DCU Auto Purchase, Refinance and Lease Buyout Loans: 2023 Review

Full review

Digital Federal Credit Union, also known as DCU, offers new and used car purchase loans, refinance loans and lease buyout loans. Credit union membership is required to finalize and fund a vehicle loan, but individuals can submit a loan application and join DCU after receiving their loan decision. There are many ways to become eligible for DCU membership. Members are also required to open and maintain a primary savings account with a minimum $5 balance. This account can be opened and funded online.

DCU has two different online auto loan applications, one is accessible from the main DCU auto loans page and one from its auto refinance loans page. The auto refinance application is a better experience than the origination loan application.

The application specifically for auto loan refinancing provides pre-qualification with instant rate and payment estimates using a soft credit inquiry. A hard credit inquiry is done only after an applicant proceeds with the loan. The auto refinancing application, which includes lease buyout loans, stands out for simplicity and speed. Applicants can input their cell phone number to receive a verification code by text. Upon entering this code and Social Security number last four digits, an applicant’s information, including existing vehicle and loan information, automatically populates the auto refinance application.

DCU’s online application from its main auto loans page is less automated and requires the manual input of information. It does not offer rate estimates with a soft credit inquiry, and submitting it does result in a hard credit inquiry. Usually, an approval decision is provided within minutes. Applications for all auto loan types can also be made through a 24/7 consumer loan call center.

DCU rates are the same for both new and used vehicles, including refinancing and lease buyouts. Auto loan rates on the DCU website reflect rates available to borrowers with excellent credit and a 0.5 percentage point discount. To qualify for this discount, members must use direct deposit to a DCU checking account and maintain electronic loan payments. An additional rate reduction of 0.25 percentage point is available for energy efficient vehicles.

Unlike many credit unions, DCU focuses more on direct lending to consumers than providing loans through car dealerships. The credit union does provide financing for cars purchased through online used car retailer Carvana.

Digital Federal Credit Union may be a good fit for those who:

• Need a more flexible lender. For auto loans, DCU has no minimum requirement for credit history and a low income requirement. It also allows co-signers and offers a “new to credit” program to assist first-time car buyers.

• Want the benefits of credit union membership. Borrowers who open or have a DCU checking account, add direct deposit and make their loan payments electronically will receive a rate discount on auto and other consumer loans. Accounts and loans can be managed through DCU’s online and mobile banking, including submitting future pre-filled loan applications.

• Want to see potential savings from refinancing. In most cases, borrowers can quickly see how much they might save by refinancing their current auto loan through DCU. Using the online refinancing application, applicants can input their cell phone number, have the application pre-fill including their existing vehicle and loan information, and within minutes see their loan offer.

Digital Federal Credit Union at a glance

• Application process

  • Origination fee: None.

  • Personal information needed: Social Security or ITIN, address, time at address, phone, email, birthdate, employment status, employer name, housing status, housing payment amount, driver's license number, basic vehicle information (refi).

  • Pre-qualification available: Rate estimates for auto refinance and lease buyout loans are available through an online application with a soft credit check. The main DCU auto loan application doesn't offer rate estimates with a soft credit inquiry. Instead, applicants receive preapproval, which results in a hard credit inquiry.

  • Online, in-person or both: Process can be 100% online including document upload. Applications are also taken 24/7 through a consumer loan call center and in credit union branches. Members can also apply in online banking and may already have a preapproved auto loan amount displayed there.

  • Approval speed: It is immediate in most cases. Pre-qualified and preapproved offers are good for 45 days.

  • Funding: Same day of loan closing.

• Qualifications

  • Minimum FICO credit score: 600.

  • Minimum credit history: None.

  • Minimum annual gross income: $6,000.

  • Maximum debt-to-income ratio: 60%.

  • Bankruptcy-related restrictions: There is a 12-24 month waiting period after the bankruptcy depending on credit score.

  • States covered: All 50 states.

  • Membership: Eligibility can be by family membership, working at or retiring from certain companies or belonging to or joining a designated nonprofit organization. Those who live, work, worship or attend school in certain Massachusetts communities are also eligible. Eligibility guidelines are on the DCU website.

• Restrictions

  • Maximum vehicle age: 25 years or newer (will finance classic/antique vehicles).

  • Maximum vehicle mileage: 250,000 miles.

  • Other vehicle restrictions: None. Vehicle can be purchased from a franchised dealer, independent dealer, online retailer or private party.

  • Loan amount minimum: None.

  • Loan amount maximum: $500,000.

  • Maximum loan-to-value ratio: 130%.

  • Refinancing time restrictions: As soon as the previous loan's paperwork is complete and the title can be transferred.

• Other loan details

  • Loan terms: 12-84 months. Offers flexible rates and terms, such as a 65-month option.

  • Rate discount: Yes, 0.5 percentage point with an electronic payment and direct deposit to a DCU checking account. Also, 0.25 percentage point for fuel-efficient vehicles with an EPA fuel economy rating of 35 MPG or 35 MPGe combined city/highway. Discounts can be combined.

  • Greater-than-minimum payments: Accepted and can be made by automatic payment. Is automatically applied as paid-ahead status (to the next due payment).

  • Biweekly payments: Yes, and accepted by automatic payment.

  • Late payment fee: Yes, 4% of the payment due, with a $5 minimum. Has a 15-day grace period.

  • Refinance administrative fee: Charged only for the refinance of existing DCU loans. Amount is based on the loan balance at the time of refinancing.

  • Prepayment penalty: None.

  • Co-applicants allowed: Co-signers and co-borrowers are allowed. Co-applicants can apply at the same time.

  • Payment options: Mailed-in check, phone, mobile app, online banking, through website, ACH (electronic bank-to-bank), in person. DCU is part of the Co-op Shared Branches network, so auto loan payments can be made at more than 5,000 credit union locations nationwide.

  • Selected payment due date: Yes, both before and after signing loan agreement. Can submit a due date change request at any time.

  • Cash-out refinancing: Yes, cash limit depends on equity available based on 100% of the vehicle value and subject to credit approval.

  • Hardship plans: Yes, based on member’s need, programs can include modifications, re-amortizations, skip-a-payment, payment deferrals, and account re-ages where past due accounts are brought current after several on-time payments.

  • Existing loan payoff: For refinancing and lease buyout loans, funds can be sent directly to the current lender, electronically if possible, or mailed to the lender by check.

• Customer service

  • Assistance provided: A consumer loan call center with DCU representatives is available 24/7 to assist with loan applications and answer servicing-related questions for members who have loans. A loan origination team assists with in-process loans during regular information center hours.

  • Availability: Information center hours are Monday to Friday 8 a.m.-9 p.m., Saturday 9 a.m.-3 p.m. ET.

  • Contact options: Phone, visit branch, email, chat through website or online banking.

DCU offers cash-out refinancing, meaning borrowers with vehicle equity may be able to receive cash up to 100% of the vehicle’s value with their refinance loan. Borrowers should weigh the pros and cons of cash-out auto refinancing.

» MORE: Compare lenders that offer auto lease buyout loans

More from Digital Federal Credit Union

DCU also provides antique car loans and mobility loans for people with disabilities, as well as loans for motorcycles, boats and recreational vehicles. It offers gap insurance, payment protection and auto insurance through an affiliate, DCU Insurance.

The DCU website has many educational resources, including the Streetwise Financial Education program, Auto Loan FAQs and Vehicle Title FAQs.

Digital Federal Credit Union auto loan rates

Credit requirements vary by auto lender, but Digital Federal Credit Union’s lowest rates are typically available only to borrowers with good or excellent credit (a FICO score of 690 and above). Borrowers with bad or fair credit won’t qualify for the lowest interest rates.

You can check your credit score before applying for a car loan.

Loan example: According to NerdWallet's auto loan calculator that uses the VantageScore credit model, a borrower with a credit score of 300-499 (considered deep subprime), a $20,000 used car loan, repayment term of 72 months, interest rate of 18% APR and $0 down payment would have monthly payments of $456. One year later, if all payments were made on time, the borrower will have paid the loan down to a balance of $17,963. If the borrower is able to then refinance at 12% APR for the remaining 60 months, the payment would drop to $399 and result in interest savings of $3,394 over the life of the loan.

How do we review direct lenders for auto loans?

NerdWallet's review process surveys companies that offer any combination of new car purchase loans, used car purchase loans, auto refinance loans (traditional and/or cash-out) and lease buyout loans. These companies include direct lenders and aggregators; the latter group doesn't have in-house loan products but matches borrowers to third-party lenders within a network. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgements on which ones will best meet your needs. We adhere to strict guidelines for editorial integrity.

Our survey for direct lenders has different questions than the survey for aggregators, but each includes more than 60 data points. NerdWallet independently confirms product details and, when necessary, follows up with company representatives. At least two writers and an editor verify the facts for every lender review to ensure data are accurate.

To receive a star rating, a lender must respond to NerdWallet’s annual auto loans survey. Star ratings are then assessed from poor (one star) to excellent (five stars).