Clark advises anybody seeking an auto loan to get pre-qualified at a credit union, which will offer lower rates than a bank.

But don’t just go to the first credit union you see. You can qualify to join many credit unions. By doing some searching, you can find the credit union which will offer you the best deal on a car loan. This post is intended to make this search easy.

Finding a Credit Union with Competitive Auto Loan Rates

A good resource to find all of your local credit unions is this Credit Union Locator. This will give you all of the credit unions near where you live. It’ll also give you the web address of each credit union. Most credit unions will list the auto loan rates on their website.

Another good resource is at BankingMyway which has a searchable database of local bank and credit union auto loan rates. If you use this, I bet you’ll notice that the best rates are from credit unions.

Joining a Credit Union

If the credit union is offering competitive rates, you’ll next want to check to see if you are eligible to join the credit union. Unlike banks, credit unions are only allowed to offer membership to certain groups or fields of membership. These can be based on employers, association memberships or where you live. Most credit union websites will include a page which describes their field of membership.

If you are eligible to join a credit union, membership typically requires a minimum balance in the credit union’s savings account (typically called a share account). This balance must be maintained to keep your credit union membership. Typically this amount ranges from $5 to $25.

Credit Unions Outside Your Area

You can be eligible to join many credit unions that may not have branches in your city. This gives you more options at finding the best rate. Some of these credit unions allow you to join online or by mail. You still have to be in their field of membership to be eligible to join. But this can often be easier than you might think. You can often qualify if you’re a member of some association that anyone can join. The association typically requires a small membership fee, but you don’t have to maintain the association membership to maintain your credit union membership.

How to Join Pentagon Federal Credit Union

A good example of this type of credit union is Pentagon Federal Credit Union. If you don’t qualify based on military, employer or family, you can become eligible by joining the National Military Family Association (NMFA). Please refer to Pentagon FCU’s How to Join overview page for details. Joining NMFA and Pentagon FCU can be done at the same time all online. The yearly membership for NMFA is $20, but your membership in the association does not need to be maintained to continue as a Pentagon FCU member (although the NMFA is a good association to support).

Car Loan Deals at Pentagon FCU

Pentagon FCU has a history of offering great . As of April 2008, the credit union has an especially good deal with a rate of 4.25% APR. This rate applies to terms from 12 to 72 months for new cars and from 12 to 60 months for used cars. This rate also applies to refinancing an auto loan.

This is an internet-only rate. Pentagon FCU sends you a blank check for the auto purchase within 2 days with limits you set when you do the online application. There have been reports that Pentagon FCU is a conservative lender who’ll typically require a decent credit score for you to qualify.

In addition to car loans, there are other reasons why you may want to join Pentagon FCU. They offer a great that pays 5% cash back for gas purchases when you pay at the pump, 2% for supermarket purchases and 1.25% on all other purchases. Pentagon FCU also offers good deals on mortgages, HELOCs and CDs.

Pentagon FCU is just one of many credit unions which provide easy nationwide membership. I’ve covered other credit unions in previous posts which have also had great auto loan rates. In the months ahead, I’ll continue to post on more of these.

Another common tip the article mentions is to shop for the best loan deal before buying. The article recommends checking your local credit unions for the lowest rates. One credit union it doesn’t mention is Pentagon Federal Credit Union which currently has some very competitive auto loan rates. I last mentioned PenFed in my March post. Anyone can join this credit union by joining an association. For more information on joining, please see this Bank Deals PenFed post. To find local auto loan deals, the website BankingMyWay is a useful resource that is much better than what Bankrate.com provides.

In addition to local credit unions, there are several credit unions that serve members nationally and provide for easy ways to be eligible to join. Easy membership is usually done by allowing you to join an association which is in the credit union’s field of membership. This usually costs between $10 and $40. Once you join that association, you can join the credit union, and once you’re a member of the credit union, you no longer have to maintain membership in that association.

Auto Loan Rates as Low as 5.49%

Two credit unions with easy membership are Pentagon Federal Credit Union (PFCU) and Agriculture Federal Credit Union (AFCU). You can join both of these online, and during the online application, you can also join the qualifying association to meet the eligibility requirements. Both of these credit unions regularly have great auto loan deals. Currently, PFCU is offering rates as low as 5.54% APR for terms from 36 to 72 months. AFCU is offering rates as low as 5.49% APR for terms from 24 to 60 months.

Auto Loan Rates as Low as 4.50%

Justice Federal Credit Union (JFCU) currently has the best auto loan deal. Its current promotion has auto loan rates as low as 4.50% APR for both new and used cars. These rates apply to terms from 24 to 60 months.

JFCU’s membership eligibility is a little bit more restrictive than that of PFCU and AFCU. However, you can still be eligible by joining an association. This has to be done by mail or fax. In addition to this auto loan special, JFCU is offering a $100 sign-up bonus for joining and using its Web BillPay. For more information for joining JFCU, please refer to the Bank Deals Blog.

To decide on the best auto loan term for your needs, check out The Loan Calculator Tool.

Navy FCU is the largest credit union in the nation with branches all around the world. To be eligible to join this credit union, you or your immediate family member must have some affiliation with the Navy. See their eligibility checklist for more details. If you’re not sure if you are eligible, I recommend calling. Often the customer service representative will be able to give you more options to join.

Pentagon Federal Credit Union (Penfed) will be introducing new and lower auto loan rates in January. The rates will be as low as 5.49% APR for new vehicles and 5.79% APR for used vehicles.

Penfed is the third largest credit union in the nation. Unlike Navy FCU, anyone can be eligible to join Penfed by joining the National Military Family Association. This allows you to meet their field of membership. It costs $20 to join this association, but you only have to pay one time to join Penfed. You can also be eligible to join Penfed if you or an immediate family member has affiliation with the US Army, Air Force or Coast Guard. See Penfed How to Join Guide for more details.

To decide on the best auto loan term for your needs, check out this The Loan Calculator Tool.

However, there appears to be some mitigating factors for those new long loan rates — cars simply last longer. Which should be also a sign that you can expect to drive a car for more than 6 years and not worry about significant repairs in that time period. This is good news for all of us consumers (as long as we abstract ourselves from the cost of financing a loan at an average currently of about 6.2%)

Think about this — approximately the same financed amount could mean significant interest costs over the increased number of years. For example, if you would like to buy that nice new mid-size sedan with a price tag of about US$35K, put $5K down and finance $30K the difference between financing over 3 years vs. financing over 7 years could mean additional interest of approximately US$5K. Here is a simple tool to help you evaluate the impact of prolonging paying off an auto loan.

* why not buy a slightly used one? I have always (except for my first car out of college) bought one or two year old car. Especially in the dry warm Southwest, where cars do not get much of a rust problem, cars last a long long time. So buying a slightly used car can save you big.

* Loans for used vehicles are usually higher (by several points/percent) if compared to a loan for a new car. In this case you may be better off by picking a loan from the financing arm of the brand of vehicle you are buying. For example BMW Financing offers rates on certified or not used vehicles in the range of 3.8% vs. right now even credit union rates for used vehicles are in the range of 7.25% and 10% and in some cases could reach over 14% given you credit score.

Clark has talked for several years about the tremendous advantage of getting pre-approved for your car loan from a credit union. They offer deals that are substantially better than what you’ll get from a bank.

To join a credit union, you have to be eligible and be in their field of membership. Each credit union’s field of membership is different. It can be based on where you live, where you work or what organization you are a member of. There’s a little known fact that there are several credit unions you can join via a membership into an organization open to everyone. There’s typically a small membership fee into these organization, but you only have to pay this one time. Once you’re a credit union member, you’re a member for life. You can join these organizations and these credit unions by mail and in many cases online. So you don’t have to live close to one. The Bank Deals blog has a list of several credit unions open to everyone.

Car Loan Deals

As Clark Howard mentioned, you’ll often find great deals at credit unions for car loans. One credit union in particular that has consistently offered great loan deals is Pentagon Federal Credit Union. This is one of those credit unions anyone can join. Currently, they’re offering auto loans with rates as low as 5.74% APR for new cars with terms from 36 to 72 months. For used cars the rates are as low as 6.04% APR for terms from 36 months to 60 months.

An even better deal is currently at Agriculture Federal Credit Union which is another credit union open to all. They are now having an auto loan special with rates as low as 4.99% APR for new cars, trucks and vans with terms between 24 months and 60 months. For used vehicles, the rates are as low as 5.49% APR for terms between 24 and 60 months. These are fixed rates. You can even get a $50 gas card.

The above deals are much better than what’s listed at Bankrate.com.