Although a recent Federal Reserve survey said that credit standards are beginning to loosen, consumers should still shop around to secure the best rate and terms on an auto loan.
"I don't think you need to have the 800-plus FICO score that was probably necessary in 2009," said Alec Gutierrez, analyst with Kelley Blue Book with regard to being approved.
However, experts contend that even though auto loan approvals may be more plentiful, those without stellar credit are going to pay higher than market rates.
“Shop around” is the advice given by auto loan experts, and where else can you land a better deal than at your local credit union?
How An Auto Loan at Your Credit Union Is Different
Typically the bread and butter for most credit unions, auto loans are the stand out product that provides low rates and flexible terms on both new and used vehicles.
According to Andrew Wilson, VP/Lending at Generations Federal Credit Union ($397 million, San Antonio, TX) checking with your credit union year round can produce hot deals for your new wheels.
“We have amazing auto loan deals throughout the year,” he says. “We see very little peaks and valleys. Ours is much more of a sustained benefit to our membership.”
Wilson adds that typically, spring and fall are traditional auto loan event periods for his (and most) credit union.
“However, spring and fall are the typical times for members to check for auto loan sales. Spring brings a change in weather, time of freshness and newness and carries over to our members’ desire for a change-thus shopping for a ‘new’ vehicle.”
Additionally, post tax season can produce a flurry of auto buying activity as consumers head to the dealership with refund check in hand. “Dealers are well aware that buyers may suddenly have an influx of cash on hand this time of year, so it’s not uncommon to see promotions and offers tied to tax season,” said Carroll Lachnit, consumer advice editor at Edmunds.com in a statement. “And while there are good deals to be had on new cars, we strongly encourage consumers to take advantage of every research tool at their disposal before they plunk down their refunds as down payments.”
Instead of just handing over their check to the dealer, consumers should consider whether spending all or some of their tax refund on a new vehicle is in their best interest. In some cases, squirreling that cash in an insured IRA, certificate or money market interest bearing account can produce a better return on investment. The member could then turn to a low interest auto loan to fulfill financing.
One advantageous aspect of doing business with a credit union is that a member service representative can help you determine whether an auto loan versus paying cash is the best solution for you.
Wilson says that Generations FCU gears auto loan campaigns to meet its members’ specific needs, looking for ways to improve the member’s financial life.
“For the most part, we tailor our auto loan campaigns to the needs of our membership,” he explains. “We are very plugged into the membership that we serve and as their advocates, we are constantly looking for win-win situations that benefit both sides.”
He says that the member benefit is unique to each situation. “We look for ways to save on monthly payments, favorable loan terms or even consolidation of existing debt to assist in credit profile improvement. Our skilled agents have living room dialogues with our members to determine their specific needs and then apply their industry knowledge to meet those needs. It is a very satisfying experience for both the credit union employee and the credit union member.”
Members View An Auto Loan As A Blessing
Although some people have no problem securing financing, others struggle to find a financial institution with someone who will listen to their needs and help them find a solution.
For Elizabeth Neal in Live Oak, Texas obtaining an auto loan was no easy feat. She wrote to Generations FCU after a positive experience with one of the credit union’s loan officers, Jason Saldana:
“It is hard to put into words my sincere appreciation for Jason Saldana in making all of the final preparations to make a miracle of blessings that has happened for me.
When I contacted Jason, and he could see I was so stressed with concern of an incident, that would and was, going to happen to me over my vehicle, Jason went way above, and beyond expectations that I never could imagine a wonderful miracle happening for me.
I feel Jason really deserves great recognition for all of his hard work to finalize and complete my vehicle loan. Please acknowledge this wonderful time consuming work Jason has performed, and how pleased I was for the great amount of time he put forth.
Thank you for giving me this opportunity to express and acknowledge my thanks to Jason Saldana.”
Shop Credit Union Auto Loan Sales this Spring
Generations FCU held a special auto loan tent sale event during the first weekend of May. “We have had many auto tent sales through the years as our inventory allowed,” Wilson recalls. “The first for this year was on Feb 18, 2012 where we sold nine units out of 12. During our second 2012 event, we sold three out of 13 on May 5, 2012 however, several preapproved members stated they will be returning today to make an offer. There was a lot of interest during both tent sales before and after the sale. Numerous members were at the sale and those who have been confirmed preapproved test drove several units.”
Gas cards continue to have appeal as a few credit unions are offering gas giveaways with auto loans. Apple Federal Credit Union ($1.57 billion, Fairfax, VA) is offering 20 chances to win a $500 gas card to members who finance a new or used vehicle through June 30 during it’s “$10,000 gas giveaway” offer. Also, Sharonview Federal Credit Union ($1 billion, Fort Mill, SC) is giving each member a gas card (up to $250) and a chance to win a year’s supply of gas (and a seven day cruise) with their auto loan.
Other credit union current promotions include BrightView Credit Union’s ($26.8 million, Columbus, MS) offer to spring for the member’s tag (or receive a Visa gift card) with auto loan financing. Meriwest Credit Union ($1 billion, San Jose CA) is even waiving the member’s first three auto loan payments --offer good through June 16th. The credit union is also holding a pre-owned auto loan sale in May for two days only.
Ready to drive into the summer of 2012 with new hot wheels? Find a credit union and inquire about a spring auto loan sale today.