google Search of Credit Unions near you. You can also use Google Maps for this purpose. Although, you can also go to one of the dealerships where you spotted a car that you want–they may be able to refer you to a credit union that can help you out.

I went to a local Kia dealership once, and when the sales rep run my credit report, he didn’t find any. So he gave me the card and phone number of a credit union that they do business with and asked me to check them out.

2. Make sure you qualify for membership.

Credit Unions usually have a strict policy on the kinds of people they want to accept as members. Some credit unions only accept members of the military; others are for a certain type of professionals such as teachers, nurses, or lawyers; still, there are credit unions that only accept people who work for a certified list of employers, like say, people who work in the city government, or for a religious organization.

3. Open an account with the Credit Union.

The opening deposit is usually low–$50 for some. And then you can just make a deposit to that account monthly. You can also make a Direct Debit arrangement so that your pay or a portion of it could go directly to your Credit Union account.

4. Apply for a car loan.

Call them or visit the Credit Union office and talk to them about applying for a loan. The good thing is, their application process is not as prohibitive as most commercial banks. If you explain your situation, they would also understand it and offer to help you out.

But keep in mind that Credit Unions still need a level of profit to keep operating. And if you abuse your privileges as a member, you will be penalized.

This may not be the time for you to set your eyes on that heavy, gas-guzzling SUV you’ve been drooling about for years. Let’s be realistic here and you will see that your options are actually great.

5. Make sure to pay your credit union car loan on time.

I cannot overemphasize this point. Set up a direct debit arrangement with them to pay your loan. You may even get a 0.5% discount off your car loan’s interest rate. And if a portion of your pay is already deposited directly to your credit union account, ask them to directly take your loan payment from your account. That way, you won’t miss a payment deadline at all!